InvestMacro FX

The eighth trading week of the year comes to a close and stocks have reverse course to head lower.

How the waves of social mood led to an investment method worth looking into

By Elliott Wave International

Have you ever been at the ocean body surfing, just waiting for that perfect wave? When you begin to truly feel it, your adrenaline starts pumping.

I came to work for Elliott Wave International in the late 1980s — before the Internet, before ETFs, before smartphones. Part of my job was to review the many publications that came to our offices, in search of articles that spoke to the “mood” of the markets.

It was a task that constantly searched for an answer to the question, Is there a large cluster of articles in print right now to indicate that people are extremely “bullish” or “bearish”? At that time my searches related mostly to the commodities markets, but I also kept close tabs on stock market news.

At first it was tedious. When I found groups of articles that reflected a certain mood, I would clip and save them to a file for our analysts to review. Yet after several months, I actually began to develop a feel for the mood patterns in the articles. I started to use this to see if I could anticipate where the price trend would go over the next several days or weeks.

The idea was simple: When the mood in the news articles got extremely bullish – and our Elliott wave counts suggested that a rally was completed — it would often represent a downside opportunity; when that mood became deeply gloomy, it was usually time to get bullish.

I was amazed — my adrenaline was pumping. I actually started to get a feel for the waves — a feeling for the direction of the market! I was hooked, so I took it to the next level.

I had read Prechter and Frost’s Elliott Wave Principle – Key to Market Behavior before I interviewed for my position. It was interesting, but it didn’t really speak to me. But after I had personally experienced and understood what it means to feel the mood of the markets, I read it again. The second time took on a whole new meaning.

If you read Elliott Wave Principle a long time ago, or wish to read it for the first time, Elliott Wave International has just released an online edition of this investment classic, free to members of Elliott Wave International’s Club EWI. Membership is free. This is your chance to learn how the waves of social mood can change the way you invest forever.

Follow this link to become a member, and to receive FREE online access to Elliott Wave Principle, and the many other free investment and trading reports available to Club EWI members.

By CountingPips.com

The US dollar has been mixed in forex trading against the major currencies today as oil’s sharp rise and stock market declines have cooled off. The dollar has gained ground versus the euro, Swiss franc and the British pound sterling while the American currency is trading lower against the Japanese yen, Australian dollar, New Zealand dollar and the Canadian dollar.

The US stock markets are having a winning session today with the Dow Jones gaining by over 50 points, the Nasdaq increasing over 30 points and the S&P 500 up by more than 10 points.

In commodities, oil’s run has cooled off today and trades almost unchanged at the $97.15 per barrel level while gold futures have lost $8.20 to trade at the $1,407 per ounce level.

EUR/USD Daily Chart – The dollar has been gaining ground against the European common currency with the EUR/USD falling below the 1.3800 exchange rate after three straight days of gains. The EUR/USD reached its highest level yesterday since the beginning of the month at the 1.3837 exchange rate and may possibly test the February 1st high of 1.3861 in next week’s trading.

Pivot Levels:

Daily pivot: 1.3788
weekly pivot: 1.3617
monthly pivot: 1.3579

Gold rose as high as $1411 an ounce early today, which is largely owned to the EUR’s gains vs. the USD. In the past week, Gold has made a significant upward correction, which can be directly correlated with the bullish trend of the EUR/USD cross. This recent activity has raised the stakes for traders. From here on, the forex and commodity markets will see very high volatility indeed.

Pivot: 1395.00

Our Preference: LONG positions above 1395 with targets @ 1408 & 1417.

Alternative scenario: The downside breakout of 1395 will open the way to 1387 & 1382.

Comment: as long as the price remains within its key upside channel, a further up move is expected to re-test 1417 after a pause.

Trend: ST Ltd upside; MT Bullish

Key levels Comment

1424* Fib projection

1417** Intraday resistance

1408** Intraday resistance

1404 Last

1395** Intraday pivot point

1387** Intraday support

1382** Intraday support

By Russell Glaser

The rise in spot crude oil prices may have technical implications as this week’s high coincides with a key Fibonacci level.

Following the collapse of crude oil prices over the second half of 2008 where the price fell from $147 to $33, prices have steadily climbed back, albeit slowly. This week’s rally to $103 has completed a 61.8% retracement of the June 2008 to January 2009 price drop.

Should the commodity continue to move higher, resistance is found at this week’s high at $103, followed by $110 and $122, as well as the all-time high near $147.

Support should be found at $93, with further support at $83 and $73. The rising trend line off of the February 2009 low may also prove to be supportive.

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.

This is what’s in the news for Friday, February 25th. the Wall Street Journal reports that efforts by News Corp (NWS) to sell MySpace are advancing, and sources say bankers Allen & Co this week began to schedule meetings with potential suitors, …the Financial Times reports that The digital music market will soon be shaken up as Apple (AAPL), Google (GOOG) and Spotify race to deliver new services that labels hope may reverse a decade of declining revenues, …And finally, The New York Post has learned that Google’s YouTube is looking to launch an unlimited subscription service for movies. The service, which is similar to offerings from Netflix (NFLX) and Amazon (AMZN), could first be launched in Europe, particularly the U.K., before expanding to the U.S.

By Greg Holden

After this past week’s surging price of precious metals, traders appear to be expecting some level of retracement in value for Silver.

In an earlier article it was argued that Silver prices may outpace the spiking price of Gold, which has so far panned out. Gold reached just shy of its all-time nominal high, whereas Silver jumped to a 30-year peak and held steady, for the most part.

As of yesterday, however, Silver prices appear to be coming back down. So far, it seems, there appear to be two fundamental factors and one technical aspect fueling this retracement.

First, profit-taking among the precious and noble metals yesterday constituted the bulk of the sudden plummet in Silver prices. As several industries which apply Silver in their production posted above-expected profits in Q4, many analysts seem to be anticipating a pull-back as part of an impending cyclical downturn.

Second, the flaring tensions in Libya, which have driven oil traders bonkers this week, have also created a capital shift towards safe-haven stores of value, like Gold. Gold’s upward mobility pulled other associated metals higher along with it, but Silver’s spike was given impetus by a multitude of other factors associated with growth among industry and hi-tech.

As long as Libya’s president, Muammar Qaddafi, fights to hold onto power, commodity prices will likely continue to find support. But traders should be cautious since revolutions like those spreading throughout the Middle East may end as abruptly as they began, creating a whiplash turnaround in market activity.

Australia’s central bank governor, Glenn Stevens, warned of such sentiment recently by calling on markets to begin pricing in the impending correction to the latest surge in asset prices. Gov. Stevens’ concern is connected to the fact that Australia’s economy is closely aligned with the value of precious metals and an overextension of investment could create a nasty backlash on the Economy Down Under.

The technical factor is, as usual, a theoretical prediction. The daily and weekly charts on Silver show what may end up being the first shoulder and the head of a head-and-shoulders formation. If true, we may expect a retracement back towards $27 before a secondary surge, likely reaching as high as $31. If it does end up being such a formation, we may see Silver prices breaking out of its uptrend over the next few months, possibly falling back into the low $20s.

Silver – Weekly 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.

Feb. 25 (Bloomberg) — Beat Siegenthaler, a senior foreign exchange strategist at UBS AG, discusses the outlook for the euro. He talks with Linzie Janis on Bloomberg Television’s “Global Connection.”

The US dollar remained under pressures on Thursday and fell to its ever low versus the Swiss franc. The investors were more focused towards the Japanese Yen and Swiss franc as the surge in oil price made them to look for other safe haven investments.

Moreover the recent hike in US Treasury yields further added to the misery of the greenback as both currencies the Yen and Swiss franc are highly sensitive to US interest rates.

The US dollar declined to 81.92 versus the greenback on Thursday as compared to 82.46 on Wednesday’s North American trading session. The US dollar declined to it’s ever low against the Swiss franc on Thursday and reported the fall of 0.6 percent to 0.9316. The greenback touched it’s lowest of 0.9238 in yesterday’s trading session.

The dollar index DXY which measures the US dollar’s performance versus its major six rival currencies fell to 77.086 as compared to 77.373 on Wednesday.

In opinion of most analysts the Forex market currently seem highly sensitive to US Treasury yields in reaction to which the yen and the Swiss franc are most favorable choices.

The US dollar also weakened against the Euro and British Pound as European Central Bank and Bank of England both are opting for tightened monetary measures like increase in interest rates to address the regions sovereign debt problems. The Euro gained to 1.3802 against the US dollar as compared to 1.3761 on late Wednesday while the British Pound traded around 1.6139 versus the greenback on Thursday slightly changed as compared to 1.6211 on Wednesday.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar continued to surrender ground during the Asia session, and USDCHF set a new all-time low. EURUSD traded 1.3787-1.3838, USDJPY traded 81.68- 82.07. The euro and sterling remain supported by the prospect of rate hikes to tame inflationary pressures, especially as oil prices stay firm due to tensions across the Middle East and North Africa. Even a better initial jobless claims could not boost the dollar as Treasury yields remained subdued and oil prices elevated. Jobless claims fell more than anticipated, continuing the recent downtrend. January headline durable goods orders rose, while orders ex-transportation were much weaker. New home sales also fell more than expected, declining 12.6% m/m. St Louis Fed President Bullard, a non-voter in 2011, said the economic outlook has improved since QE2 was announced and that “the natural debate now is whether to complete the program, or to taper off to a somewhat lower level of asset purchases.” Our analysts team notes that this is significant because he is historically a hawk but has been very supportive of the QE2 program. He isn’t making a strong argument for curtailing the QE2 program, but is certainly highlighting the risk that the Fed might do that.
EUR

Bundesbank President Weber said interest rates can only go up in the future, which briefly boosted the euro. Bundesbank board member Dombret was also hawkish, saying that second-round price effects cannot be ruled out.
German GDP for Q4 was confirmed at 4.0% y/y, 0.4% q/q, driven by strong export growth and public spending. Our European economists note that the release shows a less balanced growth picture than in Q3, with capex down and private consumption sluggish.
Italy is planning on selling approx. EUR5 bn in 2021 bonds, EUR3 bn in 2013 bonds and EUR1.5 bn in 2017 bonds. Recent auctions have gone well, though their impact on euro sentiment has diminished given that rate hike expectations are currently dominant. Our fixed income strategy colleagues point out that the behaviour of Italian spreads appears to have become more ‘core-like’ over the past year, which could mean these auctions are well received.
GBP

BoE MPC Member Sentance stuck to his hawkish line repeating that the time has come to increase interest rates. Fellow policymaker Posen said that his view on the need for more Gilt purchases has not changed.
We expect no revision to Q4 GDP growth. The initial estimate severely disappointed, triggering a sterling selloff. However, today sterling is likely to remain supported as the market continues to focus on the prospect of an early BoE rate hike.
CHF

We expect a slight dip in the KOF leading indicator but external developments remain the key driver for the Swiss franc these days, as it continues to benefit from safe haven flows. Nevertheless, keep an eye on the data as an accommodative SNB and the end of Swiss economic outperformance could put some downward pressure on CHF.
NZD

An RBNZ spokesman denied speculation that the RBNZ is planning to hold an emergency policy meeting to address the aftermath of this week’s earthquake.
S&P became the third major ratings agency to say that New Zealand’s credit rating has not been affected by the quake.

TECHNICAL OUTLOOK
USDCHF clears 0.9329/01.
EURUSD BULLISH Rise through 1.3744 exposes 1.3826 and 1.3862 next. Near term support is at 1.3647.
USDJPY NEUTRAL Decline through 82.34 has exposed 81.78, while resistance lies at 82.89.
GBPUSD BULLISH Bullish pressure holds below 1.6279/99 resistance zone. Near-term support comes in at 1.6101.
USDCHF BEARISH Negative momentum continues; breach of 0.9329/01 support area has exposed 0.9241. Near-term resistance at 0.9506.
AUDUSD NEUTRAL 1.0158 and 0.9944 mark the near-term directional triggers.
USDCAD BEARISH Initial support is at 0.9816 ahead of 0.9745/12 area. Resistance at 0.9959.
EURCHF BEARISH Push below 1.2774 would expose 1.2709. Initial resistance at 1.2958.
EURGBP NEUTRAL Move above 0.8514 would expose 0.8533. Near-term support lies at 0.8384.
EURJPY BULLISH Focus is on 114.19, breach of this level would expose 114.94. Support holds at 112.09.

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.