Traders' Library Blog

Top 10 Forex Events Outlook: Jun. 17-21

2013-06-16T10:26:06-07:00

Jun. 16, 2013 (Allthingsforex.com) – In the week ahead all eyes will focus on the Federal Open Markets Committee meeting in search for clues of the Fed’s willingness to take the first step toward monetary policy tightening.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe.

1. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Jun. 18, 4:30 am, ET.

Inflationary pressures in the U.K. are forecast to rise to 2.7% y/y in May from 2.4% y/y in April. A pickup in the level of inflation could make it more difficult for the Bank of England to ease monetary policy in upcoming months.

2. EUR- Euro-zone ZEW Economic Sentiment Index, a leading indicator of economic conditions measuring the outlook of financial experts, Tues., Jun. 18, 5:00 am, ET.

The ZEW index is expected to show a month of improvement with a reading of 38.0 in June compared with 36.4 in the previous month. The euro could get a boost from a report that instills optimism that recovery is underway in the euro-area.

3. USD- U.S. Housing Starts, a leading indicator of housing market activity measuring construction of new residential properties, Tues., Jun. 18, 8:30 am, ET.

The weekly sequence of U.S. housing market data could start on a high note with housing starts forecast to increase to 924K in May from 853K in April. Strong U.S. data should continue to raise the odds of the Fed tightening monetary policy sooner rather than later.

4. JPY- Japan Trade Balance, an important gauge of economic activity measuring the difference between imports and exports, Tues., Jun. 18, 7:50 pm, ET.

Finally, after all these months of significant yen weakness, the trade balance data could begin to show better results with the Japanese economy forecast to register a trade surplus of 1.2 trillion yen in May compared with 362 billion yen trade deficit in April. Signs that the economy is improving could reduce expectations that the government and the Bank of Japan would step up their efforts to devalue the yen and to spur economic growth.

5. GBP- Bank of England Meeting Minutes, a detailed report of the bank’s latest meeting containing an outlook on monetary policy and the economy, Wed., Jun. 19, 4:30 am, ET.

As expected, the Bank of England sat on the sidelines in June and the minutes will probably confirm that policy makers were not rushing to make any changes a month before the bank’s new Governor Mark Carney takes his seat. Although we could see once again that some members voted for an increase of the Asset Purchase Program from 375 billion to 400 billion pounds, the overall content of the minutes report is not likely to deliver any surprises. The GBP, which has managed to stage a nice rally in recent weeks, could remain supported if the minutes do not hint of any impending easing moves by the Bank of England.

6. USD- U.S. FOMC Interest Rate Announcement, Wed., Jun. 19, 2:00 pm, ET.

With the recent jobs report showing the economy creating more jobs in May but revealing some weaknesses like the unemployment rate inching higher and the participation rate declining, the Fed will be in no hurry to reduce the size of its monthly asset purchases. There is no doubt that the US central bank is considering taking the first step towards monetary policy tightening, but getting the timing of the QE reduction right will be a difficult task and the current fragile economic environment may not be very supportive of such move. The FOMC will probably remind the markets that policy can be adjusted depending on economic conditions, but will be more likely to stay the course with open-ended QE until the unemployment rate falls below 6.5% or inflation exceeds 2.5%. The USD could come under pressure if the Fed does not signal “tapering” of QE.

7. CHF- Swiss National Bank Interest Rate Announcement, Thurs., Jun. 20, 3:30 am, ET.

In recent weeks, Swiss National Bank officials have made it clear that maintaining the franc cap at 1.20 per euro is “the right policy for the foreseeable future”. The Swiss central bank will more than likely echo this statement following its meeting. We could see unwinding of CHF long positions if the Swiss National Bank hints that it may be willing to consider additional options to weaken its currency.

8. EUR- Euro-zone Composite PMI- Purchasing Managers Index, a leading indicator of economic conditions measuring activity in the manufacturing and services sectors, Thurs., Jun. 20, 4:00 am, ET.

Although the index might inch a bit higher, no relief from the chronic contraction in the euro-zone manufacturing and services sectors is expected to be seen yet. The Composite PMI is forecast to remain below the 50 boom/bust line for another month with a reading of to 48.1 in June from 47.7 in May. The euro could stay under pressure if the report fails to instill optimism that conditions in the euro-area are improving.

9. GBP- U.K. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Thurs., Jun. 20, 4:30 am, ET.

The disappointing 1.3% m/m drop in April is expected to be followed by 0.8% m/m increase in retail sales in May. The GBP could stay well bid if the report does not deliver a negative surprise.

10. USD- U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, Thurs., Jun. 20, 10:00 am, ET.

Sales of existing homes in the U.S. are forecast to break slightly above the 5 million mark with a reading of 5.01 million in May from 4.97 million in April. Further improvement of the housing and labor markets should be U.S. dollar supportive on expectations that the Fed could start reducing the size of its monthly asset purchases earlier than expected.

Stocata S&P 500 Analysis: June 15, 2013.

2013-06-15T04:43:14-07:00

Last week I wrote:
"The index made the expected move towards the support of the 50 day moving average. This was also a 161.8% Fibonacci target, the 50% retracement of the wave 3.4 up and the low side of the up moving pitchfork. From that point an up reaction was started on Thursday and Friday. I do expect this last wave 2 correction to remain a valid wave 2, probably next turning down against the upper side of the internal BBS band and the median line of the up moving pitchfork. ".

Monday brought the index close to the upper side of the internal BBS band, and as expected the index turned down reaching a low on Wednesday finding support on the 50 day average. Thursday brought a large correction back to the Pivot point PP and previous support, now becoming resistance. But Friday the down move was back closing the week lower. I assume there will be another attack to break the 50 day average support the coming week and the low side of the internal BBS band, as a result creating a wave 3.2 down. We have an open short position. The expert is still green. I believe we must expect a continuation of the down move, so I keep the open short position.

Sylvain Vervoort http://stocata.org/

Top 10 Forex Events Outlook: Jun. 10-14

2013-06-09T14:16:23-07:00

Jun. 9, 2013 (Allthingsforex.com) – The euro will be closely watched during the upcoming week which could mark a new phase in the euro-area’s debt crisis as the German Constitutional Court convenes to debate and make a decision on the legality of the country’s participation in bailout funds and sovereign debt purchases.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1. JPY- Japan GDP- Gross Domestic Product, the main measure of economic activity and growth, Sun., Jun. 9, 7:50 pm, ET.

The revised GDP estimate is expected to confirm that the world’s third-largest economy returned to growth by 0.9% q/q in the first quarter of 2013 after the flat 0% q/q reading in the final quarter of last year. The negative JPY trend is still intact, but a long overdue price correction has gotten underway in the last couple of weeks and the yen strength could continue if better-than-expected economic data from Japan reduces expectations of the need for additional easing measures by the Bank of Japan.

2. JPY- Bank of Japan Interest Rate Announcement, Tues., Jun. 11, around 12:00 am, ET.

The Bank of Japan will be likely to reaffirm its commitment to open-ended QE until the 2% inflation target is in sight. Although the bank is not expected to step up its efforts at this point, it would be interesting to see if the central bank surprises the market with an announcement of even more aggressive easing due to the recent rapid rise of the yen. Should the Bank of Japan choose to sit on the sidelines, the yen rally could extend further.

3. EUR- Germany Constitutional Court Ruling on Bailouts Participation, Tues., Jun. 11, and Wed., Jun. 12, all day events.

The German Constitutional Court will gather for two days of hearings on the legality of the country’s contribution to bailout funds like the European Stability Mechanism and the European Central Bank’s OMT bond-buying program. Some experts have already named it “the most important risk event” that could lead to a showdown between Germany and the ECB and could reignite the crisis in the euro-area. In recent years, the court ruled out an injunction intended to freeze the ESM, but at the same time tied politicians’ hands by capping Germany’s ESM contribution at 190 billion euro. Judges blocked the proposal of a bank license for the ESM, killed off hopes of eurobonds, debt-pooling, or fiscal union by prohibiting the Parliament from “accepting liability for decisions by other states”. Although the German high court may not announce its ruling for several weeks or may even pass the decision making to the European Court of Justice where an approval would be much more likely, uncertainty about the outcome of the event could elevate anxiety levels and could increase the pressure on the euro.

4. GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Tues., Jun. 11, 4:30 am, ET.

Las week’s series of stronger Services, Construction and Manufacturing PMIs could be followed by a weaker overall industrial sector data with industrial production forecast to drop by 0.3% m/m in April after rising by 1.0% m/m in March.

5. GBP- U.K. Jobless Claims and Unemployment Rate, the main gauges of labor market conditions measuring claims for unemployment benefits and rate of unemployment, Wed., Jun. 12, 4:30 am, ET.

Jobless claims in the U.K. dropped by 7,300 in March, but are forecast to register a smaller decline by about 6,800 in April, while the unemployment rate stays unchanged at 7.8%. A weaker-than-expected jobs report would increase the odds of more easing by the Bank of England when the new Governor Carney takes his seat in July and could trigger a correction of the pound’s recent gains.

6. EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Wed., Jun. 12, 5:00 am, ET.

After rising by 1.0% m/m in March, industrial activity in the euro-zone is forecast to stumble with a 0.2% m/m drop in April. The EUR will not be likely to get a boost from data that fails to instill optimism that the region’s economy is on a path to recovery.

7. NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wed., Jun. 12, 5:00 pm, ET.

In a world where competitive currency devaluation has become the norm, the New Zealand central bank will not be in a hurry to start tightening monetary policy. The central bank joined “currency wars” in February with the Governor warning that intervention is being considered as an option to curb the persistent strength of the New Zealand dollar. The Kiwi has recently fallen and could weaken further if the Reserve Bank of New Zealand makes it clear that rates will not rise anytime soon.

8. AUD- Australia Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., Jun. 12, 9:30 pm, ET.

Following April’s strong jobs report which showed 50,100 new jobs created, the Australian economy is expected to lose 9,800 jobs in May, while the unemployment rate inches higher to 5.6% from 5.5%. A weak employment report could raise the odds of a rate cut by the Reserve Bank of Australia and could weigh on the Australian dollar.

9. USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Thurs., Jun. 13, 8:30 am, ET.
Consumer spending in the U.S. is expected to recover from the disappointing 0.2% m/m drop in April with an increase by 0.3% m/m in May.

10. USD- U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Jun. 14, 9:55 am, ET.

The preliminary estimate of the U.S. consumer sentiment index is forecast to show further improvement with a reading of 84.9 in June from the four-year high of 84.5 in the previous month. Following the decent Non-Farm Payrolls report last Friday, stronger U.S. economic data in the week ahead could boost the US dollar on expectations that the Fed might begin the “tapering” of its asset purchases in upcoming months.

Stocata S&P 500 Analysis: June 9, 2013.

2013-06-09T01:55:22-07:00

Last week I wrote:
"It looks like as I mentioned last week "Until Thursday it looked like the week would be closed with a higher price. But, my expectation of a further move down was confirmed on Friday, closing the week lower at the level of the 61.8% Fibonacci retracement with a large black candle. The index is now making a first wave 3.1 down. There may be some up reaction, but short term I do expect a further move down towards the 50 day moving average and the low side of the BBS volatility channel. The expert turned black and indicators are moving down. We still have our open short position".

The index made the expected move towards the support of the 50 day moving average. This was also a 161.8% Fibonacci target, the 50% retracement of the wave 3.4 up and the low side of the up moving pitchfork. From that point an up reaction was started on Thursday and Friday. I do expect this last wave 2 correction to remain a valid wave 2, probably next turning down against the upper side of the internal BBS band and the median line of the up moving pitchfork. The total closed profit trading the index is 128.3% from the start in March 2009. We have an open short position. The expert went from black to green. I believe we must expect a further move down, so I keep the open short position.

Sylvain Vervoort http://stocata.org/

Top 10 Forex Events Outlook: Jun. 3-7

2013-06-02T09:14:53-07:00

Jun. 2, 2013 (Allthingsforex.com) – Three monetary policy announcements by major central banks and the U.S. Non-Farm Payrolls report will make for an intriguing week ahead as traders watch the next move by European Central Bank and gauge the odds of “tapering” of the Fed’s asset purchases based on the condition of the U.S. labor market.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1. EUR- Euro-zone Manufacturing PMI, a leading indicator of economic conditions measuring activity in the manufacturing sector, Mon., Jun. 3, 4:00 am, ET.

Although the index is expected to bounce a bit higher, the chronic contraction in the euro-zone manufacturing sector is likely to continue for another month. The revised estimate of the Manufacturing Purchasing Managers Index is forecast to show a reading of 47.8 in May, compared with 46.7 in April.

2. USD- U.S. ISM Manufacturing Index, a leading indicator of economic conditions measuring activity in the manufacturing sector, Mon., Jun. 3, 10:00 am, ET.

Manufacturing slowed down to 50.7 in April and activity could remain subdued with an index reading of 50.5 in May.

3. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., Jun. 4, 12:30 am, ET.

With its largest trading partner slowing, the mining boom peaking and the “two-speed” Australian economy underperforming, the Reserve Bank of Australia could be forced to announce another rate cut following the 25 bps reduction in May. The Aussie dollar has fallen significantly since the last meeting and could stay under the pressure if the central bank lowers the benchmark rate to 2.5% and warns about the negative effects of persistent currency strength.

4. EUR- Euro-zone Services PMI, a leading indicator of economic conditions measuring activity in the services sector, Wed., Jun. 5, 4:00 am, ET.

The final reading is expected to be in line with the preliminary estimate which showed activity in the euro-zone services sector inching higher to 47.5 in May from 47.0 in April. Despite of the anticipated increase, the index will remain below the 50 boom/bust line for yet another month of contraction.

5. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Jun. 5, 5:00 am, ET.

In the first quarter of the year, the euro-zone economy was unable to return to growth and the revised estimate is forecast to confirm that the economy contracted by 0.2% q/q, prolonging the recession for a third consecutive quarter. With no end to its recessionary period and not much optimism that the economy might be turning a corner in the near future, the EUR could be pushed lower on expectations of additional easing by the European Central Bank.

6. USD- U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., Jun. 5, 8:15 am, ET.

Following the unexpected decline to 119K in April, the U.S. private sector is forecast to pick up the pace of job creation with up to 170K jobs added in May.

7. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions measuring activity in the services sector, Wed., Jun. 5, 10:00 am, ET.

Reaching its weakest level in nine months with a drop to 53.1 in April, activity in the U.S. services sector could bounce higher with a reading of 53.4 in May.

8. GBP- Bank of England Interest Rate Announcement, Thurs., Jun. 6, 7:00 am, ET.

The hopes that the latest weak retail sales report automatically means more easing by the Bank of England may prove to be misguided, especially if the U.K. manufacturing and services PMI reports throughout the week signal that activity is picking up. Granted, the drop in consumer spending is not to be taken lightly, but it will take more bad data before the Monetary Policy Committee decides to increase the size of the Asset Purchase Program. For the time being, the U.K. economy has comfortably managed to avoid an unprecedented triple dip recession in Q1, the new Governor Mark Carney is to take his seat on July 1, and there is simply no urgency for the Bank of England policy makers to do anything in June, except to maintain the status quo. It will then be up to Mr. Carney to steer monetary policy depending on the state of the U.K. economy. Until the Bank of England rejoins the QE party, the pound should remain as a viable alternative to currencies whose central banks are committed to aggressive monetary policy easing.

9. EUR- European Central Bank Interest Rate Announcement, Thurs., Jun. 6, 7:45 am, ET.

Despite of some recent signs that conditions in Germany may be improving, the 17-nation euro-zone is struggling with record high unemployment and economic growth is still nowhere to be seen. This is why it would not be a surprise to see the European Central Bank resorting to additional unconventional monetary policy easing measures that could be announced as early as the June meeting. Expectations that the ECB will continue to look for ways to spur economic growth with further easing could serve as a catalyst to push the euro further into the $1.20′s.

10. USD- U.S. Non-Farm Payrolls and Employment Situation, the main indicator of U.S. economic health measuring job creation and unemployment, Fri., Jun. 7, 8:30 am, ET.

Job creation in the U.S. could keep the momentum going with the economy adding up to 180K jobs in May compared with 165K in April, while the unemployment rate stays unchanged at 7.5%. A strong NFP report could boost the USD on expectations that the Fed might be one step closer to reducing the size of its monthly asset purchases.

Stocata S&P 500 Analysis: June 2, 2013.

2013-06-02T06:46:38-07:00

Last week I wrote:
"It looks like as I mentioned last week "I believe the reaction will probably start within the next couple of weeks'", that at least the index made a good start for the down move the past week. Wednesday there was a large black candle creating a bearish harami candle pattern. The large candle was already a confirmation of the pattern. But, also Thursday and Friday we got lower closing prices. The index found support on the R2 monthly pivot level and the median line of the up moving pitchfork. Indicators are moving down. Next down targets are the 50% retracement of the last wave up at 1611 with the R1 pivot close by, followed by the support of the 3.3 wave top at 1597. I expect a further move down. We have an open short position. Monday US markets will be closed for Memorial Day'".

Until Thursday it looked like the week would be closed with a higher price. But, my expectation of a further move down was confirmed on Friday, closing the week lower at the level of the 61.8% Fibonacci retracement with a large black candle. The index is now making a first wave 3.1 down. There may be some up reaction, but short term I do expect a further move down towards the 50 day moving average and the low side of the BBS volatility channel. The expert turned black and indicators are moving down. We still have our open short position. The total closed profit trading the index is 128.3% from the start in March 2009. We have an open short position. The expert is still green.

Sylvain Vervoort http://stocata.org/

Top 10 Forex Events Outlook: May 27-31

2013-05-26T13:51:07-07:00

May 26, 2013 (Allthingsforex.com) – The Memorial Day holiday-shortened week ahead will keep the spotlight on the U.S. dollar and the Japanese yen as series of notable data from the United States and Japan will give traders an opportunity to assess the state of the world’s first and third-largest economies.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe.

1. USD- U.S. Consumer Confidence, a measure of consumers’ outlook on the economy, Tues., May 28, 10:00 am, ET.

The outlook of U.S. consumers could continue to improve, lifting the consumer confidence index up to a reading of 69.5 in May from 68.1 in the previous month.

2. JPY- Japan Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Tues., May 28, 7:50 pm, ET.

Consumer spending in Japan is not expected to gain traction with retail sales forecast to register an even bigger monthly drop by 0.4 m/m in April compared with the 0.3% m/m decline in March. A negative retail sales report should keep the yen under pressure on expectations of more aggressive easing by the Bank of Japan.

3. CAD- Bank of Canada Interest Rate Announcement, Wed., May 29, 10:00 am, ET.

Of all major central banks, the Bank of Canada looks as the most likely candidate to start raising rates, but the current macro-economic backdrop is not yet supportive of such move. With the competitive currency devaluation race heating up, the decision to call the end of the accommodative monetary policy would probably be pushed further into 2014/2015. The Bank of Canada is not expected to make any changes to its existing monetary policy at the May meeting and will more than likely leave the benchmark rate at the current 1.0% level. The Canadian dollar could continue to feel the pressure if the central bank hints that it is not in a hurry to tighten policy anytime soon.

4. CHF- Swiss GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., May 30, 1:45 am, ET.

The Swiss economy could continue to weather the effects of the recession of its largest trading partner the euro-zone. First-quarter GDP is forecast to show the economy expanding by 0.2% q/q, same as the rate of growth in the previous quarter. If the report delivers a negative surprise similar to the unexpected drop in Q3 2012, the CHF could weaken as the market begins to price the probability of more action by the Swiss National Bank to weaken its currency.

5. USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., May 30, 8:30 am, ET.

After avoiding contraction in the final quarter of last year, the final reading of the U.S. GDP for the first quarter of 2013 is expected to confirm that the economy gained momentum and expanded by 2.5% q/a. Provided that there is no downward revision, the USD should benefit from accelerating U.S. economic growth which would raise the odds that the Fed might take the first step toward monetary policy tightening sooner rather than later.

6. USD- U.S. Pending Home Sales, a leading indicator of housing market activity measuring pending home sale contracts, Thurs., May 30, 10:00 am, ET.

Pending home sales in the United States are expected to increase for another month with the index forecast to rise by 1.6% m/m in April from 1.5% m/m in March.

7. JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., May 30, 7:30 pm, ET.

No light at the end of the deflation tunnel seems to be the likely outcome of this report, as the Japanese national core inflation gauge drops by -0.4% y/y in April from -0.5% y/y in March. With the index remaining into deflation territory and staying far away from the Bank of Japan’s 2% inflation target, the report could accelerate the trend of JPY weakness on expectations that the Bank of Japan might resort to even more aggressive measures to fight deflation and to spur economic growth by devaluing its currency.

8. EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation preferred by the European Central Bank, and Euro-zone Unemployment Rate, Fri., May 31, 5:00 am, ET.

Inflation in the euro-area is forecast to bounce to 1.4% y/y in May from the larger than expected drop 1.2% y/y in April. The unemployment rate in the 17-nation euro-area is forecast to increase for another month to 12.2% in April from 12.1%. With unemployment at record highs and the inflation gauge firmly below the European Central Bank’s 2% target, the EUR could be pushed lower as the odds of more easing by the European Central Bank increase.

9. USD- U.S. Personal Income and Outlays, a measure of consumer income and spending, released along with the PCE Price Index- the Fed’s preferred gauge of inflation, Fri., May 31, 8:30 am, ET.

Consumer spending in the U.S. is forecast to rise by 0.2% m/m in April, same as the 0.2% m/m increase in March. The Fed’s preferred core PCE Index could show inflation inching slightly higher by 0.1% m/m after staying flat in the previous month, but not enough to prompt the Federal Open Markets Committee to make sudden changes to its current monetary policy.

10. USD- U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., May 31, 9:55 am, ET.

The preliminary estimate showed the consumer confidence index at a four-year high in May and the final reading could lift the index even higher to 84.1 from 83.7. A weekly sequence of upbeat U.S. economic data could raise the odds of an early reduction in the size of the Fed’s asset purchases and could boost the greenback.

Stocata S&P500 Analysis: May 25, 2013.

2013-05-25T06:33:04-07:00

Last week I wrote:
"There seems to be no end to the move up. Looking at the shorter term historical Fibonacci projection (between waves 2>1 and 3.3), there is a 261.8% target at 1696. At that point we also have the R3 pivot resistance. I assume this will be the ultimate point for the reaction to start. The index is now at the upper side of the up moving pitchfork and even crossing above the upper side of the volatility band. Indicators are topping. The index is too far away from all averages. I am still holding the short trade because I believe the reaction will probably start within the next couple of weeks'".

It looks like as I mentioned last week "I believe the reaction will probably start within the next couple of weeks'", that at least the index made a good start for the down move the past week. Wednesday there was a large black candle creating a bearish harami candle pattern. The large candle was already a confirmation of the pattern. But, also Thursday and Friday we got lower closing prices. The index found support on the R2 monthly pivot level and the median line of the up moving pitchfork. Indicators are moving down. Next down targets are the 50% retracement of the last wave up at 1611 with the R1 pivot close by, followed by the support of the 3.3 wave top at 1597. I expect a further move down. We have an open short position. Monday US markets will be closed for Memorial Day. The total closed profit trading the index is 128.3% from the start in March 2009. We have an open short position.

Sylvain Vervoort http://stocata.org/

Top 10 Forex Events Outlook: May 20-24

2013-05-19T06:31:51-07:00

May 19, 2013 (Allthingsforex.com) – With the Bank of Japan’s announcement and the minutes of the Fed’s May meeting on the agenda, the week ahead will offer further insight into the future plans of these two major central banks and their unprecedented monetary policy easing efforts.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe.

1. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., May 21, 4:30 am, ET.

Inflationary pressures in the U.K. are forecast to see a slight pullback to 2.7% y/y in April from 2.8% y/y in March. Although the CPI remains above the Bank of England’s 2% target, inflation has subsided significantly from last year and could continue to inch lower as the bank pointed in its latest inflation report.

2. JPY- Japan Trade Balance, an important gauge of economic activity measuring the difference between imports and exports, Tues., May 21, 7:50 pm, ET.

The consensus forecasts point to another month of rising trade deficit by 621 billion yen in April from a deficit of 362.4 billion yen in March, despite of the significant devaluation of the yen since November, 2012. However, there may be a potential for a positive surprise as the Japanese economy managed to turn a corner and returned back to growth in the first quarter, while also registering a current account surplus. If the report fails to instill optimism and triggers concerns that economic conditions are not improving, the yen could remain under pressure on expectations that the Bank of Japan might be forced to step up their efforts to weaken the currency as a tool to stimulate export growth.

3. JPY- Bank of Japan Interest Rate Announcement, Wed., May 22, around 12:00 am, ET.

As the impact of the Bank of Japan’s massive amounts of asset purchases begins to be reflected in the latest economic data which has registered better than expected readings, the Japanese central bank will probably not feel the need to do more at this point. Policy makers will be likely to reaffirm their open-ended commitment to aggressive QE until the 2% inflation target is in sight. A Bank of Japan not in a hurry to step up its easing efforts could trigger a long overdue correction of the yen’s losses.

4. GBP- Bank of England Meeting Minutes, a detailed report of the bank’s latest meeting containing an outlook on monetary policy and the economy, Wed., May 22, 4:30 am, ET.

In recent months, the Bank of England has chosen to sit on the QE sidelines while other central banks have either continued or have resorted to additional monetary policy easing. The GBP has benefited from the Bank of England’s restraint and could continue to lure bids should the minutes confirm that the majority of policy makers see no urgency to increase the size of the Asset Purchase Program.

5. USD- U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, Wed., May 22, 10:00 am, ET.

Following last week’s surprising drop in housing starts, we could witness a more upbeat U.S. housing market data with sales of existing homes forecast to increase to 4.99 million in April, compared with 4.92 million in March.

6. USD- U.S. FOMC Meeting Minutes, a detailed report of the Fed’s latest meeting containing an outlook on monetary policy and the economy, Wed., May 22, 2:00 pm, ET.

At its May meeting, the Fed signaled that the size of monthly asset purchases may be reduced or increased depending on economic conditions. The minutes would probably confirm this stance, while echoing the Fed’s decision to stay on the QE course until the unemployment rate drops below 6.5% or inflation rises above 2.5%. The USD could see pressures rising if the report reassures the markets that the Fed’s open-ended quantitative easing is not going away anytime soon.

7. EUR- Euro-zone Composite PMI- Purchasing Managers Index, a leading indicator of economic conditions measuring activity in the manufacturing and services sectors, Thurs., May 23, 4:00 am, ET.

The euro-zone economy is expected to continue to suffer from the chronic contraction in its manufacturing and services sectors as the Composite PMI stays in contraction territory below the 50 boom/bust line for another month with a reading of 47.0 in May from 46.9 in April. With the economy failing to return to growth in the first quarter of 2013, the report could weigh on the EUR by increasing the odds that the European Central Bank might be forced to announce additional monetary policy easing measures as early as the bank’s next meeting on June 6.

8. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., May 23, 4:30 am, ET.

In the first quarter of 2013, the U.K. managed to avoid a triple-dip recession with the economy growing by 0.3% q/q after contracting by 0.3% q/q in the final quarter of last year. The revised reading is expected to be in line with the preliminary estimate, confirming that disaster has been averted. Provided that there are no unexpected surprises, the report should reduce further the odds of more QE by the Bank of England and could boost the GBP.

9. USD- U.S. New Home Sales, an important gauge of housing market conditions measuring sales of newly-constructed homes, Thurs., May 23, 10:00 am, ET.

Similar to the existing home sales, a small increase is also expected in the U.S. new home sales, with consensus forecasts estimating a reading of 429K in April compared with 417K in March.

10. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Fri., May 24, 4:00 am, ET.

After the shocking drop in the ZEW economic sentiment index, the business outlook in the euro-zone’s largest economy is forecast to be a bit more optimistic with the Ifo index rising to 104.6 in May from 104.4 in April. The EUR could continue to feel the pressure if the index disappoints and paints a dire economic picture, increasing the probability of more easing by the European Central Bank.

Stocata S&P500 Analysis: May 19, 2013.

2013-05-19T02:09:53-07:00

Last week I wrote:
"'A further move up the past week and as I wrote last week, not really surprised about that. We now reach the upper side of the volatility band, the R2 pivot resistance level, the index is close to the upper side of the up moving pitchfork and reaching the 161.8% historical Fibonacci projection taken over the last correction. We dot not have a reversal signal yet, but I believe we are very close to a reversal. We can expect a top around 1650. A 50% reaction from 1650 related to the last wave up will bring the index back to 1590. That would mean a loss of 2%. On the other hand having to sell at 1650 would mean a loss of 6%. Because I expect at least a medium term reaction down, the trade can become profitable. So, let's hold on to our short position just a bit longer to see where the index is going the coming week(s)".

There seems to be no end to the move up. Looking at the shorter term historical Fibonacci projection (between waves 2>1 and 3.3), there is a 261.8% target at 1696. At that point we also have the R3 pivot resistance. I assume this will be the ultimate point for the reaction to start. The index is now at the upper side of the up moving pitchfork and even crossing above the upper side of the volatility band. Indicators are topping. The index is too far away from all averages. I am still holding the short trade because I believe the reaction will probably start within the next couple of weeks. We have an open short position. The expert is green.

The total closed profit trading the index is 128.3% from the start in March 2009.

Sylvain Vervoort http://stocata.org/

IRSTS - The 1-2-3 Wave Count

2013-05-16T07:49:00-07:00

In this second part of a seven article series in S&C magazine, find out about the 1-2-3 Wave Count system that's part of the indicator rules for a swing trading strategy IRSTS.

I have found that about 99% of the time, any move in the financial markets is composed of three or more up or down waves. The 1-2-3 wave count is based on this finding. To help count these waves, I will introduce a high-low zigzag indicator that is based on a fixed-percent price change between high and low prices, or that uses an average true range (ATR) volatility factor. I have found that a combination of both methods makes a good indicator.

HIGH-Low ZIGZAG

In Figure 1 you see an example of a zigzag between the lowest low and highest high levels at the turning points. The minimum change required in this example is the sum of a 3% price change and a three-period ATR multiplied by a factor of 1.5. I call this zigzag indicator "SVEHLZZperc" and use NinjaTrader's NinjaScript to implement it. I keep the last lowest low value in parameter ll and the last highest high value in parameter hh. I need to store the bar position of this highest high or lowest low value. To do this, I use the last highest bar lhb and last lowest bar llb as the parameters.

Volatility in the zigzag

To profit from price volatility in the zigzag, I use Wilder's ATR to create a volatility factor based on a lookback period and multiplication factor. You can draw the zigzag on a fixed high-low percentage swing, or on the ATR volatility, or on a combination of percentage swings and price volatility. The HLPivot parameter is influenced by either the zigzag percentage used, or by the ATR period and factor, or by both the percent and ATR settings. If the ATR factor is set to zero, then the percent setting will be taken into account. If the zigzag percent is set to zero, the volatility setting will be used.

The basic count

The 1-2-3 wave count is based on a limited number of rules: Any up or down move consists of a minimum of three waves 99% of the time. The 1-2-3 waves are fractal: every wave can be made up of a lower-degree 1-2-3 wave and belongs to a higher-degree wave.

The move starts with a wave 1
Wave 2 is a correction wave smaller than wave 1
Wave 3 continues the move beyond the top (bottom) of wave 1.

Correction levels

A smaller wave 2 correction will be a Fibonacci retracement between 23.6% and 50%. Larger corrections retrace up to a 76.4% Fibonacci retracement level (Figure 3). A retracement beyond 76.4% should be considered a warning signal. It suggests that price may continue past the 100% retracement, and if this were to happen, it would change the count. A wave 2 retracement remains valid as long as it does not retrace more than 100% of wave 1. ..................... Read more in the full June article....

Sylvain Vervoort http://stocata.org/

Free Monthly Video: Only in your account this month!

2013-05-13T12:55:26-07:00

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Top 10 Forex Events Outlook: May 13-17

2013-05-12T10:37:06-07:00

May 12, 2013 (Allthingsforex.com) – Economic growth or the lack there of will be the themes of the week ahead as traders eye the GDP estimates from the euro-area and Japan and determine whether the euro-zone has managed to turn a corner in the first quarter of the year.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1. USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Mon., May 13, 8:30 am, ET.

Consumer spending in the U.S. could remain subdued for a second month in a row with retail sales down by 0.3% m/m in April, following the 0.4% m/m drop in March. However, some optimistic forecasters predict a 0.1% m/m increase in retail sales. The USD could benefit from a more upbeat economic data that will raise the odds that the Fed could consider reducing the size of its monthly asset purchases if economic conditions continue to improve.

2. EUR- Euro-zone ZEW Economic Sentiment Index, a leading indicator of economic conditions measuring the outlook of financial experts, Tues., May 14, 5:00 am, ET.

Declining more than expected to 36.3 in April, the ZEW index is forecast to bounce a couple of points higher with a reading of 38.5 in May. Should the index disappoint once again and send a signal that the economic outlook for the euro-area remains gloomy, the EUR could stay under pressure as the market prices expectations that the European Central Bank might ease monetary policy further.

3. GBP- U.K. Jobless Claims and Unemployment Rate, the main gauges of labor market conditions measuring claims for unemployment benefits and rate of unemployment, Wed., May 15, 4:30 am, ET.

Jobless claims in the U.K. dropped by 7,000 in March and are forecast to register a smaller decline by about 3,000 in April, while the unemployment rate inches higher to 8.0% from 7.9% in the previous month. A better-than-expected jobs report would reduce the odds of more easing by the Bank of England and could lend support to the GBP.

4. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., May 15, 5:00 am, ET.

The main event of the week will bring the preliminary GDP estimate for the first quarter of the year and the report is not expected to show that the euro-zone economy was able to end its recessionary period. Forecasts point to a fourth consecutive quarter of contraction by 0.1% q/q in Q1 2013 from -0.6% in the last quarter of 2012. Provided that there are not any positive surprises from the GDP estimate, the EUR could be pushed further into the $1.20’s as the market begins to price even more aggressively expectations that the European Central Bank might be forced to consider additional rate cuts and unconventional monetary policy easing measures that could be announced as early as the bank’s June meeting.

5. GBP- Bank of England Inflation Report, the central bank’s official analysis and outlook on inflation and the economy, Wed., May 15, 5:30 am, ET.

While the CPI remains above the Bank of England’s 2% target at 2.8% y/y, after reaching record high levels above 5% last year, inflation in the U.K. has subsided. If policy makers expect this trend to continue and forecast a “nascent recovery” in the months ahead, the report will reduce the probability of more QE by the Bank of England and could boost the GBP as an alternative to currencies whose central banks are committed to aggressive monetary policy easing.

6. USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Wed., May 15, 9:15 am, ET.

The slowdown shown by the manufacturing index in recent months could be reflected in the overall industrial production data with industrial output forecast to decline by 0.1% m/m in April, after rising by 0.4% m/m in March.

7. JPY- Japan GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., May 15, 7:50 pm, ET.

With the yen in a free-fall since last November, the effects of the weaker currency are finally beginning to show in the latest economic data from Japan. The world’s third-largest economy is forecast to return to growth by 0.7% q/q in the first quarter of 2013 after the flat 0% q/q reading in the final quarter of last year. The negative JPY trend is still intact, but it would be interesting to see if better-than-expected economic data from Japan would start to be yen-supportive going forward, as the market reduces expectations of the need for even more aggressive easing measures by the Bank of Japan.

8. EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation preferred by the European Central Bank, Thurs., May 16, 5:00 am, ET.

In line with the preliminary estimate, inflation in May is forecast to decline to 1.2% y/y from 1.7% y/y in April. With the inflation gauge dropping further below the European Central Bank’s 2% target, the formation of deflationary pressures could become one of the main factors that could prompt the ECB into additional monetary policy easing.

9. USD- U.S. Housing Starts, an important gauge of housing market activity measuring new home construction, Thurs., May 16, 8:30 am, ET.

After the stronger than expected rise to 1.04 million in March, housing starts could pull back to 980K in April, while building permits increase to 940K from 910K in the previous month.

10. USD- U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., May 17, 9:55 am, ET.

Compared with the unimpressive 76.4 reading in the previous month, the preliminary estimate of the U.S. consumer sentiment index is forecast to show an improvement to 77.9 in May. The USD could continue to find strength if the weekly sequence of U.S. economic data does not disappoint and confirms that the recovery in the world’s largest economy is on the right track.

Stocata S&P500 Analysis: May 12, 2013.

2013-05-12T04:07:00-07:00

Last week I wrote:
"You will notice that I have changed the chart template used. I am using this template for myself already some time. A description of this template you will find HERE. The index went for another higher high coming very close to 1620. The up move was stopped by the resistance of the R1 pivot point. The index is close to the upper side of the BBS volatility band and far away from the averages. I still think that we must expect a correction down, but I will not be surprised if the index will still move a bit higher before that. So, the question is, what to do with our short position? Closing above 1620 will make a loss of about 4%. If we have some more up move I do expect a top around 1650. A 50% reaction from 1650 related to the last wave up will bring the index back to 1590. That would mean a loss of 2%. On the other hand having to sell at 1650 would mean a loss of 6%. Because I expect a longer term reaction down, the trade can become profitable. So, let's hold on just a bit longer to see where the index is going. Remember, it always takes longer than you think...'".

A further move up the past week and as I wrote last week, not really surprised about that. We now reach the upper side of the volatility band, the R2 pivot resistance level, the index is close to the upper side of the up moving pitchfork and reaching the 161.8% historical Fibonacci projection taken over the last correction. We dot not have a reversal signal yet, but I believe we are very close to a reversal. We can expect a top around 1650. A 50% reaction from 1650 related to the last wave up will bring the index back to 1590. That would mean a loss of 2%. On the other hand having to sell at 1650 would mean a loss of 6%. Because I expect at least a medium term reaction down, the trade can become profitable. So, let's hold on to our short position just a bit longer to see where the index is going the coming week(s).

Sylvain Vervoort http://stocata.org/

Top 10 Forex Events Outlook: May 6-10

2013-05-06T16:46:06-07:00

May 5, 2013 (Allthingsforex.com) – In the week ahead, traders will keep an eye on the monetary policy decisions of the Reserve Bank of Australia and the Bank of England, while a sequence of data from “down under”, the euro-zone, Japan, and Canada paints a picture of economic conditions in some of the world’s biggest industrialized nations.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1. EUR- Euro-zone Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Mon., May 6, 5:00 am, ET.

Consumer spending in the euro-area is forecast to register a bit smaller decline of 0.1% m/m in April compared with the 0.3% m/m drop in the previous month. However, this report may not be able to change expectations that, after cutting rates to a record low last week, the European Central Bank might need to resort to additional unconventional monetary policy easing measures. Considering the market’s reaction following the ECB announcement, more easing could prove supportive for the euro.

2. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., May 7, 12:30 am, ET.

The inconsistency of the Australian employment reports in recent months, the jump in the unemployment rate, and some signs of a slowdown in China, Australia’s largest trading partner, have increased the odds of a rate cut by the Reserve Bank of Australia. While a 0.25% rate cut at this meeting would not be a surprise, we might actually see such decision being delayed by RBA policy makers until additional data in upcoming months provides a clearer picture of the need for additional easing. The Australian dollar could regain strength if the Reserve Bank of Australia refrains from cutting rates.

3. EUR- Germany Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Wed., May 8, 6:00 am, ET.

Recent data has shown that the euro-zone’s largest economy is cooling off and this report could confirm these suspicions with industrial activity in Germany forecast to drop by 0.3% m/m in March after rising by 0.5% m/m in February.

4. NZD- New Zealand Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., May 8, 6:45 pm, ET.

Employment in New Zealand was down by 1.0% q/q in the previous quarter but is expected to recover with a 1.1% q/q increase. The unemployment rate is forecast to decline to 6.8% from 6.9%. A strong employment report should reduce the odds of monetary policy easing by the Reserve Bank of New Zealand, giving the Kiwi dollar a boost.

5. AUD- Australia Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., May 8, 9:30 pm, ET.

February’s blockbuster jobs report which showed a record job creation of 71,500 new jobs was followed by bigger than expected loss of 36,100 jobs in March. In April, the Australian economy is forecast to add up to 12,000 new jobs, while the unemployment rate stays at 5.6%. Another volatile employment report could raise the odds of a rate cut by the Reserve Bank of Australia and could weigh on the Australian dollar.

6. GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., May 9, 4:30 am, ET.

The recent improvement in the Services and Manufacturing purchasing managers indexes has shown promising signs that the U.K. may be on a path to recovery. This report could do the same with industrial production forecast to increase for another month by 0.3% m/m in March after rising by 1.0% m/m in February. The GBP should be able to maintain its strength if the U.K. economic data continues to boost optimism and reduces the odds of additional easing by the Bank of England.

7. GBP- Bank of England Interest Rate Announcement, Thurs., May 9, 7:00 am, ET.

With the U.K. economy managing to avoid an unprecedented triple dip recession, there is no urgency for the Bank of England policy makers to do more QE. The Monetary Policy Committee will maintain the existing monetary policy and will keep the size of the Asset Purchase Program unchanged at their May meeting and probably in the next few months until the new Governor Carney takes his seat in July. The pound could continue to attract bids as an alternative to currencies of central banks that are committed to aggressive monetary policy easing.

8. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., May 9, 8:30 am, ET.

In the aftermath of last week’s four-year low reading of 324K, the U.S. jobless claims are forecast to stay within range, rising slightly to 333K. The unexpected jump to 385K a few weeks ago can now be dismissed as a one-off event and, with the non-farm payrolls beating the forecasts, the USD could continue to benefit from the improvement in U.S. labor market conditions.

9. JPY- Japan Current Account, an important gauge of economic activity measuring foreign trade, Thurs., May 9, 7:50 pm, ET.

The current account deficit in Japan was on the rise in the final quarter of last year, but the significant decline of the yen, which has been helping exporters, could finally begin to produce the desired results. The economy is forecast to register a surplus of 480 billion yen in March after a flat reading in the previous month. This could become one of the reports that confirm that the Bank of Japan may be on the right track with their open-ended QE program. On the other hand, a return to current account surplus could strengthen the yen on expectations that the Japanese government and the Bank of Japan might not need to become even more aggressive with their measures to weaken the currency and to stimulate the economy.

10. CAD- Canada Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Fri., May 10, 8:30 am, ET.

After unexpectedly losing 54.5K jobs in March, the Canadian economy is expected to add up to 14K jobs in April. The unemployment rate is forecast to remain unchanged at 7.2%. The inability to offset the previous month’s job losses could signal that the economy may be losing momentum and could weigh on the Canadian dollar.

Stocata S&P500 Analysis: May 5, 2013.

2013-05-05T04:57:46-07:00

Last week I wrote:
"The expected up correction move went higher than expected, but we are still below 1620. This means I am still holding the short trade. Thursday the index turned below the previous top and against the R1 pivot level. If turning down is confirmed the coming week, we still are having a valid wave 2 correction. There is also a bearish harami pattern at the top. Let's see if we get a onfirmation beginning of next week. If there is no confirmation, keep in mind that the index may go for another (limited) higher high. Note that the index did not reach the median line of the last up moving pitchfork, this would confirm a move down to below 1540 in first instance. I will keep a close eye for a move around 1620, eventually closing the open short trade, but I believe there is a better chance for a move down. '".

You will notice that I have changed the chart template used. I am using this template for myself already some time. A description of this template you will find HERE. The index went for another higher high coming very close to 1620. The up move was stopped by the resistance of the R1 pivot point. The index is close to the upper side of the BBS volatility band and far away from the averages. I still think that we must expect a correction down, but I will not be surprised if the index will still move a bit higher before that. So, the question is, what to do with our short position? Closing above 1620 will make a loss of about 4%. If we have some more up move I do expect a top around 1650. A 50% reaction from 1650 related to the last wave up will bring the index back to 1590. That would mean a loss of 2%. On the other hand having to sell at 1650 would mean a loss of 6%. Because I expect a longer term reaction down, the trade can become profitable. So, let's hold on just a bit longer to see where the index is going. Remember, it always takes longer than you think...

Sylvain Vervoort http://stocata.org/

Free Webinar with Steve Nison

2013-05-03T13:14:30-07:00

Who: Steve Nison, CMT President & Founder of Candlecharts.com

When: May 14, 2013 at 4:30 PM

What: Free webinar

Candlestick Charting Essentials: Catching the Next Big Move

This will be a 60-minute live online web seminar presented by world-famous candle charting guru Steve Nison. As a renowned author and speaker, he has the distinction of being the first to reveal candlesticks charts to the Western world and is known as the ''Father of Candlesticks''. He has presented his trading strategies in 20 countries to traders from almost every investment firm on how to apply – and profit from – these methods. He has also lectured at numerous universities. And he was guest speaker at the World Bank and the Federal Reserve.

These strategies, which Steve previously only revealed to top institutional traders, will quickly give traders (including options and FX) vital timing advantages in entering before the potential big moves start, and just as importantly, knowing when to exit.

Discover how to avoid some of the most common misuses of candles that could cost you big $$$.
Participate in the live Q&A to have rock-solid confidence about what you learned at the webinar
Discover how to use candles with Western indicators for super-confident trading
Steve will show you two patterns and ask which is the better signal... the answer will shock you!
Warning! Did you know that the exact same candle pattern can at times give a signal to enter a trade... and at other times a signal to exit a trade?

Top 10 Forex Events Outlook: Apr. 29 - May 3

2013-04-28T10:47:36-07:00

Apr. 28, 2013 (Allthingsforex.com) – The next moves by the world’s two major central banks and the condition of the U.S. labor market will be on top of the agenda in the week ahead, as the markets prepare for a likely announcement of additional monetary policy easing by the European Central Bank.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1. USD- U.S. Personal Income and Outlays, a measure of consumer income and spending, released along with the PCE Price Index- the Fed’s preferred gauge of inflation, Mon., Apr. 29, 8:30 am, ET.

Consumer spending in the U.S. is forecast to register a smaller increase by 0.2% m/m in March, compared with 0.7% m/m in February. The Fed’s preferred core PCE Index could show inflation inching slightly higher by 0.1% m/m, but not enough to convince the Federal Open Markets Committee to change the direction of its current monetary policy.

2. USD- U.S. Pending Home Sales, a leading indicator of housing market activity measuring pending home sale contracts, Mon., Apr. 29, 10:00 am, ET.

After dropping by 0.4% m/m in February, the pending home sales index is expected to get back on track with 0.3% m/m increase in March.

3. EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation preferred by the European Central Bank, Tues., Apr. 30, 5:00 am, ET.

Inflation in the euro-area is forecast to subside further to 1.6% y/y in April from 1.7% y/y in March. With the inflation gauge dropping below the European Central Bank’s 2% target, the formation of deflationary pressures could become one of the main factors that could prompt the ECB into additional monetary policy easing.

4. USD- U.S. Consumer Confidence, a measure of consumers’ outlook on the economy, Tues., Apr. 30, 10:00 am, ET.

The outlook of U.S. consumers is forecast to remain optimistic, keeping the consumer confidence index above 60 with reading of 60.5 in April from 59.7 in the previous month.

5. USD- U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., May 1, 8:15 am, ET.

Job creation in the U.S. private sector is forecast to be less than it was in the previous month with 145K jobs added in April, compared with 158K jobs in March.

6. USD- U.S. ISM Manufacturing Index, a leading indicator of economic conditions measuring activity in the manufacturing sector, Wed., May 1, 10:00 am, ET.

Activity in the U.S. manufacturing sector is forecast to lose a bit of steam with a reading 51.1 in April from 51.3 in March.

7. USD- U.S. FOMC- Federal Open Markets Committee Interest Rate Announcement, Wed., May 1, 2:00 pm, ET.

Recent reports from the labor market and other sectors of the economy have sparked concerns that the U.S. may be losing momentum. In addition, the world’s largest economy will be dealing with the impact from the sequestration in the months ahead. Such economic backdrop does not create a sense of urgency for the Fed to start tightening anytime soon. The FOMC will maintain the current monetary policy course at its May meeting, and probably into 2014. The majority of policy makers will be likely to reiterate their commitment to open-ended QE until the unemployment rate falls below 6.5% or inflation exceeds 2.5%. No end in sight to QE and “exceptionally low levels for the federal funds rate” could weigh on the USD.

8. EUR- European Central Bank Interest Rate Announcement, Thurs., May 2, 7:45 am, ET.

Mired in recession and record high unemployment, the euro-zone economy continues to suffer from a chronic contraction in its manufacturing and services sectors. With economic growth still nowhere to be seen, it would not be shocking to witness the European Central Bank announcing additional monetary policy easing measures as early as the next meeting on May 2. The euro will be pushed back into the $1.20′s if the European Central Bank announces LTRO 3, reduces the benchmark rate or hints of an impending rate cut in the near future.

9. USD- U.S. Non-Farm Payrolls and Employment Situation, the main indicator of U.S. economic health measuring job creation and unemployment, Fri., May 3, 8:30 am, ET.

Following a dismal NFP report in March, job creation is expected to gain momentum in April. The U.S. economy is forecast to add 155K jobs compared with 88K in March, while the unemployment rate stays unchanged at 7.6%. An upbeat NFP report should help to dismiss last month’s unexpected drop as a one-off event and could give the USD a boost on expectations that the Fed might take the first step toward monetary policy tightening sooner rather than later.

10. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions measuring activity in the services sector, Fri., May 3, 10:00 am, ET.

Although at a slightly slower pace, activity in the U.S. services sector is forecast to expand for another month with an index reading of 54.1 in April from 54.4 in March.

Stocata S&P500 Analysis: April 27, 2013.

2013-04-28T01:52:06-07:00

Last week I wrote:
"I believe we past the point of 'it always takes longer than you think' and that the down move has started. Monday we got a very nice large candle confirmation down for the bearish harami candle pattern at the top. Thursday the index found support on the 50 day average. We should expect some consolidation. The correction wave 2 that started from the top wave 3.9 changed from a wave 2 to a wave 1, passing the low of the previous wave 2. That means we are now expecting a wave 2 up correction. I assume this correction will be limited to about 1570. I tried some down projections and that gives me a first down move to about 1465 by the second half of May. Please remember what I mentioned the week before: 'What do I want to risk staying in the short trade? Most next up targets point to 1620. That would mean a loss of about 4% for our open short trade. That is acceptable.'".

The expected up correction move went higher than expected, but we are still below 1620. This means I am still holding the short trade. Thursday the index turned below the previous top and against the R1 pivot level. If turning down is confirmed the coming week, we still are having a valid wave 2 correction. There is also a bearish harami pattern at the top. Let's see if we get a confirmation beginning of next week. If there is no confirmation, keep in mind that the index may go for another (limited) higher high. Note that the index did not reach the median line of the last up moving pitchfork, this would confirm a move down to below 1540 in first instance. I will keep a close eye for a move around 1620, eventually closing the open short trade, but I believe there is a better chance for a move down. The total closed profit trading the index is 128.3% from the start in March 2009. We have an open short position.

Sylvain Vervoort http://stocata.org/

Top 10 Forex Events Outlook: Apr. 22-26

2013-04-21T12:53:24-07:00

Apr. 21, 2013 (Allthingsforex.com) – A combination of notable economic data from the euro-area, coupled with the Bank of Japan’s monetary policy meeting and two GDP reports from the U.S. and the U.K., will offer plenty of excitement in the week ahead as the markets anxiously await to find out if the U.K. economy has averted an unprecedented triple-dip recession.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe.

1. USD- U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, Mon., Apr. 22, 10:00 am, ET.

The report could start a sequence of upbeat U.S. economic data with sales of existing homes forecast to increase to 5.01 million in April, compared with 4.98 million in March.

2. EUR- Euro-zone Composite PMI- Purchasing Managers Index, a leading indicator of economic conditions measuring activity in the manufacturing and services sectors, Tues., Apr. 23, 4:00 am, ET.

Mired in recession, the euro-zone economy is expected to continue to suffer from a chronic contraction in its manufacturing and services sectors, as the Composite PMI stays in contraction territory below the 50 boom/bust line for another month with a reading of 46.3 in April from 46.5 in March. With economic growth still nowhere to be seen, the report could weigh on the EUR by increasing the odds that the European Central Bank might be forced to announce additional monetary policy easing measures as early as the bank’s next meeting on May 2.

3. USD- U.S. New Home Sales, an important gauge of housing market conditions measuring sales of newly-constructed homes, Tues., Apr. 23, 10:00 am, ET.

Similar to the existing home sales, a small increase is also expected in the U.S. new home sales, with consensus forecasts estimating a reading of 420K in March compared with 411K in February.

4. NZD- Reserve Bank of New Zealand Interest Rate Announcement, Tues., Apr. 23, 5:00 pm, ET.

The Reserve Bank of New Zealand joined “currency wars” in February with the Governor making it clear that intervention is being considered as an option to curb the persistent strength of the New Zealand dollar. In a world where competitive currency devaluation has become the norm, the New Zealand central bank will not be in a hurry to start tightening monetary policy. The Kiwi could weaken if the Reserve Bank of New Zealand issues another warning that its currency should not be considered as a “one way bet.”

5. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Wed., Apr. 24, 4:00 am, ET.

This could become another economic report that fails to instill confidence that the euro-area is on a path to recovery. The business outlook in the euro-zone’s largest economy is forecast to be less optimistic with a decline in the Ifo index to 106.2 in April, compared with a reading of 106.7 in the previous month.

6. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Apr. 25, 4:30 am, ET.

Following three consecutive quarters of contraction, the U.K. returned to growth in Q3 2012, only to see its economy contracting again by 0.3% q/q in the final quarter of last year. As a result, fears of unprecedented triple-dip recession in the U.K. escalated and could become a reality if the economy unexpectedly contracts in the first quarter of 2013. The consensus forecasts suggest that such scenario could be averted with the U.K. economy expected to dodge the triple-dip recession bullet and grow by 0.1% q/q in Q1. On the other hand, should the report signal a triple-dip recession, pressure on the GBP would mount on expectations of more QE by the Bank of England.

7. JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Apr. 25, 7:30 pm, ET.

The Japanese national core inflation gauge is forecast to drop by -0.4% y/y in March from -0.3% y/y in February. With the index sinking deeper into deflation territory and heading further away from the Bank of Japan’s 2% inflation target, the report could accelerate the trend of JPY weakness on expectations that the Bank of Japan might resort to even more aggressive measures to fight deflation and to spur economic growth by devaluing its currency.

8. JPY- Bank of Japan Interest Rate Announcement, Fri., Apr. 26, around 12:00 am, ET.

Since the Bank of Japan already gave the markets the “shock and awe” treatment earlier this month by doubling the size of asset purchases, the Japanese central bank will probably not rush to deliver even more fireworks. Policy makers will be likely to reaffirm their open-ended commitment to aggressive QE until the 2% inflation target is in sight. If the Bank of Japan does not announce anything we don’t already know, we could see the yen correcting some of its losses.

9. USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth, Fri., Apr. 26, 8:30 am, ET.

After the U.S. economy avoided contraction in the final quarter of last year, the preliminary GDP estimate is forecast to show the U.S. growing at a faster pace by 3.0% q/y in the first quarter of 2103, compared with 0.4% q/y in Q4 2012. The USD could benefit from accelerating U.S. economic growth report which could raise the odds that the Fed might take the first step toward monetary policy tightening sooner rather than later.

10. USD- U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Apr. 26, 9:55 am, ET.

The final April reading of the U.S. consumer sentiment index is forecast to be revised higher to 74.3 from a preliminary estimate of 72.3. The report will wrap up what is expected to be a week of positive U.S. economic data that could boost investor sentiment and risk appetite.