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September 23rd, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The U.S. dollar firmed last week, recovering from a multitude of setbacks in the previous session as investor are anxiously waiting for the Federal Reserve’s latest guidance on U.S. interest rates.
The Fed’s Open Market Committee shall be concluding its regular two-day policy meeting in the later session at which it is anticipated to converse the timing of the next U.S. rate increase with policy makers also expected to release fresh economic and interest-rate projections which will extend their respective forecast by 2017.

The greenback was under immense pressure after the Wall Street Journal’s Fed watcher mentioning that the U.S. central bank may possibly keep the words considerable time with in its policy statement would dissatisfy dollar bulls hoping for a more hawkish statement.

Markets have been anticipating and bracing for the Fed to decrease the rates for a considerable period following its bond purchasing programme, Fed officials have said that they won’t be expecting any rate increase until 2015, however the recently strong U.S. economic data has led some of them to recognise they may need to act sooner than they previously have anticipated.

The panel might also change its depiction of the labour market to indicate further progress toward its goal of supplementing employment.

It fairly very hard for markets to make hefty and vital moves ahead of the FOMC, until that event has been concluded.

The dollar fell overnight with mostly against the euro rather than the yen with the yen weakness still evident and persistent.

As compared with the Fed, the Bank of Japan is expecting to maintain its easy monetary position and could possibly even take additional steps in spite of signs that it could be reaching the limits of its authority to reverse inflation of the economy. This month, Japan’s central bank purchased bills at negative yields, in effect paying banks for privilege than lending them cash.

As against the yen, the dollar was able to add about 0.1 % on the day to 107.25 yen which will be tantamount to a move backwards toward a six-year peak of 107.39 set last week after the drop of 106.81 yen overnight.

The euro went down 0.1 % to $1,2951 after surging to a near two-week peak just short of $1.3000 last week. When the common currency are to be set aside, a closely monitored survey reveal that a drop in investor morale was not much appreciated.

The dollar index was able to edge up 84.104 which moved back towards a 14-month high of 84.519 following a drop to a one-week low of 83.864 overnight over a prediction that a more dovish Fed statement is likely to happen.

On the brighter side, no one is currently trading data. In the U.S., all they care about is a considerable period. A noteworthy mover was the Australian dollar which rallied almost 1 % to a high of $0.9112 last week which was regarded as a turnaround from a 4 % slide in the past week.

The Australian dollar was strengthened by reports from a news website and the Wall Street Journal which said that China’s central bank is on the move of providing 500 billion Yuan of liquidity to the country’s leading banks through standing lending facilities.

Furthermore, Australia’s currency is sometimes used as a liquid alternative for China plays basically since the two nations are known to be solid trading partners.




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September 11th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Investors had generally overlooked the September 18 Scottish independence referendum, pointing to the incessantly large lead enjoyed by the ‘No Camp’ as a primary reason not to worry.
However, last week’s survey changed all that by an opposition to the affirmative vote which implied that it can no longer be ruled out.

The most noticeable reaction came in the currency option markets where investors were on a frenzy to purchase protection against swings in sterling pertaining to the date of the vote which reflected hedging by both speculators and companies alike.

When there exists an archetypal polls that still have enough margin to see the possibility of an independent Scotland as a tail risk instead than a baseline scenario. However, when investors offset the same with the price of protection, it’s still worth having some of it in one’s portfolio.

Sterling declined approximately 0.6 % against a generally stronger dollar, but analysts said that they are anticipating the pound to plummet much more sharply in the likelihood of a Yes vote. A specific concern for currency investors would be Britain’s persistent account deficit, should it be longer offset by North Sea oil revenues.

There is a long position in the dollar as against the sterling as it appears to like the easiest and modest way to strategically win for independence, given that sterling is likely to weaken in a break-up scenario. In an event of a Yes vote, sterling could slide much faster from its present levels of 1.65 to the dollar of 1.50.

According to IG Index, it had received a bet of £50,000 on a Yes vote last week following the report on polls.

Gilts investors looked as if they were stagnant. Interest rates on 10-year U.K. gilts increased at an estimated 6 basis points to 2.349 % but there was very little improvement in terms of yields on shorter-dated debts with the Debt Management office considering the healthy demand of a £4 billion sale of bonds as a result of its maturity by 2020.

The effects of the Yes vote would definitely temper gilts and could possibly even unnerve international holders of U.K. debt with shares in companies with cross-border exposure also slipping last week with Lloyds and RBS banking Group being among the worst performers in a subdued London market. Moreover, SSE, the Scottish utility with extensive interest in Britain fell 1.6 % respectively.

Barclays equity research analysts have speculated that a Yes vote would somehow affect shares in several financial institutions including similar situated sectors including transport, defence, utilities, asset management property and insurance as well.
But, both the outcome of the referendum and the contentions of an affirmative vote still remains vague in which options for investors are restricted.

According to several hedge fund managers that had looked at trading Scotland could not gauge how the referendum would alter the gilt markets and sterling.

Finally, the outcome of the election still is uncertain and even if many would have a strong prediction as to the results of the referendum, it would still be very hard to make money out of it due to the difficulty of making out the certainty of future events.




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September 10th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

In the most typical arbitrage play, foreign investors are now sweetening their comeback on the Philippine government bills by loaning their currency offshore derivative markets at half the rate they would necessarily pay onshore.
Emerging Asian assets have been the priority picks among investors as they utilise cheap money from major overseas central bank stimulus campaigns in order to purchase higher yields provided by borrowers in the Asia-Pacific region and the South East Asian pearl of the orient has been one of the primary beneficiaries.

It is said that offshore peso interest rates are much lower than onshore rates simply because investors are holding large peso positions and any subsequent betting on the said currency will increase on solid economic fundamentals.
This difference in the rates provides for a much greater opportunity for foreign investors as central banks rule the limits amounting how much domestic investors can borrow from the offshore market.

Investors can now freely exchange dollars for peso successively for three months at a total cost of between 0.4 and 0.8 per cent via offshore currency forwards plus earning returns of 1.49 % on three-month treasury bills from the Philippines.
Borrowing peso for a successive three-months onshore costs around 1.3 % and 1.5 % which would make the returns on three-month treasury bills hardly worth the time and money.

Foreign investors and bolstering their returns further up by purchasing peso at the cheap one-month rate and rolling them over incessantly in order to purchase three-month bills but avoiding the higher cost of three-month borrowing.

The spread is actually very enticing. Moreover, rising 1.0 % from a 3-month low against the dollar hit last August has increased the peso’s appeal which currency traders agree that the same was augmented by demand from offshore hedge funds.
With inflation rising to a near three-year high of 4.9 % two months ago, there are expectations that the central bank could further hike rates as early as this month. Yields on long-term Philippine bond yields have leaped which reflected inflation expectations yet the short-term yields have increased in recent weeks which even eased with the arbitrage trade.

The yearly inflation in August is expected to move past 5 %, the upper limit of the central bank’s target for the first time in nearly three-years. Inflation places the profitability of bonds at risk as it effects the debt prices, but the arbitrage play effectively assisted investors locate higher returns in the Philippines over the short term.

These trades are basically always there and may indeed become more popular mainly because the BSP (Banko Sentral ng Pilipinas) has a present minor stance at present. 
According to traders, while sharp higher inflation could scuttle the present trade by eroding the value peso bonds, it was still not a substantial threat. Arbitrage demand plus higher rates would result in the likely support of the peso despite the inflation concerns.




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September 5th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Critics pointed to its volatility of prices evidenced of a Bitcoin fizz and similar other problems. With the price of Bitcoin falling below the $500 for the very first time since May, both sides point out valid contentions.

Bitcoin is regarded as a cryptocurrency which is based primarily on a self-regulating computer currency. The primary issue is that in any currency, trust is needed to make the process work. The central bank must be trusted not to debase the said currency, although there were instances that this type of currency is generally not to be fully trusted.

Sterling, for instance, has lost well over 98 % of its purchasing power since the Bank of England was nationalised way back in 1946. The total amount of Bitcoin, however, is still limited by a digital production process similar to precious metal mining which can stop its value from being corroded by the systematic debasement and over-production.

The high level of anonymity provides Bitcoin users to carry out financial operations beyond the control of the government; which not only makes government prohibitions of drugs and the like more difficult to impose but more importantly also raises the prospect of possible restoration of the right to financial privacy which is presently under scrutiny from many sectors, most specially from governments of the world’s dominating economic powers.

Bitcoin basically uses peer-to-peer network that is intended to stall various firms of fraud such as ‘double spending’. Further, as a consequence of such, there is no single point of failure which makes it very difficult to bring the system down. Even if the pseudo-currency shut down individual sites, the Bitcoin community would still carry on as if nothing happened.

Bitcoin certainly has some of the characteristics of successful money, it is indeed becoming relatively widely accepted even if not generally perceived. Any new money has to start somewhere and Bitcoin can be used with relative ease in many establishments. It can even be used to pay university fees and certainly portable to settle accounts much faster than conventional online banking.

The problem however with Bitcoin is that it is certainly unreliable as a store in terms of value. Last year was the prime example in which the value for that year was $215 in which it was $63 eight days later and went up to $1,200 seven months after. This volatility is partly a result of Bitcoin being relatively new and there is a strong speculative demand for majority among buyers.

There are more principal problems that caused the value of Bitcoin to further fluctuate. The algorithm that controls supply prevents the amount of Bitcoin from extending to meet increases in demand. This inelasticity in supply should lead to variations in prices which will hopefully encourage speculation and excessive volatility all of which will turn into an the unreliability as a store of value.

The cryptocurrency market is basically an open one and new competitors are pushing forward into the field. Most of these however, will eventually fail. But as competition develops, no one can really speculate which of these cyrptocurrencies will be best suited to the market which will achieve success in the long-run.

The most possible scenario is that Bitcoin will eventually be put aside by far better cyrptocurrencies and that those would be much better at avoiding the boom-bust cycle in which the present one is very susceptible.

There are talks that these cryptocurrencies will be used on super-smartphones of the near future or whatever will replace them and the demand for the government money may possibly disappear altogether.




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September 3rd, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

U.S. stocks were able to push higher last week, with the S&P 500 scoring its first-ever finish above the milestone level of 2,000 with a stronger-than-expected results in consumer confidence that provided the much needed boost tagging with it mixed reports on durable-goods orders.

The S&P 500 (SPX) was able to rise 2.10 points or 0.1 % ending at 2,000.02. The benchmark was able to level at an intraday record above 2,005 before easing back again. Energy (XLE) charged among the 10 S&P sectors whereas utilities (XLU) and industrial (XLI) were the worst performing groups that lost ground.

The Dow Jones Industrial Average (DGI) was able to advance 29.83 points or 0.2 % ending at 17,106.70. Followed by the blue-chip index having garnered an intraday record of 17,153.80 but still fell short 0.2 % off its recent record close last July at 17,138.20. Moreover, the Nasdaq Composite (RIFX) tacked on 13.29 points or 0.3 % to end at 4,570.64 snitching its highest close for more than a decade.

In today’s economic data; an August reading on consumer confidence came in at 92.4 slightly above the predicted forecast of 88.5 and a separate report said that the U.S. home prices went up 1 % in June. Orders for U.S. durable goods surged 22.6 % in July due to the surge in contracts for Boeing Co. despite bookings actually falling for most of other industries in the sector.

The confidence reading was pretty much encouraging along with the durables report coming next to positive and the backdrop is still favourable for equities that are trending at a higher rate.

With the U.S. economic reports coming in mostly upbeat and positive, some analysts gave a stern warning that overseas headlines can still put a shock in the market. Changes in the geopolitical landscape which has the potential to cause most of the volatility is a big possibility that can arise at an instance.

The S&P 500 was able to top 2,000 for the very first time in intraday action but it wasn’t until last week that the benchmark closed above the said figure.

It’s really good to see that the broad equity markets are meeting milestones, yet for some the more compelling driver is company earnings. The consensus forecasts are calling for earnings growth of 11 % this year and then another 11 % by 2015 respectively.

Movers and shakers, Best Buy Co. (BBY) was able to close down 6.8 % despite a slow outlook. The besieged retailer was the day’s worst performer in the S&P 500. Canada-based Tim Hortons Inc. (THI) and Burger King Worldwide Inc. (BKW) confirmed last week that the two are planning to merge a new company in an $11 billion deal. The two are said to be receiving financial assistance from Warren Buffett’s Berkshire Hathaway Inc (BBRK/A). The latter’s shares lost 4.3 % following a surge last week while the former listed U.S. shares gained 8.5 %.

Furthermore, shares of Kite Pharma Inc. (KITE) went up 17.7 % after the biotech reported most of its patients responding positively to its new cancer-drug treatment candidate.

Among other markets, the Stoxx Europe 600 closed higher and the FTSE 100 came back from a U.K. holiday to make a catch-up play with gains that it missed last week. Asian stocks were able to finished comparatively on a mixed note as the dollar ((DXY) eased correspondingly.




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August 29th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The U.K.’s top share index drew back from a three-week high last week, stopped the progress of a five-day winning streak with companies trading without the enticing attraction of their most recent dividend placing pressure on the broader market.

The effect of several major marketing firms including HSBC, British American Tobacco and Mondi, with regards to going ‘ex-dividend’ took approximately 11 points off the FTSE 100 index. Their shares slid between 1.2 and 1.9 per cent respectively.

The benchmark index closed down 0.4 % or 23.83 points higher at 6,755.48 points following the gains it profited for the past five consecutive days which climbed to its highest since the late second quarter.

The FTSE 100 was able to hit an all time high of 6,894.88 points in mid-May which was its highest level in more than a decade but has given up so much of that ground.

Investors are weary that a likely increase in interest rates in the U.K. would result in negatively affecting businesses and tighten consumer spending.

Minutes from the recent meeting of the Bank of England’s nine-member Monetary Policy Committee just released last week showed policymakers breaking ranks over for the first time in three years with two individuals unexpectedly voting to squeeze the said policy.

It considerably soiled the waters which if one member had chosen to vote for a rate hike, which they would have probably gotten away with it. Presently, they have two members sending off a powerful signal across the economy. However, the BOE is well aware of the fact that domestic demand would be openly susceptible in the event of quick rate hikes. It argues for a relatively slow pace of tightening.

U.K. housebuilders Persimmon and Barratt Developments, after it gained in previous sessions on hopes that the current housing market would be supported by lower rates for longer, slid 2.0 % correspondingly.

Analysts from Hantec Markets said that there they are optimistic to see the FTSE 100 getting back up the 6,834 point level, which would signal the market’s recent rebound with more strength and confidence.

Finally, among the sharp movers, Irish building supplies firm CRH plummeted 3.9 % following the Deutsche Bank severing its target price for the stock to 1,450 pence from 1,500 pence with a ‘hold’ rating. Should the FTSE fall over again within these levels, it would simply just predicate the drift that was seen in the past two month.




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August 27th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Sterling rebounded from a prior four-month low against the dollar following the Bank of England minutes which revealed two policymakers voting to uphold the interest hike this August.
Several strategists in the market had been anticipating only one member of the Bank’s Monetary Policy Committee at most in order to vote a rate rise. News that two high-ranking members favoured such a move which resulted to the market bringing forward new speculation for a first U.K. interest rate rise in the course of five months.

Following last week’s Quarterly Inflation Report, that was globally perceived to be quite dovish, the market had pushed further back speculations and forecasts for a rate rise to March from this year’s first two quarters.

Despite higher volumes, sterling was able to rise $1.6680, up 0.3 % on the day and kicked the broad dollar uptrend. It was able to hit a four-month depression of $1.6602 earlier in that trade day which was its lowest since early April this year and was seen last trading at $1.6645 up 0.2 % on the day.

The euro was down 0.5 % at 79.69 pence which hit its lowest in a week along with the euro hitting a two-month high of 80.37 pence the week prior after the said Inflation Report gave its figures.
According to several key strategists, the pound was unlikely to rise much, considering that the inflation was well below the BoE’s target of 2 % and wagers were still due to show signs of picking up which is indicative of a considerable limp in the present British economy.

Majority of MPC members found that there wasn’t enough inflation pressures to validate increasing interest rates just yet, since this contention is now firmly supported by the previous week’s CPI data according to analysts at UKForex.

Moreover, the same members similarly just want to see more evidence of wage growth prior to increasing the rates and so in spite of the surprising vote during last week’s data is dampening the positive effects on the British pound.

With consumer prices rising 1.6 % on the year in July, which was well below the forecasts of a 1.8 % reading as showed last week. Month-on-month, the consumer price index diminished a total of 0.3 % respectively.

While economic growth is considered vigorous and upbeat, rate hike expectations have now been pushed back since wages have still yet to rise on real terms. As a result, the sterling trade-weighted index discarded 2 % since it hit a six-year peak against the dollar during the early weeks of the third quarter.

The risks are apparently very real and that more members are opting to join the two hawkish policy makers on the committee in the succeeding months that could give a more robust support to the pound especially as against the euro.

Generally, the minutes should ease the recent weakness experienced by the sterling but many traders are still better off in their preference to keep longer positions through euro/sterling shorts based on the current strategy employed by Citi.




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August 22nd, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Did the early risers club expanded new horizons

As the second quarter comes to an end, some new themes are beginning to take notice; firstly the central bank position appears to be the primary theme overshadowing geopolitical risks and oil price volatility. This has hefty consequences for financial markets in genera and with the present stocks in the U.S. not being able to make new record highs on the back of persisting accommodations of monetary policy from the Fed, the constant disregard to oil prices inevitably resulted in continued tensions in Iraq.

However, in the FX market, the central bank theme has resulted in huge gains for GBP and CAD coupled with the ensuing volatility which caused investors to refrain from their heightened enthusiasm.

The reason why the carry trade is becoming stagnant

The FX market is presently in a way bit of a challenge which although market volatility is closer to record lows, the carry trade has yet to survive. For instance, NZDJPY is currently below the high from its March readings and the AUDJPY is still within range, although it is close to the top of its recent range. Should the AUDJPY and NZDJPY would be allowed to burst out of the upcoming resistance levels, there might be a need to expect oil prices stabilisation and the reduction of geopolitical risks.

If in any case this would happen, then the carry trade could be one of the big themes for the remaining year. One pair appears to be resisting the carry trade theme which is EURGBP. The EURGBP appears to be signaling off some comments from the German Finance Prime Minister over the weekend, when the latter said that there was not enough liquidity in the Eurozone system. He appears to be implicating the German banking lobby who have yet to voice out their displeasure over the ECB’s cut in deposit rates, taking them into the negative territory for the first time.
The NOK gets beaten by the Norges Bank
The primary importance of relating central bank stances is regarded in the performance of the G10 FX last week. The GBP, AUD, CAD and NZD were among the top contending performers while the NOK was the least performing currency. The NOK was knocked by the Norges Bank which hinted that rates could be further cut at its meeting last week while the CAD was bolstered by stronger than expected CPI.
This CPI release firmly bolted in place Canada as the latest member of the early risers club. The U.K., AUD and NZD have been in this club for quite some time already which has helped to push their currencies higher.

The CAD was able to gain permanent entry to the club last week when the market began to infer that the Bank of Canada may have to drop its dovish stance even in the face of the Fed stubbornly shrugging off inflation risks in the U.S.

Speculation over the BOC remains predominant

At this point there isn’t much speculation than the BOC will want to move out of course from the Fed’s policy path since there isn’t any indication that rates rises will occur anytime soon. However, there is still a good three-weeks in anticipation that will give the market plenty of scope to imagine a more hawkish BOC hence in the absence of any major U-turns from the Fed, there is a possible downside in the USDCAD at least in the interim.


The technical point of view: USD/CAD

After further additional pressure, this currency pair is presently considered as the key financial support at 1.0731-50 % retracement of the September 2013-March 2014 advance. Any recovery from this vital level is considered temporary as investors unwind some of the sharp sell-off that was previously seen at the end of the week. Key resistance lies at 1.0892 with a daily close of 1.0731 is indicative that a deeper sell off could be on the cards with the next term near support at 1.0600-61.8 % Fib retracement of the equivalent progress.




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August 20th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Sterling recuperated losses early on Wednesday after comments from the Bank of England governor reserved expectations for an impending interest rate hike this year and while the G3 currencies still remained caught in well-worn ranges after another non-committal session, things are still left open ended.

Amazingly, less than hawkish statements from the BoE Governor saw that the pound plummet to a near one-week low of $1.6966 which pulled away from 5-1/2 year peak of $1.7064 set the week before.

Britain’s economy still has lots of slack to work through and that the financial markets underestimate how much uncertainty is still left in the economy. The notion was that of a dovish one and rather difficult to reconcile with the sudden and hawkish change of policy which was predicated at a speech earlier this month.

This in turn leaves the GBP really baffled given the extent of the bullish sterling positioning that requires the confirmation of a more clearly hawkish shift in the BoE’s overall reading of the economy.

Also in the sights of profit takers, the Australian dollar declined to $0.9366 while its New Zealand peer fell to $0.8663. Earlier this week, the Australian dollar was able to garner an 11-week high streak of $0.9445 and the kiwi scaled back at a seven-week peak of $0.8749.

The setback in the Antipodean currencies was well coincided with a decline in the U.S. stocks as concerns regarding the ongoing violence in Iraq prompted investors a reason to book some of their existing profits. The S&P 500 hit an intraday record high before finally turning its tail.

There is of little comment regarding the G3 currencies, which continued to drift pointlessly as investors are convinced that all three major central banks will be keeping the monetary policy loose for some time.

A highly influential Federal Reserve policy maker mentioned that the U.S. Central Bank can reasonably wait until the mid-2015 in order to raise interest rates without taking risk with an undesirable increase in inflation.

The most recent readings on the U.S. economy were in actuality encouraging with consumer confidence at its highest in more than five years, while sales of new homes soared in May indicating a possible recovery in the future.

The most recent Eurozone data supported the grounds for the ECB to remain dovish. A closely watched report revealed that German Business sentiment deteriorated more than expected last week as companies were anxious that tensions in Iraq and the Ukraine continue would hurting their business.

The euro was traded at $1.3605 which fell within this month’s $1.3503-$1.3678 range as against the yen, the common currency appeared to have stayed flat near the 138.70 after drifting up from a four-month trough of 137.7 on June 16.

The greenback obtained 101.94 yen which slid on either side of 102.00 for the past two weeks. All this resulted with the dollar index stuck near the heart of a 81.000-80.000 range since the second quarter.

Asia is looking at the prospect of yet another data-free session which left the focus on equities and there was little reaction to Japan’s most recent installment measures in augmenting long-term economic growth provided it had been trailed in advance.

Analysts say that the update of the so-called “Third Arrow” of Prime Minister Shinzo Abe’s plans to revitalise Japan was a bold step in the right direction. However, the reforms are still to be discussed and the implementation remain to be seen.




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August 14th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Global stock markets began the week with a good start while gold heftily suffered its biggest one-day fall this year as concerns regarding Eurozone banks faded and eager spirits were ignited by a fresh bout of bid and merger activities.

The mood did substantially improved as Citigroup’s quarterly earnings came in ahead of expectations following the narrowing out of special items and setting a positive tone for a busy calendar of corporate result in the preceding week.

In New York, the S&P 500 index went up 0.5 % at 1,977 which was able to recover from a sizable chunk of last week’s decline which left the equity benchmark just 0.4 % below its previous record closing high. The Dow Jones Industrial Average was able to move back again above the 17,000 as it climbed 0.7 %.

Citigroup shares were up more than 3 % in the later trade following the agreement settlement with the U.S. authorities regarding the sale of mortgage-supported securities which assisted its earnings per share down a little from the same period of last year but was still ahead of Wall Street estimates.

The mood was somewhat akin to a buoyant cross Atlantic setting where the FTSE Eurofirst 300 index rallied 0.8 % after last week’s 3 % slide and the Xetra Dax in Frankfurt climbed 1.2 %. The shares in Shire , the Dublin based drug group was able to hit a record high after its board filed a recommendation to refresh the £31bn offer from AbbVie of the US.
The improved tone in equities came late last week following the bout of Eurozone angst which were largely triggered by apprehensions regarding the financial health of Portugal’s Banco Espiritu Santo was silenced for the meantime.

The participants are more likely to standby for any signs of stress among Eurozone lenders specifically in the region’s peripheral’s nations. With Portugal’s ten-year government bond yield which momentarily pushed 4 % at the height of last week’s nervousness, fell to another 4 basis points to 3.82 % having declined as much as 10bp.

Spanish and Italian yields held a stable position with the yield on the German 10-year bund which last week hit the lowers since last year as apprehensive investors sought safety was left unchanged at 1.21 %. The ten-year U.S. Treasury yield was up 2bp at 2.54 %.

Gold, which landed its highest level in more than three-months has experienced a much steeper fall, with the metal plummeting down $31 or 2.3 % at $1,306 per ounce its largest single-session percentage drop since early December.

Analysts were able to note last Friday’s close that gold had risen 11 % by far for this year and had risen 7.5 % in sterling terms despite of the pound’s strong performance against the dollar.

Less than a few commentators have noticed that its previous report highlighted that the jewellery demand during the first quarter of the year represented the strongest start to the year in more than nine years.

Data from the U.S. Commodity Futures Trading Commission revealed that the net long positions in gold rose 5.4 % in the week to July 8 to the highest level in two years.
Analysts suggested that the precious metal was no looking overbought on a technical perspective. It was a relatively calm day in the currency market as the yen gave back several of its week’s gains. The dollar was up 0.2 % against the Japanese currency whereas the euro was 0.3 % higher correspondingly.

The single currency was relatively steady against the dollar at $1,3611 despite the weak Eurozone industrial production data for the second quarter which was highlighted of the region’s economic recuperation.

Amongst the industrial commodities, it was copper that fell 0.5 % in London which eased at $7,120 a ton while zinc landed a three-year high before paring its advance to end 0.2 % higher.

Finally, Brent crude settled 32 cents higher at $106.98 per barrel as persisting concerns over possible supply disruption provided rather different support.




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August 12th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The International Monetary Fund (IMF) advised the Eurozone policymakers to start a quantitative easing late last week which painted a unwelcoming picture of the bloc should the current trends persist to continue.

If inflation still continue to remain low, the European Central Bank (ECB) is deeply taking into account a significant balance sheet expansion which will include asset purchases and similar acquisition as it is predicted to give annual report on the region’s existing economic policies.

The European Central Bank (ECB) is considered as the only central bank which did not opt to follow the quantitative easing following the financial crisis. Inflation in the affected region still sits at around 0.5 %, the lowest level in more than five years and far below the ECB projected target of 2 % respectively.

Even the central bank’s own forecasters with their expert predictions are not totally sold out that the price growth will return to its average target level in the next two and a half years. The report indicated that there is a high risk that the lower growth and additional inflation would make it progressively more difficult for national governments to service current existing and outstanding debts.

The IMF’s review was likewise depressing especially that the euro area’s ability to taper unemployment. In some states, the report revealed that the growth and expansion would have to be three or four times as increasingly strong in order to cut back the unemployment according to their historical records.

Quantitative easing falls squarely in the present directive which is collectively using alternative and nonconventional approaches in addressing the risk of a prolonged period of low inflation. 
The incumbent ECB chairman gave a strong impact that the same could end up following the IMF’s prompt.

Moreover, the ECB chairman made his opposing comments regarding the recent calls in order to make Eurozone’s deficit reduction policies less strict in exchange for better accepted structural reform programmes . Furthermore, flexibility within the given set of new rules using structural reforms on a purview of a growth-friendly fiscal consolidation will mean subsequent lesser government expenditures.




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August 7th, 2014 | By CFDSpy | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

 

Online CFD trading resource site IndependentInvestor.com has said it remains committed to helping new traders start investing in CFDs, and helping to avoid the most common pitfalls and mistakes made by inexperienced traders.

By providing a range of resources, strategy guides and trading how-to’s, IndependentInvestor.com is free for traders, and is kept up to date with the latest news and opinion on market developments in addition to its extensive knowledge archive.

IndependentInvestor.com has said it believes by providing freely-accessible, high quality trading information, it is helping give new traders a nudge towards avoiding the mistakes and misjudgments of inexperience, and in the direction of consistent, profitable trading.

A spokesperson for IndependentInvestor.com said that the trading resources section, complete with constantly updated broker comparisons made it an essential guide for new traders.

“Starting out as a CFD trader can be a risky business. While margin trading can make you a lot of money, it can also lose you a lot of money, and the common errors and misjudgements made at the most vulnerable stage in your trading career can quickly lead to a spiral of unsuccessful and unprofitable trading. At IndependentInvestor.com, we’re dedicated to helping new and inexperienced traders learn more about how the markets work and how successful CFD traders think, in order to provide a solid grounding of knowledge for a successful trading career.”

“We cover all the bases – from how to get started with a broker account through to how to implement successful long-term CFD investment strategies, our resources section is packed with everything you could possibly need to know as a CFD trader. And with regular updates to our archive, and ongoing news and commentary on market outcomes, IndependentInvestor.com is the only place you need to be online as a budding successful CFD trader.”

IndependentInvestor.com is an online investment site, specialising in trading CFDs. With broker comparisons amongst the leading CFD brokers, and full how-to guides for every aspect of the trading experience, IndependentInvestor.com is a free to use resource for traders of all levels.




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August 5th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The stock market had already gave a warm reaction to Barclay’s first-half result last week, with analysts upbeat regarding the bank’s better-than-expected results that were previously garnered.

The lender previously reported a 7 % fall in adjusted pre-tax gains and profit to £3.35 billion, which blamed on currency movements and a decline in Investment Bank profitability, but still managed to achieve better results than what analyst’ have previously expected.

Numis Securities restated a purchase recommendation for the stock stating that the Investment Bank revenues were far better than what it was previously feared with the balance sheet gaining better strength and the non-core run-off is progressing very well. Several financial institutions such as Santander, Espirito Santo and Deustsche were also keeping their respective ratings on standby for Barclays.

The Head of Equities at Lansdown Stockbrokers said that Barclays is riding the wave of recovery in Britain’s economy. The excessive recent negative news related to the ongoing regulatory investigations had already been priced in to the current stocks which had fallen 23 % over the past year.

Despite, the continued complaint for both the financial sector and Barclays in general, market consensus still remains to be uptight but loosely confident on the progress being made in the refining process of the major financial institutions with the overall view coming in at a buy. The stocks were up 4.04 % at 227.94p by the recent trade last week.

Traders in general could not only purchase shares fast enough last week which is a welcome relief for shareholders following the sight that share price peaked a year low last week. Furthermore, the drop in investment banking revenue along with more provisions for miss- selling has not daunted trader’s confidence and posture as they rushed in for shares at any price on the open.




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July 31st, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

There was a substantial upheaval in the financial markets last week with sharp declines in the global equities and sizable swelling of volatility measures with the short-term equity based measure increasing almost 60 % last week. Still, there were notable contrasts to this turmoil which was more than the moderate response from FX and specifically the calmer demeanor of the U.S. dollar.

Hence, the question is should the greenback be considered a safe haven and why did it not rally as other capital markets experience the effects of the alarm? What then does it mean for the fast moving currency?

Last week’s volatility began with two alarming headlines specifically, the alleged commercial plane which was shot down in the disputed territory between Russia and the Ukraine and the start of the ground troop offensive in the Gaza strip by the Israel military. These concurrent events carry serious geopolitical implications which generates distinct concern amongst investors that have increasingly exposed risk assets and are dependent on the economy’s stability.

As grave as these concerns are, there have been comparable stints of apprehension in the past whereby the market has recognised and acclimated and ultimately returning to its status quo. What separates the present situation from similar prior circumstances is the financial backdrop. Activity levels, positioning and underlying fundamental themes are now every changing and dynamic.

Volatility measures have in recent weeks were able to hit multi-year (emerging markets. commodities and equities) and record (rates and FX ) lows. A usual low seems inevitable where real returns have seemingly vapourised with the absence of premia which deter short term traders through sell volatility.

Frail volumes and open interest reflect the steady retreat of active market participants and liquidity that is pivotal to stabilise market when apprehensions arise. There is an impending erosion of conditions in the stickiness of this most recent volatility and expanding divergence in the performance of risk-sensitive assets.

The dollar represents a safe haven with a specific type of appeal. Fronting the primary global regulated market, it is predicted that it is a prized liquidity which means that the intermittent jumps in volatility carry far less weight than the equity index. Still, the current reach for yield in the lesser market represents a perfect chance for the currency as a conditions recuperate and normalise.

Looking at the present docket, there are only few events that look to carry the heft of a definite change in sentiment. Moreover, given the market’s immunity in comparable high-level event risks (FOMC decision, external headlines and employment result) it is more likely that optimism will ignite the reality of position under its own authority. On the other hand, the docket provides a listing of key event risk for other key drivers for the dollar such as interest rate expectations.

There is no true level in unemployment that the Fed is inevitably forced to increase rates with the need to tighten monetary policy in order to develop through inflation pressure. This further means that the timing on the Fed’s primary hike and subsequent pace will be dependent on the readings such as the CPI consumer inflation figures for the month of June.

The headline figure is predicted to hold at 2.1 % and the core at 2.0 % respectively both noticeably at the central bank’s target. While the group’s favoured measure is the PCE which is significantly softer in terms of reading, the more pressure can be seen in the existing market with more pervasive of a likely bank response.

Finally, another consideration for interest rate speculations behind the dollar is the knowledge that there is going to be a higher profile event risk due the following week with the rate decisions all on the docket for another speculative week. It is commonplace for the market to withstand near-term fundamental turmoil in the regard to much larger event risk on the horizon. While there lots of favourable opportunity in both rate forecast and trends moving forward, timing is still the primary working catalyst in the success or failure of any undertaking.




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July 29th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Footsie was only going as far as one direction last week. The premier index was able to close at 6,795, up almost 67 points as traders were buoyed by stronger sentiment and an easing of apprehension over the events in the Ukraine/Russia and Gaza.

The race was spearheaded by chip giant ARM Holdings (LON:ARM), which added 5.7 %, while house builder Alsom made a much later move to change. Persimmon and Barrat Developments gained 4.49 % and 4.04 % respectively. Moreover, Easyjet (LON:EZJ) also gained as news of the emerging appointments of new non-executive directors were announced.

At the other end of the continuum, Tesco (LON:TSCO) and Royal Mail (LON:RMG) were in the spotlight as some of the largest losers. Indeed, the U.K. supermarkets made up three of the top five losers for the quarter.

Tesco was down 3.91 % following the rally last week when in surfaced that its chief executive is to resign from his position anytime in October. Royal Mail (LON:RMG) shares were on the lower end down to 1.5 % to 450p – as it cautioned last week that parcels revenue this year will be lower than expected, but it is still far better than the predicted possibility of cost cutting.

Addressed letters declined less than expected but U.K. parcels were adversely affected by a much tougher competition across the account, consumer/SME and export channels. FTSE AIM All share was able to add 3.22 to 772.56 whereas FTSE AIM 100 was also up negative 32.25 points at 3319.

Notable rise, Kea Petroleum (LON:KEA), which added over 27 % on the day as it said drilling had commenced on the third well on the Puka field in New Zealand. Dekel Oil (LON:DKL) shares went up 14.63 % as its chief executive made assertions of confidence that there will be more important milestones over the next twelve months as the company revamps its production policy.

Rasin was greeted by investors at the company’s AGM after a year in which the company transformed into a revenue generating crude palm oil producer, after it recognising one of West Africa’s biggest mills on time and on the given budget. The new mill is relatively performing well and the recently reported 23.8 % extraction rate was well above the expectations and was even considered as among the best there is in the industry.

Finally, shares in Medtech firm ANGLE (LON:AGL) bumped 2 % higher last week as it said its Parsortix diagnostic system had been positively assessed by the prominent Clinical and Experimental Pharmacology (CEP) group. The DEP team is primarily based at the Cancer Research U.K. Manchester Institute (CRUNK MI), which is included in the University of Manchester in England.




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July 24th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The last time corn futures went up, the U.S., Mexico and Uruguay were still in the World Cup but surprisingly they did so again last week for the first time in 10 sessions taking the December corn contract 0.9 % higher to $3.88 which was 1/4 a bushel – bouncing from a fresh new contract low of $3.80 1/4 a bushel respectively.

The old crop September contract, which will move past in the next session as the spot lot after this week’s expiration of the July lot closing up 0.9 % at $3,81 1/2 a bushel.

Below the $3.50 bushel

The downbeat commentaries on soybean and corn prices following Friday’s upgrades by the U.S. Department of Agriculture estimated that for the domestic and world stocks were at a close of the two-year span maybe than in itself prove as a contrary indicator.

There are plenty of talks regarding corn yields moving above the 170 bushels an acre as weather throughout the U.S. are simply too good of a sunshine with very little geographic area indicating any problems. With the extra slight negative, U.S. corn exports last week came in at 926,329 tons which was not particularly bad but was still below the average 1.26 million tons it garnered last week.

The extra length that appeared to be a negative indicator was perhaps reflective of spread betting between corn and soybean futures.

Dismay caused by fusarium

It was noted that Chicago soft red winter wheat for September jumped 2.2 % to $5.37 3/4 a bushel, far bested Kansas City red winter wheat for the same month in which hedge funds will still have a net long position which closed up 1.6 % at $6.46 1/4 a bushel respectively.

U.S. wheat exports last week were frail with 377,520 tons down from 470,372 tons the prior week. With the weather not proving so good for grains as for corn and the continued damp conditions resulted in the introduction for the dread fusarium which is a fungal disease affecting the crops became a real threat in the course of the season.

Wet weather conditions substantially affected the harvest in eastern colourado and Nebraska which circumstance is also plaguing harvest in the European Union with the same spoiled quality emerging.

As with European prices

Heightened Ukraine tensions which transpired earlier this year contributed to the rally in wheat prices which was further precipitated by the recent U.S. drought.

Still, nearer to Ukraine and in Paris, milling wheat failed to shine closing down 1.0 % at E178.75 which was still a ton for November delivery which was the weakest close for a spot contract in more than three years.

London wheat for November ended down 0.8 % at a four-year low of £129.70 a ton and with these closes occurring before the best of the rally in Chicago wheat futures which would be indicative of the possible trade in the coming weeks.

Weighing heftily

Oilseed markets had the negative to negotiate of a tumble in palm oil futures which closed 2.0 % at 2,298 ringgit a ton in Malaysia which was the lowest close since last year correspondingly. A little support did came from news of an Argentine truckers’ strike last earlier this month for an indefinite period due to the disruption in shipments from the said geography.

Moreover, U.S. exports were rather decent at 115,280 tons from 92,698 tons the week prior and it was also noted that the hedge funds have already been sold down a stacks of soybeans and options almost turning, curiously, net short in the oilseed.

Roasters more interested in purchases

Among soft commodities, cocoa decline 0.2 % to $3,083 a ton in New York for the September delivery which was undermined by data revealing a 9.9 % drop in Malaysia’s grind in the second quarter.

That being said, an unveiling of the U.S. confectionery acquisition, claimed double-digit organic expansion in chocolates sales in North America raised the optimism for a new upbeat industry from the said region later this week. This being evidenced by Arabica coffee which closed 1.8 % at 164 cents a pound despite bargain hunting, with not much news around to settle on the extent of the drought-hit Brazilian harvest.




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July 22nd, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The global regulators published details of its preparations to fix foreign-exchange benchmarks in response to assertions that traders are in conspiracy to manipulate rates in the $5.3 trillion-a-day currency market.

The Financial Stability Board (FSB) suggested making changes to how the most popular rates from WM/Reuters are being calculated by expanding the length of the one-minute windows in which the benchmark is primarily based. Switzerland-based Basel were among the first ton set its deadline set in the 12th of August upon commenting on the plan.

There are tacit benefits to having a broader window such as more data points would be made available to help fix the rate which are likewise much harder to manipulate. With at least a dozen regulators among three primary continents are investigating whether traders in the world’s biggest financial market having allegedly acted in conspiracy with counterparts at other companies in manipulating benchmarks which are used by money managers in determining the payment for foreign countries. Furthermore, more than 25 traders in total have been fired or suspended across the industry.

Manipulated benchmarks

The excitement and temptation to manipulate financial benchmarks is within the premise of sporting events. The challenge for those who are contemplating to create a benchmark is to ease on the temptation by making the benchmark inherently resistant to the said exploitation.

The plans were among the 15 proposals suggested by the group to transform rate setting and consequently boosting contingencies against fraud and manipulation. The plans were spearheaded by the Prudential Regulation Authority at the Bank of England and the Reserve Bank of Australia. However, the aforementioned firms stopped short of proposing guidelines for central banks that publish reference rates indicating that it is the sole responsibility of each to set internal measures.

The FX Markets

Regulators should generally be focusing on people who exploit the system instead than changing the rate-setting process.

It basically is the matter in which it is utilised be definite market participants that must be examine which simply boils down to the behaviour of individual market participants along with the ability of their respective supervisors in implementing high standards through valuable oversight and proper supervision.

The FSB generally involve regulators and central bankers from across the world that aims to balance global financial rules. The board which reports to the group of 20 nations recently set-up a task force to make repairs to the injured benchmarks in the aftermath of the London Interbank offered rate (Libor). Moreover, it would be providing for an extension into currency-market benchmarks.

Current Trading volumes
The benchmarks are primarily based on trades in a minute-long period which is mostly used. There is a concentration of trading by dealers during the calculation period and although trading volumes are on the rise shortly ahead of the fixing period, this minimum position created optics for dealers who were trading ahead of the fix despite the managed risks in relation to their respective client orders.

The worst part is, it could create an opportunity and an incentive for those dealers to exploit the market in order to make it more likely that the same market price can be seen at the fixed generated rates which will consequently result in profit from their fixed trade.

Traders once used chat rooms to share information regarding their client’s position with counterparts at other financial institutions and agreed to push trades though altogether during the fix in order to maximise their impact in the simulated benchmark.

The Bank of England said that it is presently reviewing allegation that its officials overlooked sharing client information going into the fix as it could potentially reduce volatility.

Sensitivity of time

The FSB is now imploring views on whether the fix should begin or end exactly on the contemplated hour than be centred around it and whether the time should be moved from the usual 4 PM spot.

Market-making dealers should generally be cautious of which times of days are most likely to be disrupted by news release and clients should be further advised not to use such fixed rates at those times or when vital data is due.

The FSB is also contemplating in seeking feedback from market participants on the development of the global/central utility for order matching in order to supervise fixing orders from any market participants later on.

With such attention to facilitate a well governed and capitalised plan, the risks are better understood. However, the unintended consequences of any additional concentration of FX flows may not be what regulators and supervisors have in mind.




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July 17th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Corn was able to tumble nearly 21 % last April which placed it in a bear market.

Corn and wheat futures cascaded to their lowest price in almost four years as good weather over July which later upgraded prospects for U.S. crops. Likewise, soybean fell closing at their lowest level in more than four months.

In the previous week, up to six times the normal amount of precipitation fell in parts of Illinois and Iowa, the largest U.S. growers of soybeans and corn, furthering the growing conditions. Approximately 3/4 of the nation’s corn and soybean crops were in pristine condition as of last week.

Continued bad weather assisted in lifting corn and soybean yields that the USDA was able to estimate reached record levels this year. The USDA had estimated this autumn’s corn harvest will total 13.935 billion bushels which is expected to go beyond last year’s record crop while soybean output will also set a new record respectively. The government is scheduled to be updated its predictions for supply and demand for major U.S. crops in a closely watched report this week.

Corn for July delivery, the front-month contract declined 7.75 cents or 1.9 % to $4.0925 a bushel which was the lowest closing price for a front-month contract since August more than four years ago.

The $27 billion corn-features has been plunged almost 21 % since the Q2 which exceeded 20 % threshold that officially makes it a bear market. the U.S. is the world’s largest producer and exporter of corn and by far grain is the largest U.S. crop by revenue at present.

December corn futures were the most actively traded contract which dropped 9 cent or 2.2 % ($4.0625) a bushel. Wheat futures were followed by corn, continuing a sharp descent since early May. The two grains often move together since they are substitutes for each other in animal feed. Wheat likewise was pressured last week with speculations that larger global crops will increase the global stockpiles which will offset poor production in the U.S. and recent demand for the U.S. wheat from subsequent foreign buyers.

Wheat futures for the month of July declined a total of 23 cents or 4.1 % to $5.45 a bushel which was the largest closing price for a front-month contract since July.

Futures were able to climb for much of the early part of this year as the drop in prices assisted in motivating more demand from ethanol producers and foreign buyers. However, futures have fallen sharply in the past two months as rains improved soil conditions across the Midwest region.

Anticipation for another plentiful crop this year is very much encouraging many investors who were in the long market or those having been on the rising futures to sell contracts and liquidate positions further pushing down the cost of the production of corn.

As of July, the number of bullish bets on corn futures were held by mostly money managers such as hedge funds which outnumbered bearish ones by 119,284 contracts which were down 57 % from 277,101.

Corn prices could later begin to turn higher should demand for grain later gains momentum. There might even be a pickup in exports or that there might be more demands from ethanol yet this still is vaguely up for conclusion.

Soybean futures also declined for the 6th consecutive session last week which weighed down by the USDA’s forecast for the U.S. growers to plant a record 84.8 million acres this year which was more than 2 million above average analyst approximations.

Soybean futures for the July delivery fell 24.75 cents or 1.8 % to $13.63 a bushel on the CBOT, which was the lowest closing price for a front-month contract since the first quarter. Furthermore, soybean futures, which is the most actively traded contract diminished 8 cents or 0.7 % to $11.255 a bushel.




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July 15th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

European stocks were comparatively higher last Wednesday as sentiment advanced ahead of the Federal Reserve’s meeting minutes due later for the week as well as a speech by the ECB chairman, Mario Draghi.

During the European morning trade, the DJ Euro Stoxx 50 edged 0.19 % higher with France’s CAC 40 rising 0.17 % while Germany’s DAX went up 0.12 %.

European equities were able to find support last week after the ECB vice chairman said that the rates will remain on hold for another extended period in order to ensure monetary stability in the Eurozone. Moreover, the ECB left all rates temporarily on hold following the cut rates to record lows last June in order to bid a stave off threat of indefatigably low inflation in the sector.

Financial stocks were likewise mixed as French lenders Societe Generale (PARIS:SOGN) and the BNP Paribas were able to slide 0.04 % and 0.27 % respectively at the same instance with Germany’s Deutsche Bank (XETRA:DBKGn) rose 0.99 % respectively.

among the peripheral lenders, Italy’s Unicredit (MILAN:CRDI) and Intesa Sanpaolo (MILAN:ISP) moved further up 0.75 % and 0.81 % correspondingly while the Spanish Banks BBVA (MADRID:BBVA) and Banco Santander (MADRID:SAN) rose 0.71 % and 0.69 % respectively.

Deutsche Telekom (XETRA:DTEGn) dropped 0.80 % despite reports of the phone carrier is considering whether it requires a new Wi-Fi partner to replace its present dealer in ensuring clients to have better and much reliable connections in cities served by the said Spanish service provider.

The LET’s Gowex have just recently made startling news when it said that it had forged its financial accounts for the past four years which is still to await sanctions.

In London, FTSE 100 declined 0.31 % weighed by Avira (LONDON:AV) which was down 2.86 %, following its chief executive’s promise to continue cost cuts and focus on smaller number of markets in a bold move to boost the insurer’s profit.

Financial stocks were generally lower as the HSBC Holdings (London:HSBA) and the Royal Bank of Scotland (London:RBS) cascaded 0.02 % and 0.06 % correspondingly, while Lloyds banking (LONDON:LLOY) and BArclays (LONDON:BARC) scaled back to 0.72 % and 0.75 % in that order.

Earlier last week, Barclays announced that it was to sell its exchange-traded note which was tied to public companies with female executives, betting on claims for products that enhances women’s perception of leadership.

Meanwhile, mining stocks were on the upside with Vedanta Resources (LONDON:VED) rising 0.36 % and Polymetal (LONDON:POLYP) climbing 0.53 % whereas their rivals Randgold Resources (LONDON:RRS) climbed 2.23 % and Fresnillo (LONDON:FRES) at 1.50 % respectively.

Finally, in the U.S., equity markets led to a steady open, with the Dow 30 futures pointing to a 0.04 % loss, S&P futures indicated a 0.01 % dip, while the Nasdaq 100 futures signaled a 0.01 % transaction downtick.




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July 10th, 2014 | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

It was indeed another remarkable week for stocks and for the third consecutive week in a row the market has gained 1 %. The market displayed some ambiguity in the week which dealt with the OEW 1929 pivot, but later cleared as it made new all time highs respectively.

For the week, the SPX/DOW was able to gain 1.25 %, the DJ World index gained 1.35 % and the NDX/NAZ gained 1.75 %. Economic reports for the week were a good combination. On the uptick; manufacturing/services, construction spending , auto sales, factory orders and consumer credit were doing well. On the downtick; ADP, monthly payrolls, investor sentiment and the WLEI along with jobless claims and the trade balance continued to deteriorate.

Long term: Bull market
The bull market that happen nearly 5 years ago still continue today. As this market go into its 63rd month, it appears to be nothing like the 60 month, 2002-2007 bull market. The one that generally began more than a decade ago only managed to get about 1 % above the 2000 all the time high before it peaked. That bull maker was regarded the end of the cycle. This bull market has been creating all time new highs for over several months already and it certainly appears that a new cycle wave is imminent.

There have been several counts this bull market has been operating since early 2010. Since the cycle waves was unravelled in five primary waves, there has been tracking activities for that purpose. When in concludes the market, it should take the bull market to even higher peaks with the target range for the third and fourth quarter for this year remains SPX1970 to 2070 correspondingly.

Uptrend in the Medium Term
This transitional wave iii uptrend began at SPX 1814 midway between April and May. The NDX/NAZ had two more uptrends before it can fully complete its primary wave III. Such were the indices most heavily sold during the most recent correction. While all this ambiguity was still unfolding, there was an observation of three potential counts.

The most bullish one still remained on the SPX chart with two less bullish ones posted as an option on the DOW charts. The DOW still has a large potential of forming a diagonal triangle Major wave 5. Since it has only dissipated its credit last April by less than 300 points.
Continuing the count of this uptrend, minor waves 1 and 2 completed at SPX 1885 and 1851 respectively. Minor wave 3 has since been at that point since that low. Minute waves i and ii was completed at SPX 1891 and 1892 with minute iii underway is still marked at a low spot.

Minute iii has been subdivided into five Micro waves namely; 1886-1868-1925-1916-1949. When Micro wave 5 concludes Minute wave iv should follow correspondingly. Then a rising minute wave v completes Minor 3, and a diminishing Minor 4 should likewise follow. Furthermore, the uptrend ends with a rising Minor with medium term support is that at 1099 and 1901 pivots with a struggle at the 1956 and 1973 pivots.

Short Term

Short term support is levelled at 1929 and 1901 pivots, with resistance at the 1956 and 1973 pivots. Short term momentum concluded the week extremely overbought and the short term OEW charts are positive with the reversal now at SPX 1943.

As the market continues to make new highs almost every day, it is easy to get carried away with the rising tide. The easy part of this uptrend, should one regard it as such, was the events that transpired in the past three weeks. Now it is about 1 % away from the objective. In the meantime, the SPX has already pierced the range of the uptrend targeted 1956 pivot. However, the uptrend is considered to be extremely overbought on both the hourly and daily timeframes. Presently, the weekly timeframe has hit quite an overbought.

Overbought conditions such as this could lead at some point to a substantial pullback. Not only is the Micro, Minute and Minor waves of this uptrend were taken into consideration, the intermediate waves of Major wave 5 and Major waves of Primary III and Primary I were also taken into account. Two important price clusters were considered; 1886-1868-1925-1916-1949 with both of the said clusters fitting comfortably with the 1956 and 1973 pivots very close.

Finally, the Micro 5/Minute iii is likely to end within the range of 1956 pivot. Then after a Minute iv pullback will possibly revert back to the 1929 range. Minute v/Minor 3 should likewise conclude within the 1956 or 1973 pivot. Therefore it does likely appear some volatility is ahead as this uptrend ends.