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A FREE myth-busting report from Club EWI reveals the real force behind long-term trend in financial markets

By Elliott Wave International

Conventional economic wisdom is founded on one core concept: namely, that events that exist outside the market (part of “market fundamentals”) trigger trend changes in the financial markets.

Because of this belief, you have the mainstream experts of finance watching everything from weather patterns to crop conditions, political exploits to the subtlest changes in punctuation in the Fed’s minutes — all in the hopes of anticipating the next big move in commodities, stocks, gold, the dollar, etc. In a nutshell, “positive” news and events cause a rise in prices, while “negative” news pushes prices down.

In reality, however, things are not as clear-cut. Markets regularly “ignore” the news, shrug it off — and move in the opposite direction of their “fundamental” cues. OR, worse waver in two different directions after the same event.

Take, for instance, the recent slew of news items following Federal Reserve chairman Ben Bernanke’s March 1 testimony before the Senate Banking Committee:

• “US Stocks Advance Ahead of Bernanke’s Testimony” (International Business Times)
• VERSUS — “US Stocks Turn Lower As Bernanke Testifies To Congress” (NASDAQ)
• VERSUS — “US Stocks Rise With Bernanke In Focus” (MarketWatch)
• VERSUS — “Stocks Decline As Bernanke Comments Fall Flat.” (Wall Street Journal)

What often ends up happening is this: Because the original event fails to predict the movement in stocks, commentators then sift through the day’s news feed in search of a different “trigger” — one that fits price action AFTER the fact.

The fallacy of a news-driven market is the first misconception exposed in Elliott Wave International’s Club EWI free resource “The Independent Investor” eBook. Here’s a short preview of this eye-opening report.

Chapter 1 opens with the question “What Really Moves the Market?” You then get the answer via riveting excerpts and charts from EWI president Bob Prechter’s monthly Elliott Wave Theorist publications, such as this one below:

“Suppose the devil were to offer you historic news days in advance. He doesn’t even ask you for your soul in exchange. He explains, ‘What’s more, you can hold a position for as little as a single trading day after the event or as long as you like.’ It sounds foolproof, so you accept. His first offer: ‘The President will be assassinated tomorrow.’ You can’t believe it. You and only you know what’s going to happen. The devil transports you back to November 22, 1963. You short the market. Do you make money?

The first arrow in Figure 6 shows the timing of the assassination. The market initially fell, but by the close of the next trading day, it was above where it was at the moment of the event. You can’t cover your short sales until the following day’s opening because the devil said you could hold as briefly as one trading day after the event, but no less. You lose money.”

Independent Investor eBook further exposes 10 other commonly held economic beliefs for what they truly are: Wall Street myths disguised as reality. Here’s what else you’ll learn:

• The Problem With “Efficient Market Hypothesis”
• How To Invest During a Long-Term Bear Market
• What’s The Best Investment During Recessions: Gold, Stocks or T-Notes?
• Why “Buy and Hold” Doesn’t Work Now
• How To Be One of the Few the Government Hasn’t Fooled
• How Gold, Silver and T-Bonds Will Behave in a Bear Market
• MUCH MORE

Keep reading this 118-page Independent Investor eBook now, free — all you need is a free Club EWI profile.

By CountingPips.com

The US dollar has been mostly gaining ground in forex market trading today against the other major currencies. The dollar has been on the rise so far today against the British pound sterling, Japanese yen, Swiss franc, Australian dollar and the New Zealand dollar while losing ground to the euro and trading close to unchanged against the Canadian dollar, according to currency data by Oanda in the afternoon of the US session.

The US stock markets, meanwhile, are having a winning session today with the Dow Jones Industrial Average gaining by over 150 points, the Nasdaq increasing close to 50 points and the S&P 500 up by approximately 20 points.  In commodities, oil has traded a bit lower to $100.55 while gold has lost $21.00 to trade around the $1,416.00 per ounce level.

Positive jobless claim news out of the US today has helped boost stocks as initial jobless claims fell to over a 2 1/2 year low and followed up yesterday’s better than expected ADP private employment report. The most important jobs report of the month is out tomorrow with the government’s nonfarm payrolls expected to show a rise of 185,000 jobs for February.

Euro jumps on ECB comments

The euro has been the big gainer on the day in the currency markets as European Central Bank president Jean-Claude Trichet commented that interest rates could rise in the euro zone by as early as next month. The comments came after the ECB decided to hold its interest rate steady today and prompted sharp buying of European common currency.

EUR/USD Daily Chart – The EUR/USD has continued its recent climb and today reached above the 1.3900 level for the first time since early November 2010.

March 3 (Bloomberg) — John Taylor, chairman and founder of FX Concepts LLC, discusses the possibility of the U.S. falling into a recession. Taylor, speaking with Betty Liu and Jon Erlichman on Bloomberg Television’s “In the Loop,” also discusses the outlook for European Central Bank and Federal Reserve monetary policies and the euro. (Source: Bloomberg)

The Labor Department reported Thursday that initial U.S. jobless claims fell by 20,000 to 368,000, the lowest level since May 2008, in the week of February 26th. Economists on average had expected first-time claims to reach 395,000, up from last week’s guided level of 388,000. Claims averaged 388,500 over the past four weeks, the lowest one month average since July 2008. The 27% decline in claims since August 2010 shows a pattern of modest hiring but fewer layoff. Continuing claims have also fallen, declining 59,000 to 3.77 million in the week of Feb. 19.

By Chris Vermeulen, thegoldandoilguy.com

By Greg Holden

Since the start of 2011, the EUR/CAD has been fluctuating within an ever-tightening range. The consolidation point for this trend appears to be just below 1.3600.

Looking over the technical indicators it seems worthwhile to point out that current momentum is bullish and we have what appears to be a relatively clear target at 1.3600 prior to any sharp movements.

This price target is well within reach today. Given the flurry of events on today’s calendar, especially out of the euro zone, there is a strong possibility that the EUR will gain the needed boost to touch this consolidation point.

The Stochastic (slow) on the chart below shows a cross just above the over-sold region, making it a weaker indication of upward mobility, but a bullish signal nonetheless.

The MACD also reveals what could be a bearish cross, countering the limited upward strength shown on the Stochastic indicator.

Since the price is within 100 points of its consolidation target, these conflicting signals make sense. There is enough data to support the upward move towards this point, but not enough to justify breaching that target.

It seems more likely that traders will witness a downturn in the pair once the consolidation price target is reached today. This is also supported by rising Crude Oil prices, which often support the value of the Canadian dollar (CAD).

EUR/CAD – Daily Chart

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.

By GCI Forex Research

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)

USD

FX markets remained tightly range-bound for most of the Asia session, as investors direct their attention to the upcoming ECB press conference. Headlines suggesting that a peace plan for Libya is being discussed led to a spurt of risk-seeking, but it was shallow and brief. EURUSD traded 1.3847-1.3876, USDJPY 81.65-81.93. The S&P 500 finished fractionally stronger. The Fed’s latest Beige Book was a bit more optimistic and the ADP employment data beat consensus, rising +217k in Feb. Fed Chairman Bernanke’s second day of prepared testimony was largely unchanged from the first. During the Q&A session, he said he would not rule out the possibility of a QE3 if conditions deteriorate, though he implied this was not his expectation. He added that monetary policy works with a lag and therefore “we cannot wait until we get to full employment and the target inflation rate before we start to tighten.” ADP estimates private payrolls rose +217k in Feb.

EUR

The ECB decision is due and our analysts are in line with the consensus in expecting no change to the policy rate. But during the ensuing press conference, we look for a more hawkish stance, an upward revision of inflation forecasts, and no change in the 3-month repo rules for forthcoming ECB tenders.
German Chancellor Merkel and Portuguese Prime Minister Socrates met and Socrates reiterated that Portugal does not need external help. Socrates said the March 11 summit aims to boost confidence for market participants and Merkel remained non-committal on possible reductions or alterations to current bailout packages for Ireland and Greece.
Eurozone PPI was stronger at 1.50% m/m compared to consensus of 1.10%. This will add to the ECB’s inflation concerns and provides further evidence of higher oil prices feeding through.

AUD

Trade data for January showed a -29.5% m/m decline in coal exports, due to flooding in Queensland, while exports in general fell -4.1% m/m. The AUD was not badly affected by the news, largely because of a compensating decline in imports, which caused the trade balance to come in ahead of expectations at A$1.875 bn (cons. A$1.55 bn).
Building approvals fell dramatically by -15.9% m/m (cons. -3.3%), and -24.8% (cons. -6.6%). The declines were even more pronounced in Queensland.
Our team of analysts stick to their view that the RBA will likely hike by a further +50bp in H2.

TECHNICAL OUTLOOK
USDJPY 81.13/80.93 support.
EURUSD BULLISH Recovery through 1.3862 has opened up the way towards 1.3948/74 zone. Near term support is at 1.3712.
USDJPY BEARISH Breach of 81.62 exposes 81.13/80.93 support area. Initial resistance is at 82.24.
GBPUSD BULLISH Clearance of 1.6330 has exposed 1.6379. Support is defined at 1.6216.
USDCHF BEARISH Pressure on 0.9200; breach of this would expose 0.8951 next. Near-term resistance at 0.9323.
AUDUSD BULLISH Rise above 1.0202 would open 1.0256 key resistance. Near-term support at 1.0085.
USDCAD BEARISH Initial support is at 0.9684, breach of this would expose 0.9600. Resistance at 0.9800.
EURCHF BEARISH Move above 1.2706 would expose 1.2686 and 1.2592 next. Near-term resistance is at 1.2893.
EURGBP BULLISH Support at 0.8423 continues to hold, expect gains towards 0.8555 ahead of 0.8593.
EURJPY BULLISH Momentum is positive; initial resistance at 114.19 ahead of 114.94 while support at 111.96.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

The euro rose to a near 4-month high against the U.S. dollar on Wednesday on prospects the European Central Bank (ECB) will today emphasize a readiness to raise record-low interest rates amid increasing price pressures.

Economic News

USD – U.S. Dollar Weakens on all Fronts

The U.S. dollar fell against most of its major counterparts yesterday, reaching the weakest level versus the euro since November as oil rose above $100 a barrel for a second day amid unrest in North Africa and the Middle East. By yesterday’s close, the dollar fell 0.6% against the EUR to 1.3863. The greenback was little changed against the JPY at 81.80, after earlier sliding 0.4%.

The greenback slumped versus the euro as Federal Reserve Chairman Ben Bernanke wouldn’t rule out another round of asset purchases to spur the economy. Bernanke, in congressional testimony yesterday, signaled he’ll keep the Fed on course to finish $600 billion of Treasury purchases through June. Another round of buys “has to be a decision” of the Federal Open Market Committee, and “depends again on our mandate” for stable prices and maximum employment, he said in response to a question. Bernanke said he doesn’t want to see the economy to relapse into recession.

Another leading indicator released yesterday was the U.S. ADP Non- Farm Employment Change figure. This number handedly beat last month’s result but failed to provide strength to the dollar as investors may be waiting for key data due to be released today to implement their trading strategies.

Looking ahead to today, there are few news releases coming out of the U.S. These include the Unemployment Claims and ISM Non-Manufacturing PMI at 13:30 GMT and 15:00 GMT, respectively. Better-than-expected results may help the dollar recover some of yesterday’s losses against a number of its crosses, such as the EUR and GBP. On the other hand, if the results turn out to be lower than forecast, then the dollar may record a fairly bearish session in today’s trading. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow these releases.

EUR – EUR Rises on Interest Rate Expectations

The euro rose to a near 4-month high against the U.S. dollar on Wednesday and looked set to extend gains on growing expectations interest rates in the euro zone will rise earlier than those in the United States. By yesterday’s close, the EUR rose against the USD, pushing the oft-traded currency pair to 1.3860. The 17-nation currency experience similar behavior against the GBP and closed at 0.8490.

European Central Bank (ECB) policymakers meet on Thursday, and with euro zone inflation well above its target, markets see the central bank sharpening its anti-inflation rhetoric. But gains in the common currency risk a correction as geopolitical turmoil continues to fuel uncertainty and higher energy prices, causing stocks to tumble on Wednesday.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not commonplace and present terrific opportunities to take advantage of the price swings for large profitable gains.

JPY – Yen Lower vs. Major Currency Pairs

The JPY saw a bearish trading session yesterday, losing ground against most of its currency crosses. The JPY fell sharply against the EUR, pushing the oft-traded currency pair to 113.45. The Japanese yen experience similar behavior against the GBP and closed at 133.50.

Today, the JPY will be absent from the economic calendar, and traders should follow overseas events in order to determine the JPY’s direction for today. Special attention should be given to the U.S. Unemployment Claims that will be published at 13:30 GMT, and will be today’s leading publication which will also affect the yen’s crosses.

Crude Oil – Crude Oil Prices Continue to Rise

Oil rose to settle at its highest level since August 2008 on Wednesday, a price near $102.60 a barrel, after an airstrike near Libya’s oil infrastructure raised more fears the OPEC nation’s oil sector could become a target in embattled leader Muammar Gaddafi’s efforts to hold power.

News of the strike in Brega, near to Libyan oil terminal, added to two weeks of fears the unrest could spill over into other large oil producers in the region. Oil markets remained focused on the turmoil in the Middle East, which could signal another threat to global oil supplies after the Libyan revolt cut exports.

As for today, traders should first and foremost follow the developments in the Middle East, as this issue will continue to impact oil prices in the near future. Traders are also advised to follow the U.S. Unemployment Claims report, which is scheduled for today at 13:30 GMT, as this report tends to have a direct impact on the market.

Technical News

EUR/USD

The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the 4-hour chart’s Stochastic (slow) signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice today.

GBP/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, the 8- hour chart’s RSI is already floating in the over-bought territory indicating that a bearish correction might take place in the nearest future. Going short with tight stops might be the right strategy today.

USD/JPY

The price of this pair appears to be floating in the over-sold territory on the daily chart’s RSI indicating an upward correction may be imminent. The upward direction on the Stochastic (slow) also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

This pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s RSI signals that a bullish reversal is imminent. An upward trend today is also supported by the 4-hour chart’s Stochastic (slow). Going long with tight stops may turn out to pay off today.

The Wild Card

Crude Oil

Crude Oil prices rose significantly in the past month and peaked at $102.60 a barrel. However, the daily chart’s RSI is floating in the over-bought territory suggesting that the recent upwards trend is losing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

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.

By Anton Eljwizat

The EUR experienced one of its most bullish trading days in recent weeks on Wednesday. The EUR made significant gains against many of its most traded currency pairs, such as the GBP, JPY and USD.

Today’s busy calendar will have forex traders highly active in the upcoming European and American sessions. The euro zone will publish their interest rate decisions along with monetary policy statements. The US will later publish its trade balance and weekly unemployment claims and ISM Non-Manufacturing PMI report prior to tomorrow’s very significant NFP figure.

Here is a roundup of today’s leading events:

12:45 GMT: EUR – Minimum Bid Rate

The release of the European Central Bank’s (ECB) latest decision regarding its short-term interest rates will no doubt have a heavy effect on the value of the EUR. Predicting the movement of the 17-nation currency following such reports is, however, highly difficult given the volatility typically experienced around this event. Traders should make sure to protect their positions today and expect sharp movements in the market.

13:30 GMT: USD – US Unemployment Claims

This indicator reflects the number of individuals who filed for unemployment insurance for the first time during the past week, and is considered to be the broadest measure of economic health. If the end result will show a better than forecast figure the USD might get boosted.

15:00 GMT: USD – US ISM Non-Manufacturing PMI

This indicator measures the level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry. As leading indicators of economic health, businesses react quickly to market conditions and this report has a direct correlation with the strength of the US economy. Today’s forecast is for higher growth than last month, indicating that a positive return to economic normalcy is beginning to get underway. Such an outcome should boost the USD.

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.