USDJPY’s downward movement from 85.51 extended further to as low as 81.62. Resistance is at the upper border of the price channel on 4-hour chart, as long as the channel resistance holds, downtrend could be expected to continue and next target would be at 81.00 area. Only a clear break above the channel resistance could indicate that the downtrend from 85.51 is complete, then the following upward move could bring price back to 83.50 zone.
The holiday shortened sixteenth trading week of the year comes to a close as investors fret about about lackluster economic data, though drive stocks higher on optimism and good earnings.
Chip makers Intel (INTC) and Micron (MU) announced late yesterday that they have officially opened a joint venture, IM Flash, in Singapore. The $3 billion facility will produce the companies 25 nanometer NAND Flash memory.
By Greg Holden
The Reserve Bank of Australia (RBA) is receiving additional pressure with each passing week to tighten its monetary policy in the near future. Data has shown inflation rising in Australia at levels beyond expectations and analysts are now expecting the RBA to take steps to control such growth.
As an example of recent pressures mounting the RBA’s next rate decision is Wednesday’s report on surging import prices which rose an unexpected 1.4% on the quarter, above the expected 0.8%. This morning’s higher-than-forecast Producer Price Index (PPI) out of Australia also supports this notion with a reading of 1.2% growth.
The Aussie dollar has been rising for some time, only recently experiencing uncertainty on Chinese rate statements following last week’s G20/IMF meetings. Business sentiment in Australia is also rising with today’s confidence survey by the National Australia Bank (NAB) signaling sufficient optimism emerging in the Aussie economy.
The combination of positive inflationary growth with speculation that the RBA will undertake monetary tightening in its next round will likely affect AUD values to the upside. Traders may want to take advantage and begin pricing in such expectations. Look to continue going long on the Aussie dollar in the near future.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
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By CountingPips.com
Economic news out of Canada today showed that retail sales rebounded in February after sales declined in January. Canadian retail sales increased by 0.4 percent to a C$37.3 billion total in February after a decrease by 0.4 percent in January, according to the report by Statistics Canada. The rise in sales was slightly less than expected as economic forecasts were predicting a 0.5 percent increase for the month.
On an annual basis, February’s retail sales level was 3.7 percent higher than the February 2010 level.
Core retail sales, excluding automobile sales, climbed by 0.7 percent in February following a decline by 0.2 percent in January. The rise in core sales surpassed market forecasts that were expecting a 0.5 percent increase for the month.
Contributing to the gain in the retail sales numbers was an increase in gasoline station sales which rose by 1.3 percent. Also contributing positively to the report were gains in furniture & home furnishing store sales (+2.1%), clothing and accessories store sales (+2.5%), sporting goods, hobby, book & music stores (+1.4%) and miscellaneous store retailers (+1.6%).
Negative contributors to the retail sales report in February included motor vehicle and parts dealers (-0.6%) and electronics a appliance stores (-0.6%).
Canadian Loonie falls in Forex Trading today
The Canadian “loonie” dollar has been weaker today in the currency markets despite the positive retail sales data for February. The Canadian currency is trading lower versus the US dollar, euro, British pound, Japanese yen, Swiss franc, New Zealand dollar and Australian dollar, according to currency data from Oanda.
AUD/CAD Chart -The Australian dollar increasing higher versus the Canadian dollar for a second day in a row. The AUD/CAD is now over the 1.2000 level.
Plenty of strong earnings news out from several Dow Jones Industrial Average components today is driving the market higher. DuPont (DD) reported a 27% increase in earnings, to $1.43 billion, or $1.52 per share.
By CountingPips.com
U.S. jobless claims decreased by less than expected in the week that ended on April 16th, according to a release by the U.S. Labor Department today. Weekly initial jobless claims fell by 13,000 workers to a total of 403,000 unemployed workers following a revised total of 416,000 jobless claims recorded the previous week. The 4-week moving average of unemployed workers increased by 2,250 workers from the previous week to a total of 399,000.
Market forecasts were expecting jobless claims to decline to a total of 390,000 workers.
Workers seeking continuing claims for unemployment benefits for the week ending April 9th also decreased for the week. Continuing claims fell by 7,000 workers to a total of 3,695,000 unemployed workers following a total of 3,702,000 workers seeking continuing claims the week prior. The 4-week moving average of continuing claims dropped by 17,500 workers to a total of 3,716,750.
By Greg Holden
Germany’s publication of its Ifo Business Climate report was roughly as expected on Thursday. Analysts were expecting a reading of 110.6 making today’s 110.4 figure anti-climactic. Interestingly, the EUR/USD met solid resistance shortly after this report even though such a reading would typically boost the euro.
Today’s thin market conditions ahead of this weekend’s Easter holiday may be interfering with normal currency values. A number of investors have been anticipating a reevaluation at the start of next week as normal volume levels are reintroduced to the market.
Comments from the president of the European Central Bank (ECB), Jean-Claude Trichet, recently hinted at a softening of the central bank’s position in regards to monetary policy. The dovish sentiment has pulled down on the EUR in short-term trading with many traders beginning to shift away from the 17-nation single currency in anticipation of a fall.
The EUR/USD checked its recent rise towards 1.4650 and is now trading downward with a current price near 1.4570. The data out of Germany may have less to do with this movement than the ECB’s softened stance in regards to monetary policy adjustments. Traders may want to anticipate a downturn in this pair at the beginning of next week should the current environment remain unchanged.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Over the weekend, I had the pleasure of spending some time with a friend — we will call him “Greg.” Greg is a true “stock investor.” He has been investing for years and has done well for himself through diversification and other methods.
We were talking about his stock portfolio, and he was expressing some of his frustration with the amount of money he had at risk as well as the fact that his stock portfolio was not performing to his expectations.
It’s not that he owned the wrong stocks necessarily. He was just using the wrong vehicle and strategy to invest in them.
I think that about sums up the current global situation, geopolitically and economically, and in the stock and bond markets. Experts can’t agree at all on which way the stock market is going, nor do they seem to know what the fate of the U.S. housing market or economy for that matter will be. The market is choppy, trendless and volatile at times.
With all this confusion, do you think it is a good idea to invest a good portion of your stock portfolio in anything but cash (or maybe precious metals)? Probably not. But at the same time, you don’t want to park the bulk of your investments in cash, which is going to suffer the effects of low interest rates and inflation…
You must at least keep up with inflation to grow your nest egg or at least keep your current retirement stable, because the way things look right now, Social Security and Medicare will look quite different in 10 years.
I was looking at some of Greg’s positions and noticed that he had 500 shares of McDonald’s (MCD:NYSE), currently trading at about $78. He had bought them at $72, so he was making a good profit of about $3,000. The problem was that almost $40,000 of his stock portfolio was tied up in that investment.
This obviously wasn’t his only position, but many of them had the same dollar amounts tied up and he had little cash to make other investments or in case of emergency.
What if I told you that you could use options to essentially control 500 shares of MCD, but at less than 10% of the cost and still have unlimited profit potential and limited risk? Would you be interested? Greg was.
Call options can provide you with an investment vehicle that can reduce risk drastically and still allow you just about all the benefits of owning stock.
Now, I will say that it will take a bit of education, practice and some guidelines to know how to do this. So let me explain how to use options without increasing your risk.
(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)
A call option is similar to a coupon to purchase any item, only a call is a coupon to purchase 100 shares of stock. Just like a coupon, a call option has a price at which you can buy the stock and an expiration date. If you had a coupon to buy a Sony DVD player for $100, which expired in September 2011, you essentially have a September 100 call option on that DVD player.
Obviously you have to pay for a coupon in one way or another. Follow me on this one…
We all know that you can’t just waltz into the electronics store with a coupon that is worth $20 and demand cash. But you can in the equity options market!
A common misconception is that you must “buy the stock” to make money on your options, but that is simply wrong. Call options can be bought or sold at any time! It’s like being able to sell your coupon for the DVD player back to the store and capture your profits!
Another rule of thumb is that you can only lose what you pay for a call option and you DON’T have to have the money to buy the stock.
For many people, that’s reducing their risk already, because they don’t have to have $40,000 tied up in a single stock.
Using MCD as an example, imagine Greg sold the 500 shares of stock at $78, for a profit of $3,000. With the profits he made, he decided to replace the costly stock with coupons (call options), which gave him the right to buy the stock at $75 until September.
In the current market, those calls will cost about $4.20 ($420) apiece, which means he can afford to buy seven.
(Options contracts are sold in blocks of 100, meaning one call option contract gives you the right to buy 100 shares of the underlying stock. This means a call option with a price of $4.20 will actually cost you $420 to buy.)
But since your original investment in the stock was 500 shares, you might only buy five call options. That total investment would cost $2,100 (pocket the other $900 as a guaranteed profit on the trade no matter what happens).
So now (with the five calls) you have control of 500 shares at a cost of $2,100, which is the most you could ever lose, even if MCD dropped to $10 per share!
Essentially you have locked in a $900 guaranteed profit, and if MCD moves higher, you can continue to make an unlimited amount of money. Remember, the calls give you the right to buy MCD at $75 per share, so if MCD were to rise to $85 by September, the calls would be worth at LEAST $10 (or $1,000, because remember, contracts give you access to 100 shares of stock)…
And guess what: Since you paid $4.20, you would make 161% on your call options!
Not only is that cool, but you are reducing your risk from $40,000 to $2,100, pocketing $900 in guaranteed gains and still giving yourself unlimited profit potential until that option expires. All the while you are taking risk OFF the table in this uncertain market!
No investor could do this just by investing in stocks.
This is just one of the hundreds of different strategies that option traders have at their disposal. You may be taking unnecessary risk in your portfolio and you may be able to reduce that risk, amplify returns or increase your probability of success by learning the options markets.
If this strategy interests you or you want to learn more about options and techniques to strengthen your portfolio, pick up a copy of my new book, Your Options Handbook. There are over 430 pages of tips and tricks like this, for a very low price.
Remember that there is usually more than one solution to a problem. Think out of the box and you might find them.
Editor’s Note: Inflation is rising rapidly, no matter what the government says. The result could spell doom for your bonds. But if you make one simple move right now, you could inflation-proof your portfolio and thrive as inflation continues to grow. Learn more from Taipan’s Safe Haven Investor.
About the Author
Jared Levy is Editor of WaveStrength Options Weekly, our options trading research service and Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.
Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange’s youngest-ever members to become a market maker on three major U.S. exchanges.
He has been featured in several industry publications and won an Emmy for his daily video “Trader Cast.” Jared serves as a CNBC Fast Money contributor and has appeared on Bloomberg, Fox Business, CNN Radio, Wall Street Journal radio and is regularly quoted by Reuters, The Wall Street Journal and Yahoo! Finance, among other publications.
