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Hewlett-Packard (HPQ) is On a Bearish Track – August 16, 2010

Hewlett-Packard Company or HPQ in the New York Stock Exchange has been exchanging on a bearish track for the last couple of months. The first sign of the bad things to come was when the 50-day moving average (blue line) crossed below the 200-MA (red line). Over the last three months, its shares also failed to go beyond its previous high in April. Instead, it even registered successive lower lows during the same period. Last week alone, its stock experienced a loss of 12.5%. Ouch! A bearish breakaway gap during the beginning of last week highlighted the market’s negative sentiment towards it. It did not stop there as it also broke below the support of what appears to be a descending triangle.

At present, HPQ is trading just above 40.00. A break below 38.00 (its last major support), could send it to 30.00 which is the target as gauged by projecting the height of the triangle from the point of breakout. But since the RSI is already in the extreme oversold level, the HPQ could consolidate for awhile before heading south again. Note also that a breakaway gap is usually followed by another gap – the run-away. If this true then you better start to at least lighten your positions.

Anyway, last week’s bloodbath started when the company’s CEO, Mark Hurd, resigned from his position. This June, a female marketing contractor for HP approached the company’s board of directors and said that Hurd had sexually harassed her. The board concluded that he did not violate the company’s sexual harassment policy though it was found that he had falsified some expense report documents to conceal his “close personal relationship” with the contractor. This scandal gravely undermined his credibility and the market’s sentiment towards the company. With the company’s leadership now in transition, expect its shares to dip at least in the short term.

Are the Pound Bulls About To Strike Back? – August 16, 2010

Welcome to another week of forex trading! In today’s FX feature is an update of the GBPUSD pair which I posted back on August 4 (please see my previous blog here). As you can see from its 4-hour chart, the GBPUSD or the Cable has retraced downwards after reaching a 6-month high of 1.5998 on August 4. But despite its recent weakness, I am still bullish on the British pound. At present, the pair is trading just about just above 1.5500. The previous high at 1.5500 plus the uptrend line should be able to prevent the pair from falling further. A bounce off these supports could push the pair back up to 1.5900. A break below 1.5500, on the flip side, could send it down to 1.5100. But with an oversold condition, as indicated in the stochastics, and an intact uptrend line, the pound, in my opinion, has a higher chance of moving north at least in the short term.

On the economic front, the UK’s inflation and retail sales figures are scheduled to be released on August 17 and 19, respectively. Month-over-month CPI in July is seen to be at -0.2% due to weaker consumer spending. Because of this, the year-over-year count is projected to have slowed to 3.1% from 3.2%. July retail sales is also anticipated to have tapered to 0.4% from 0.7%. And according to the data that was published by the British Retail Consortium (BRC), sales in the retail level have indeed weakened as fears over a probable slash in government spending caused the consumers to only spend for their essential needs.

Since a dip in the UK’s inflation and retail sales accounts is already expected, the market has likely priced this. Given this, the pound can just trade in a range-bound fashion unless a worse-than-projected tallies are printed. A surprise upticks in the accounts, on the other hand, can push the pound higher.

US Dollar Index Breaks Its Channel – August 13, 2010

TGIF! Welcome to another day of FX trading. In today’s chart is an update of the US dollar index (USDX) that I presented the other day (please check it here). Back then the index was still moving within a descending channel. My thinking was, it would continue to move lower since the channel was still intact. The index, however, broke above the resistance of the channel in yesterday’s price action. Now, will it start to trade on higher ground? Maybe. However, it could still move south or sideways given the lack of a reversal pattern (double bottom, cup and handle, inverted head and shoulders,etc.). So if it weakens again, it could fall back to the 80.000 area. A potential bearish divergence, where the price moves lower and the stochastics move higher, suggests this possibility.

Several key economic releases today will be critical for the USD’s short term valuation. Later at 9:00 am GMT, the euro zone’s second quarter flash GDP will be reported. Euro zone’s economy is seen to have expanded by 0.7% in the second quarter on top of the 0.2% gain during the first saga of the year. But given Germany’s better-than-expected 2Q GDP score of 2.2% (vs. 0.5%), an upside is likely in the broader euro economy since about a third of the euro zone’s total production is from Germany.

The US’s retail sales and CPI figures in July plus the University of Michigan consumer sentiment index in August can cause some volatility. the US’s month-over-month core CPI and headline CPI in July are seen to be at 0.1% and 0.2%, respectively. Retail sales on the other hand, are projected to have to gain by 0.5% after dipping by the same rate in the previous month. Furthermore, consumer sentiment in August is anticipated to reach 69.4 from 67.8. So if any of these accounts comes in at least in line with expectations or better, the market’s fear can be eased thereby causing a consolidation or even a rally in equities and the non-dollar currencies. Worse than projected results, on the flip side, can be positive for the USD given yesterday’s risk aversion-dollar movement.

Macy’s Shoots Up! – August 12, 2010

Macy’s or M in the New York Stock Exchange is a chain of department stores around the US which sells clothing, footwear, bedding, furniture, jewelry, cosmetics and housewares. Aside from that, they also sell a range of merchandise on the internet. By the way, they own Bloomingdale’s as well. Yesterday, they reported a net income of $147 million for the 2nd leg of this year compared to $7 million during the same period a year ago. Despite the global sell-off yesterday, its stock price gained 5.88% to $20.52 because of the more than expected profit report.

Chart-wise, Macy’s stocks have passed above the $20.35 resistance during yesterday’s trading session (indicated by the red circle) and could now head to the next resistance at $22.31. If the $22.31 price mark gets cleared out, the next resistance could be $25.25. On the downside, the $20.00 psychological area could act as a significant support. If the stocks drop further that level, the next support could be the 17-month uptrend.

The Euro Came Crashing – August 12, 2010

What’s up forex peeps?! Welcome to another day of forex trading! We have the EURUSD in today’s fx pick. As you can see from its 4-hour chart, the EURUSD or the fiber came crashing in yesterday’s trading. After reaching a new 3-month high just above 1.3300. , the euro slid, breaking the pair’s uptrend line in the process. In less than a week, the fell by more than 400 pips against the greenback! Ouch! At present, the pair is trading just below 1.2900 and since the next obvious support is still somewhere within 1.2800 and 1.2700, it still have some room to move lower. If the support here gets taken out, beware as the pair could fall all the way to 1.2500! But given its recent drop and its oversold condition, it can also range or even retrace as sellers pocket some of their profits.

Fundamentally, the slide in the the euro was caused by several factors. The weaker-than-expected retail sales (17.9% versus 18.5%) in China damped the confidence of the market. You see, a 17.9% is not really weak but apparently the market is expecting a lot from China. Why? Well, China is now the number 2 biggest economy in the world and a robust figure in its retail sales could mean business for all its trading partners. The number 3 economy, Japan, also failed to impress with only a 1.9% jump in its machinery orders, lower than the 5.6% forecast.

The Bank of England and the US Federal Reserve worsened the situation further by saying that risks are still present in their respective economy.

As a result, risk aversion in the broader market made a comeback, leading investors to flee to the safety of the greenback. Stocks, as well as currencies like the euro, as a consequence, were sold off.

The highlight of today will be the release of the US’s unemployment claims for the week ending July 31. Initial jobless claims are seen to be at 465,000, lesser than the 479,000 tallied the week before. Now, lesser jobless claims could ease the markets while a worse count would more likely extend the losses. Watch out for its announcement today at 12:30 pm GMT.

Nihao Breaks Out? – August 11, 2010

Hi guys, I have here the chart of Nihao Mineral Resources International (NI as the ticker symbol in the Philippine Stock Exchange), a Philippines-based company engaged in exploring, developing and operating nickel properties. Word on the street, Nihao is starting its first nickel shipment to China which probably propelled the stocks to move higher for the last two trading sessions. Shipments to Australia and Japan could also take place in the coming months according to the news clarification released by the company. As a result for yesterday’s trading session, its volume traded daily went to a 4-month high (indicated by the violet circle). High volume is a good thing since it adds more liquidity to the stocks thus buying and selling would be easier.

Chart-wise, it seems to me that the Nihao stocks have broken passed above the resistance of its 8-month triangle formation (indicated by the red circle) and could push higher. The next resistance it could now encounter is the 3.80-peso level. Once that level is breached, the next resistance could be the 4-peso psychological area then 4.25 pesos. On the flip side, if the stocks change its course and head south, the triangle’s support could prevent the slippage. In case the stocks break below the triangle’s support, the next marker could be the 3-peso psychological level.

US Dollar Remains in a Funk – August 11, 2010

Good day forex peep! In today’s fx special is the US dollar index. As you can see from its 4-hour chart, the index, which weighs the valuation of the greenback against a basket of currencies like the euro, pound, yen, [Read more...]

YUMMY Triangle! – August 10, 2010

Yum! Brands, Inc. or YUM in the New York Stock Exchange is the world’s largest fast food restaurant company that cater to more than 100 countries. Restaurants they operate include Taco Bell, KFC, Pizza Hut, Wingstreet, Long John Silver’s restaurants and A&W.

Chart-wise, there is a triangle formation setting up in the YUM stocks. If the stock price successfully breaches the triangle’s resistance, it could head to the $44.00 price mark. If $44.00 gets cleared out, the next target price could be $48.00 which is the size of the triangle’s base added up to the breakout point. On the downside, in case the stocks breakdown from the triangle’s support which is less likely to happen since the formation’s coming from an uptrend, the immediate support could be $38.25. If the price further drops below that marker, the next support could be $37.54.

A Triangle in DTE Energy Stock Chart – August 9, 2010

Last month, I posted on DTE Energy Company or DTE as listed in the New York Stock Exchange regarding the triangle formation setting up in its stock chart (kindly check here). Right now, the setup looks clearer and riper compared to when I last posted about it. The 3-month triangle shown on the image will most likely be bullish as it’s coming from an uptrend. If the stock price breaks above the triangle’s resistance at $49.06, it could move higher but will face some selling pressure at $51.15. If the $51.15 price mark gets cleared out, the next resistance could be $54.74. The possibility of the price breaking down from the triangle’s support is slimmer compared to the price breaking above the triangle’s resistance but in case it does and passes below the triangle’s support, $45.60 could be the next. If it further drops below the $45.60 marker, the next support could be $44.00.

Canadian Dollar Slips on Bleak Employment – August 9, 2010

Welcome to a brand new week of forex trading! On today’s canvas is the 4-hour chart of the USDCAD pair. As you can see, the pair has been trending south for the past month. After hitting a new 3-month low of 1.0107 on August 5, it then rallied strongly. At present, it is trading below 1.0300. A break above this could send it to 1.0350 or at 1.0400. However, it looks like the pair is experiencing some selling pressure at 1.0300. Interestingly, this mark almost falls in line with the 38.2% Fibonacci retracement that I drew. Hence, if the pair is unable to break above the resistance at 1.0300, it could once again revisit its previous low at 1.0107.

Fundamentally, the Canadian dollar or the loonie weakened against the greenback which is represented by the recent rally in the pair because of the dismal employment figures of Canada for the month of July. Canadian firms unexpectedly slashed about 9,300 jobs in July after tallying about 93,000 in job additions in June. Initially, Canada’s employment change number was seen to post about 13,700 new jobs. This drop in Canadian employment caused the nation’s jobless rate to worsen to 8.0% from 7.9%, further lessening the possibility of a central bank rate hike.

For this week, Canada’s July housing starts and trade balance in June are due on Tuesday (August 10) and Wednesday (August 11), respectively. Housing starts for the month of July are seen to be at 185,000 which was a little modest than the previous month’s score of 193,000. Canada’s trade balance for the month of June, on the other hand, are seen to have posted a surplus of C$400 million from a deficit of C$500 million. Better-than-expected results from these reports could resume the USDCAD’s downtrend.

EURO Soared Over the US Dollar On Dismal NFP Result – August 6, 2010

Hello forex peeps! On today’s fx feature is the 4-hour chart of the fiber or the EURUSD pair. In my previous post about it (please see it here) last August 3, I mentioned that as long as its uptrend holds, it would continue to move higher… and it did. As you can see, the pair had consolidated into a symmetrical triangle after reaching a high of 1.3262 on August 3. It then broke out to the upside after finding support at the uptrend line. The presence of a hidden bullish divergence (where the price moves higher and the stochastics moves lower) and its oversold condition when it fell back to the uptrend support could have also led the investors to buy up the euro in exchange of the USD. Still, the pair is facing some heavy selling pressure at 1.3300. Given this, it might a harder time in moving above the mentioned level. It would more likely consolidate again or even retrace before it shoots up again. A break, however, of the uptrend line could push the EURUSD back to 1.3100. But since it is on an uptrend, a move higher is more likely to take place.

The euro’s recent jump was due to the dismal result of the US’s non-farm payrolls (NFP) report. Imagine, US firms about 131,000 jobs in Jul which was far worse than the expected 63,000 job cuts. The country’s unemployment rate, though, managed to remain at 9.5%. Nonetheless, the worse-than-projected NFP count spurred some risk aversion in the market. The difference this time though is that the euro, as mentioned, soared against the greenback. Usually, the EUR gets sold off whenever there is risk aversion in the markets since investors generally seek shelter under the safety of the USD whenever these happen. But apparently, the market is already becoming wary of the US’s recovery which in turn leads them to question the viability of the US dollar.

For the past week, I have observed that the movement of the USD has been more or less positively in line with the US’s fundamentals.Will this trend continue? We will see. If it does then any weak economic update from the US next week could push the EURUSD higher. The Fed is scheduled to release its interest rate decision on Tuesday (August 10) while the US’s inflation and retail sales numbers are due on Friday (August 13). Watch out for any downbeat outlook and dovish statements by the FOMC and/or weak inflation and retail sales numbers!

Watson Pharmaceuticals Net Income Rises! – August 6, 2010

Watson Pharmaceuticals or WPI in the New York Stock Exchange specializes in development, manufacturing, marketing, sale and distribution of brand and generic pharmaceutical products. In the 4th quarter of 2009, they acquired Robin Hood Holdings Limited, Cobalt Laboratories, Inc. and the Arrow Group. This year’s second quarter, their net income increased 26 percent to $207.4 million compared to $164.1 million for the same quarter of last year.

Chart-wise, the stocks broke down from the ascending channel last June but a significant drop hasn’t taken place so it could just move sideways. In case it starts trekking north, the immediate resistance it could hit is $42.44. If the stocks move past above that area, the next resistance could be $45.00. On the other hand, if the stock price starts dropping, the immediate support could be $39.34. If that marker gets broken, the next support could be $37.40.

Gold is Still Alive! Whew! – August 5, 2010

Hello trading fans! Last week gold provided the market with a scare when it temporarily broke its long term uptrend line (kindly see my previous blog here). As you know, a break of an uptrend could spell disaster given the possibility of a reversal. Hence, it’s a good thing that gold managed to pull itself back above the uptrend line again. Gold actually found a nice support at 1,160.00 after it cut through the uptrend line. And now that it is trading above it once more, it’s safe to say that it could continue its journey back north. A break, however, of the uptrend support could once again push it towards 1,160.00. In my opinion, it is imperative for it to clear its all-time high 1,265.05 to be able to extend its present uptrend. A failure to do so could send it in consolidation mode. Worse, gold could even reverse and give back at least part of its gains.

Fundamentally, the demand for gold rose last week, pushing its price up, when the US’s GDP printed a slower-than-projected growth of 2.4% (versus 2.5%) after expanding by 3.7% during the first leg of the year. Prior to that, both core and headline durable goods for the month of June also unexpectedly fell by 0.6% and 1.0%, respectively. This week, frail US economic data has continued to subdue the confidence in the market, causing investors to seek shelter in gold. Pending home sales (-2.6%) and factory orders (-1.2%) likewise posted some unexpected declines.

Gold could experience some volatility tomorrow with the release of the US’s non-farm payroll (NFP) report for the month of July. US firms are seen to have slashed a total of 59,000 workers on top of the 125,000 that was retrenched in June. But if the ADP’s estimate is correct (according to them, US firms did not cut any jobs but even added 42,000 more), risk appetite among investors could return which could spell a retracement in the very short term as they move their funds to riskier assets. Worse-than-expected results, on the other hand, could spur risk aversion which would benefit the safer instruments like gold.

AOL Stocks Rise Despite 2nd Quarter Loss – August 5, 2010

AOL, Inc. formerly known as American Online, a New York based internet and services media company, posted a $1.1 billion loss yesterday. Its online advertising and social-networking service Bebo were under-performing which were some of the reasons that lead to the 10-digit loss. However, after yesterday’s report of more than a billion dollars loss for the 2nd leg of this year, its stocks rose 7.7% to $22.75.

Despite the bad news, the stocks seem to head upward following yesterday’s gain. If it continues the ascend, the immediate resistance AOL could encounter is $23.82. If that marker gets cleared out and the stocks pass above it, $24.50 could be the next resistance. On the other hand, if AOL stocks fail to follow up yesterday’s 7% gain and flow with the negative report, the immediate support could be $20.41. If the stock price slips and drops further below that level, the next support could be $19.61.

UK Pound Bulls Doing Their ‘Thang’ – August 4, 2010

Good day FX friends! On today’s fx menu is the daily chart of the cable or the GBPUSD pair. In my last post about the pair back in July 16 (kindly see it here), I took note of the British pound’s bullish streak over the greenback. Though at that time I mentioned that it could meet some selling pressure at 1.5500. For a time it did but it used the former downtrend line to propel itself above the mentioned level. And after it broke above the 1.5500 marker, it never looked back. As you can see, the pound has continued to pound the US dollar. However, the Sterling pound could be encountering some resistance just below 1.6000. Notice that around this level had been an area of interest before. Given this and the cable’s overbought condition (as indicated by the stochastics), the pair could dip for awhile or move sideways before moving north again. If it retraces, it could fall back to 1.5600, 1.5500 or right at the uptrend line. A break of 1.6000, on the other hand, could push it all the way to 1.6400.

Fundamentally, the pound has been getting the nod from the general public due to the rally in the global equities market. This rally, of course, has been buoyed by a combination of profit taking from short positions, renewed confidence in the market, better economic data from the major economies like the US and euro zone, and upbeat earnings from European and US firms.

The highlight of this week, though, for the UK and the GBP, will be the monetary policy decision of the Bank of England (BOE) tomorrow at 11:00 am GMT. The central bank is generally expected to hold its interest rate at a low of 0.50% and its asset purchase facility at £200 billion. Sir John Gieve, a former deputy Governor of the BOE, and Charles Goodhart, a previous member of the bank’s Monetary Policy Committee, however, say that the interest rate could be hiked sooner than initially projected to control inflation. Both even noted that the rates could go somewhere between 1.00% to 1.50% by the same period of the next year. A rate hike, of course, would make investments in the UK more attractive, thus, increasing the demand for the GBP as well.

Pfizer Gaps Up! – August 4, 2010

Pfizer Inc., an American based pharmeceutical company and one of the biggest of its kind, reported a $2.5 billion net income for the second leg of this year. Aside from that, its revenue increased 58 percent to $17.3 billion. As a result of good news, the Pfizer stocks (PFE in the New York Stock Exchange) gapped up during the opening of yesterday’s trading session and ended with a 5.56% gain to $16.34.

Chart-wise, the stocks recently broke out from the 7-month downtrend and could now hedge up higher.If it does, it could encounter some selling pressure at $17.39 resistance. If that hurdle gets cleared out, the next resistance could be $18.15. On the flip side, the immediate support could be $15.95. If it furthers moves past below the 15.95 price mark, the next support could be $15.50.

Euro Continues to Rise Over the Greenback – August 3, 2010

Good day FX maniacs! Here’s an update on the fiber or the EURUSD pair. As you can see, the pair has managed to bounce off the 1.3000 support and the uptrend line which I noted in my previous post (kindly see it here) to mark a new 3-month high. You see, the pair has been rising since it bottomed out back in June 7. And in the process of doing so, it also broke out from a inverted head and shoulders and escaped from its downtrend line, placing it back on the bullish track. If you look at its present chart, you will see that it has recently achieved its minimum upside target (gauged by projecting the height of the pattern from the point of breakout) which I mentioned way back when it had just broken out from the inverted head and shoulders. Still, the pair could be up for a retracement soon. For one, there is a resistance around 1.3270. Moreover, the stochastics is already indicating that conditions are overbought. In case it weakens, it could fall back down to 1.3000 or 1.2750. On the positive side, a break above 1.3270 could propel it higher towards 1.3750.

Fundamentally, the 1.99% jump in the Dow Jones Industrial Average (DJIA) yesterday led investors to dump the US dollar in favor of the higher yielding assets which consequently pushed the anti-dollar currencies like the EUR higher. Corporations in the US like the Coca Cola Company and Chevron topped the market’s second quarter earnings forecast, lifting the confidence of the general investors and the market as a whole. A bunch of second and third tier US forms are scheduled to release their financials this week. Now if most of them post some handsome profits for the same period again, then the equities markets together with the non-dollar currencies could still rise. Missed profits, on the other hand, coupled with some profit taking actions could, however, temporarily push the equities and the likes of the euro down.

Coca-Cola Stocks Climb! – August 3, 2010

The stocks of Coca-Cola Company or KO in the New York Stock Exchange has been climbing significantly. They are one of the largest producers of carbonated soft drinks which is sold to more than 200 countries around the globe. Anyway, my technical analysis on this last June was when the stocks were still moving inside the descending channel (kindly check here). Now, the descending channel’s resistance has been cleared out. The stock price also broke above the $53.80 and $56.00 resistances in a month span. As it further ascends, the next resistance that Coca-Cola could encounter is $57.43. If that marker gets cleared out, the next resistance could be $59.45. On the flip side, what used to be the $56.00 resistance could now serve as the immediate support. If it further drops below the $56.00 level, the next support could be $54.43.

Chevron Corporation Profit Triples! – August 2, 2010

Chevron Corporation or CVX as listed in the New York Stock Exchange tripled its 2010 2nd quarter net income to $5.4 billion compared to the year earlier. Higher oil prices and a rise in oil production played vital roles in the 10-digit profit of this oil giant beating analysts’ expectation. Chevron stocks closed with a 0.25% gain to $76.21 during last Friday’s trading session.

Chart-wise, the stocks are headed northbound but could encounter some selling pressure at the $77.25 resistance. If that hurdle gets cleared out, the next resistance could be $80.75. On the flip side, the immediate significant support could be $70.96. If the stock price further drops below that area, the next support could be $66.83.

End of the Euro’s Rally Versus the Swissy? – August 2, 2010

Hiyo FX men and women! Welcome to another week and month of forex trading! On today’s canvas is the daily chart of the EURCHF pair. As you can see, the euro has rallied against the Swiss franc after it hit a new historical low at on July 1. Notice that the pair has since traded within a rising channel. However, it appears that it has met some resistance at the 1.3800 market and at the 50% Fibonacci retracement line the I drew. If the pair falls below the support of the rising channel, it could once again revisit its historical low. But if the euro buying continues and the pair clears 1.3800, the 1.4000 price could be its next target. Though with the stochastics in the overbought region, I would be very cautious in buying the pair at this point. But that’s just me.

Well, the rally in the euro was pretty much fueled by a combination of profit taking on short euro positions, good economic data from the euro zone, and better-than-expected second quarter earnings of firms in the US and Europe. But with the lack of positive catalyst coming from the euro zone this week, the euro’s run could be cut short. Switzerland, on the other hand, will publish its year-over-year retail sales figure for the month of June today at 7:15 am GMT. Switzerland’s sales are seen to have grown by another 4.1% which is better than the 3.8% gain that it had during the previous month. Such growth or better would reflect positive on the Swiss economy and the Swissy.

Let’s see how it goes. Stay tuned!