Forex Investment

It wasn’t the best of days for the broader market, as distribution seeped into the picture after a nice multi-day advance. However, a few stocks did shine today, as volume and decent ‘pin action’ fueled nice performances. One recent IBD 100 stock which showed a bit of that type of spirited leadership, after a handful of volatile, but perhaps, necessary weeks of consolidation is Suntech Power Holdings ().

In Wednesday’s session, Suntech Power, a Chinese manufacturer of solar panel modules and cells, demonstrated some of its former strength, which in part, had made it one of the overall leaders within the Energy-Other Group at IBD. While the industry group still maintains a combined Technical / Fundamental Rating of 90 / 96, in recent weeks, a loose and volatile trading range ultimately knocked shares of STP below technical supports and off that particular watch list. However, if Wednesday’s activity is any indication, STP could be heating up once more.

Let bygones be bygones? Post earnings profit-taking last month, to put it mildly, wasn’t what bulls in STP could call constructive behavior. However, in more recent days, the initial near 20% plunge in shares on the heels of its earnings beat (EPS Rating 99), has cooled off tremendously nonetheless. In fact, the past four-and-a-half weeks have been governed by a price contraction that appears to be taking the shape of a weekly handle, with the 50-Day SMA being near the midpoint of that range. In lieu of that action, the current RS Rating of 74 doesn’t sound so bad. It’s thought the current condition could quickly change for the better, as plenty of consolidation work has now been established. Which it seems, has others reaching a similar conclusion judging by Wednesday’s trading.

As for caveats, for purists of this pattern the construction range of the handle, which is just under 20%, does have a bit more depth to it than most would like to see. Further, the Accumulation / Distribution statistic is registering a D+ currently. With that being said, though, the weekly price contraction does set up a potential support situation for bullish positions. Without being a recommendation, the observation is that the recent five-week pivot low of 34.05 can act as both a technical stop loss, as well as an exit which keeps the money management decision to less than 7% risk. Further, in conjunction with some interesting volume and price action in both the stock and options during Wednesday’s session, it’s thought that the observations made here, may be of some interest to a few strategists.

Back to today’s action, STP put in a bullish engulfing candle on its heaviest volume since one month ago. With more than 4.4 million shares changing hands, the activity ran at more than 86% above its 50-Day moving average. By my reckoning, possibly one million of that volume was attributed to a flurry of options interest in the May 35 Puts for 1.55 to 1.60. A ‘zillion’, well not really, prints crossed the tape over a couple minute span which amounted to more than 3,000 contracts. With a delta of 38 thereabouts, the stock volume math is easy enough, which does seem to meld with the stock action in and around that time.

If a delta neutral Married Put (Long Stock / Long Put) is what transpired, many traders it seems just entered into Long Curve or Long Volatility positions. With earnings slated for May 3rd and premiums seen as slightly cheap compared to the 90-Day SV of the stock, the trade, well the side presented here, makes sense to this unbiased and neutral observer. While there are no guarantees, the idea seems grounded enough in theory, for a still fiery hot area of the market.

BEIJING (XFN-ASIA) - The People’s Bank of China (PBoC), or central bank, might hike its benchmark rate by 27 basis points (bps) in the second quarter if inflation picks up in the first quarter, Standard Chartered Bank chief Asia economist Stephen Green said.

Commenting on the remarks made by Yi Gang, assistant governor of the PBoC, that the primary aim of monetary policy in China is currency stability, Green noted that the central bank is striving to maintain a negative spread of 250-300 bps or so against dollar LIBOR rates.

A widening gap in the rates on the two currencies could prevent dollars being converted into yuan to realise a higher return on appreciation of both the yuan and the assets the yuan are parked in because this would reduce yields on the yuan, Green said.

An interest rate hike in China would narrow the spread, therefore causing capital inflows into yuan-denominated assets and subjecting the currency to upward pressure, he added.

“If inflationary pressure continues to build though, the PBoC will be increasingly caught between a rock and a hard place,” Green said.

However Green said the central bank need not worry too much about China’s two main classes of assets - stocks and real estate - lose their appeal, which seems to be happening now.

“Real estate and stocks… look pretty fully valued, at least in the short-term, and while the former is now increasingly heavily taxed, the later is looking volatile”, he said.

Green noted that if one takes such assets out of the equation, and assumes the current rate of yuan appreciation is sustainable, the rationale for the yuan carry trade looks weak.

“We are sticking to the view that an apparent investment surge and inflation worries in the first quarter will spook enough people in Beijing to push through a 27 bps bank rate hike in the second quarter,” he added.

jianbo.wu@xfn.com

For more information and to contact AFX: www.afxnews.com and www.afxpress.com

TSAR Nicholas of Russia used to take his summer break in the Baltic resort of Heiligendamm, strolling along the pale sands before retiring to an elegant white seafront villa he had built in 1854.

But anyone looking for the classical residence in 2007 will be disappointed: it was torn down so a brand new media centre with room for 3,000 journalists could be built on the spot. The old building was in regular use for more than 150 years; the new building will be used for barely four days before being closed again.

The fate of the Tsar’s residence is just the most extreme example of the sort of lengths governments go to when playing host to the Group of Eight summit, the annual gathering of the world’s most powerful political leaders.

Those leaders began arriving in Germany yesterday afternoon, flying to Rostock 15 miles away and transferring to the summit site by helicopter.

Travelling to Heiligendamm by air is the best way to enter the “ring of steel” that now divides the town from the rest of the world. Seven and a half miles long, eight feet high and topped with razor wire and motion sensors, the fence that encircles Heiligendamm contains a total of 500 tonnes of steel.

In all, 16,000 German police have been deployed to watch over the thousands of environmentalists, anti-poverty campaigners, and anarchists who are massing around the summit: water cannons were used for the first time yesterday afternoon, as police estimated that 10,000 protesters had reached the fence.

The German authorities estimate security spending alone will exceed 61 million but they may be getting off lightly compared to British taxpayers. Protecting the G8 summit at Gleneagles in 2005 cost the Scottish Executive 72 million. The meeting itself, from booking the hotel to feeding thousands of officials and journalists, cost the Foreign Office another 12.7 million.

Some of the G8’s critics are now saying that the summit itself has outlived its usefulness. Jean Ziegler, the United Nations special rapporteur on the right to food, yesterday joined the abolitionist cause, addressing the “Alternative G8″ meeting of activists held near Rostock.

“This should be the last G8 summit. The institution should be abolished. Civil society is now planet-wide,” he said, The G8 nations represent 13 per cent of the world’s population, but “2.7 billion of the world’s population is living below the extreme poverty line - that’s nearly 40 per cent.”

The alternative summit, supported by many aid agencies, aims to mount an explicit challenge to the legitimacy of the meeting in Heiligendamm.

Michael Moore, the polemical US filmmaker, is expected to attend, as is Wangari Maathai, who in 2004 became the first African woman to win the Nobel Peace Prize when she was honoured for her campaign to plant tens of millions of trees across Africa in order to slow deforestation .

Tom Sharman of ActionAid, said the justification for the huge expense and disruption of formal summit meetings is wearing perilously thin, a feeling only reinforced by the White House yesterday making clear that the US did not plan to sign up to a global warming deal this week.

“The G8 is worthwhile if it can act effectively on issues like poverty, AIDS and climate change,” Mr Sharman said. “But if it raises false hopes and delivers half-measures, it is worse than useless. Right now it is close to losing its credibility.”

Pete Hardstaff, the head of policy at the World Development Movement, took an even harder line. “This self-selecting private members club of the world’s richest countries doesn’t have the will, or the legitimacy needed to tackle the world’s most pressing problems,” he said. “It’s time for it to go.”

Trying to address accusations of elitism, the G8 since Gleneagles has practically become the Group of Thirteen, since the leaders of China, India, Brazil, Mexico and South Africa are all invited to attend the summit. Leaders from developing nations will also be present in Heiligendamm; Tony Blair is today expected to have a private meeting with Umaru Yar’Adua, the new president of Nigeria.

Mr Blair, now on his eleventh and last G8 meeting, has become less and less enthusiastic about formal summits over his decade in office.

Privately, one government source concedes that an ever-longer guest list at summits can limit the scope for free-flowing discussions. “It is getting harder - it’s now the G8 plus 5, and there are more and more other leaders turning up. Once you could look around the table and see everyone, but now you practically need binoculars to see everyone,” said the source.

British officials remain adamant that the Gleneagles summit was a success because it put Britain’s chosen issues - climate change and African development - on the international agenda.

Philip Fiske de Gouveia, an associate at the Foreign Policy Centre, a think-tank close the Labour Party, said that the very fact that summits attract such enormous worldwide attention can be a useful tool for “public diplomacy.”

“Leaders are becoming increasingly sensitive to the fact that people care about foreign policy so they are more careful about how they present themselves at these summits,” he said.

And some insist that away from the cameras, important diplomatic deals can still be done and disagreements averted, all with a handshake and smile.

“Nothing beats face-to-face, eye-to-eye contact - it’s not just the meeting around the table, at every summit there are tremendous opportunities to talk informally, in the corridors, over coffee, wherever, and that gives you a chance to clarify the points of view of other nations,” said Dennis MacShane, a former Foreign Office minister and a veteran of dozens of summits.

“It is regrettable that serious efforts to make the world run more smoothly are disrupted by demonstrators, but summits are an awful lot better than the alternative - they are the ultimate expression of the principle that jaw-jaw is better than war-war. One hundred years ago, Britain sent gunboats to resolve disputes with other nations. Now we send government ministers.”

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August 13, 2007 — Sony BMG CEO Rolf Schmidt-Holtz is pondering a move into the music-publishing business, and has his sights set on the European rights to some of BMG’s former U.S. and U.K. song catalogs, according to multiple sources familiar with the situation.

But the label could face a big hurdle in its desire to be a player in the booming music-publishing biz: its co-owner, Sony Corp., already controls a top publishing outfit.

Sony BMG is a joint venture of the recorded music divisions of Bertelsmann and Sony Corp., which also owns Sony/ATV, home of the publishing catalogs of the Beatles and Michael Jackson.

Schmidt-Holtz has made no secret of his desire to start a new publishing division within Sony BMG. At the very least, the company wants the ability to sign new artists to publishing deals at the same time they ink recording contracts.

But sources say Sony BMG is thinking even bigger: it sees a golden opportunity to begin building a catalog with the former BMG Music Publishing rights up for sale.

Bertelsmann recently sold BMG Music Publishing to Universal Music Group for $2 billion. Universal is auctioning off the European publishing rights to Zomba, Rondor and 19 Entertainment. The Zomba catalog is believed to be worth in excess of $150 million.

Action Insight | Written by ActionForex.com | Jul 02 07 07:08 GMT |
Forex Daily Technical Report Yen Recovers after Tankan, Dollar Eyes ISM Manufacturing Index

The Japanese yen recovers mildly today after Q2 Tankan survey showed that confidence among Japanese business remained buoyant. Headline diffusion index for large manufacturers was unchanged at 23. Meanwhile, large non-manufacturers also remained at 22. Capital expenditure increased by 7.7%, which is considerably higher than prior 2.9% but was below expectation of 9.0%. But after all, the report did little to change markets’ expectation that the BOJ will probably hike in August again.

Dollar edges lower today as sentiments on the greenback remains weak. A bunch of manufacturing data will be released today from US and Europe with special focus on the ISM manufacturing index in the US which is expected to remain steady at 55 in Jun. The index bottomed at 49.3 in Jan but recovered nicely since than, suggesting that manufacturing businesses are starting to pick up momentum again. One the other hand, the price paid index could have already topped at 73 in Apr and is expected to retreat further from 71 to 69 in Jun, indicating reduction in pipeline inflation pressure. Manufacturing PMI in Germany, Eurozone and UK are also due today and are expected to remain steadily close to prior mild expansionary figure. Meanwhile, Swiss PMI is expected to rise from 58.9 to 59.8. EUR/USD

Daily Pivots: (S1) 1.3467; (P) 1.3504; (R1) 1.3578; «www.actionforex.com»

EUR/USD edges higher to 1.3546 today and at this point, intraday bias remains on the upside as long as 1.3503 minor support holds, further rise is expected to be seen to test 1.3553 resistance. As discussed before break of 1.3553 will confirm that corrective fall from 1.3681 has already completed with three waves down to 1.3262, just meeting 100% projection of 1.3681 to 1.3391 from 1.3553 at 1.3263. Retest of 1.3681 high should then follow. Touching of 1.3503 will turn intraday outlook consolidative first but downside should be contained above 1.3421 support and bring another rally.

In the bigger picture, whole up trend from 1.1639 is likely still in progress with medium term rising channel remains intact. Break of 1.3553 near term resistance will confirm that the fall from 1.3681 is in corrective nature. In other words, the rise from 1.3262 should represent resumption of the up trend and target 61.8% projection of 1.2865 to 1.1.3681 from 1.3262 at 1.3766.

However, we maintain that risk of medium term reversal remains high. Upside momentum continues to diminish with bearish divergence condition in daily MACD and RSI. As discussed before, whole medium term up trend from 1.1639 is interpreted as having first move completed with three waves up to 1.2978, subsequent sideway consolidation completed at 1.2483. Rise from 1.2483, which is treated as resumption of up trend from 1.1639. Such up trend is now is expected to terminate between 61.8% projection of 1.2865 to 1.1.3681 from 1.3262 at 1.3766 and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822.

But still, even though a break below 1.3421 support will turn short term outlook bearish again, sustained trading below medium term rising channel support (now at 1.3129) is needed to confirm whole up trend from 1.1639 has completed. Otherwise, another high could still be seen before EUR/USD finally make an important top.

GBP/USD

Daily Pivots: (S1) 2.0033; (P) 2.0058; (R1) 2.0110; «www.actionforex.com»

Cable remains strong today with recent rally extending further to as high as 2.0113. At this point, further rally is expected to be seen to retest 2.0132 high. Break will encourage further rise to 61.8% projection of 1.9183 to 2.0132 from 1.9621 at 2.0207 first. Below 2.0008 support will indicate that a short term is likely formed and bring pull back to 1.9928 support or below. But downside should be contained well above 1.9783 resistance turned support and bring rally resumption.

In the bigger picture, the completion of the fall from 2.0132 in a corrective 3 wave manner and the holding of the medium term rising channel indicates that rise from 1.8090 is still in progress, so is the whole up trend from 1.7047. There are various interpretation of the rally from 1.7047 but none is really convincing yet. Also, medium term upside momentum remains unconvincing with bearish divergence conditions staying in weekly MACD and RSI as well as daily MACD and RSI.

Focus should now be on 2.0207 projection target. Sustained break of this level, which will also have 2.0106 cluster resistance (100% projection of 1.7047 to 1.9024 from 1.8090 at 2.0067) taken out too, will indicate that underlying bullishness in cable is much stronger than we originally thought. Also, this will add much credence to the case that whole up trend from 1.7047 is resumption of multi-year up trend from 1.3680. In such case, further rally should then be seen to 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 first. On the other hand, failure of taking out this projection target and sustained trading below medium term rising channel (now at 1.9702) will argue that whole rise from 1.7047 has completed and put 1.9183 support into focus.

USD/CHF

Daily Pivots: (S1) 1.2168; (P) 1.2250; (R1) 1.2294; «www.actionforex.com».

USD/CHF remains weak today and edges further lower to 1.2195 so far. At this point, intraday bias remains on the downside as long as 1.2251 minor resistance holds and further decline is expected towards 1.2146 near term support. Break of 1.2146 will confirm that rise from 1.1993 has completed and bring further fall towards medium term rising trend line (now at 1.2045) first. Above 1.2251 will turn intraday outlook consolidative first but recovery should be limited below 1.2339 resistance and bring another fall.

In the bigger picture, the previously discussed head and shoulder bottom formation (ls: 1.1919, h: 1.1878, rs: 1.1993) scenario didn’t play out as rally from 1.1993 lost steam well below mentioned 1.2571 resistance. Sharp decline from 1.2467 and break of the short term rising trend line revives the case that price actions from 1.1919 is likely developing into a medium term triangle formation. Nevertheless, medium term outlook will remain mixed with USD/CHF still staying inside established range of 1.1993 and 1.2467.

On the downside, break of 1.1993 low will indicate that above mentioned triangle consolidation has completed. Medium term outlook will confirm to be bearish and bring deeper decline to 1.1878 low first and then towards 1.1288 (04 low). On the upside, break of 1.2467 will indicate that rise from 1.1993 low has resumed for 1.2571 resistance. And same as before, break will confirm the head and shoulder bottom and have medium term outlook turned bullish for 1.2768 resistance and then 1.3283 high.

USD/JPY

Daily Pivots: (S1) 122.88; (P) 123.22; (R1) 123.49; «www.actionforex.com»

USD/JPY’s rebound from 122.22 was limited at 123.55, failing to take out mentioned 123.53 resistance decisively, i.e the fall from 124.13 is not confirmed to be completed yet. Subsequent fall has now pushed USD/JPY below 122.80 support, which indicates correction from 124.13 is probably still in progress for another test of 122.22 support before completion. On the upside above 123.53 is needed to turn intraday bias back to the upside for retest of 124.13 high.

In the bigger picture rise from 115.13 is still in progress with 122.01/05 cluster support (61.8% retracement of 120.76 to 124.13 at 122.05 and 23.6% retracement of 115.13 to 124.13 at 122.01) remains intact. Such rally is treated as resumption of the rise from 108.99, which in turn, is the resumption of whole up trend from 101.66 after interim correction has completed with three waves down from 121.38 to 108.99. Further rally is expected to be seen to next medium term target of resistance zone of 100% projection of 101.65 to 121.38 from 108.99 at 128.72 and 100% projection of 108.99 to 122.17 from 115.13 at 128.31. Break of 122.01/05 cluster support will indicate rise from 115.13 has completed and bring deeper correction. But still, rise from 108.99 is still in force as long as pull back is contained well above 115.13 low.

Also, note that USD/JPY is staying comfortably above the long term falling trend line (147.68 to 135.20). Multi-year consolidation pattern that started from 147.60 should have already completed. But, whether current rise from 101.65 represents the resumption of whole up trend from 79.75 remains to be seen. Note that above mentioned medium term projection target of 100% projection of 108.99 to 122.17 from 115.13 at 128.31 and 100% projection of 101.65 to 121.38 from 108.99 at 128.72 are in proximity to 78.6% of 135.20 to 101.65 at 127.95. This cluster resistance zone will be important to determine the long term trend.

EUR/JPY

Daily Pivots: (S1) 165.85; (P) 166.38; (R1) 167.32; «www.actionforex.com»

EUR/JPY’s rebound from 164.23 was limited by 166.94 resistance and continues to retreat today. Nevertheless, further rally is expected as long as 165.39 support holds. As discussed before, correction from 166.94 could have completed after drawing support from 50% retracement of 161.49 to 166.94 at 164.22. and rise from 164.23 should represent resumption of whole rally from 161.49. Break of 166.94 high will confirm this and bring rise to 61.8% projection of 161.49 to 166.94 from 164.23 at 167.60 first.

However, below 165.39 will suggest that consolidation from 166.94 is probably still in progress with another fall to 164.23 before completion. Still, downside is expected to be contained above 61.8% retracement of 161.49 to 166.94 at 163.57 and bring another rally.

In the bigger picture, whole medium term rally from 130.60 is still in progress and the interpretation remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure. With 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 taken out decisively, next upside target will be 100% projection of 137.16 to 159.63 from 150.75 at 173.22.

On the downside, it will take a break of 161.49 support to indicate rise from 150.75 has completed. Otherwise, further rally is still in favor even in case of pull back

Forex News Digest

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«c.moreover.com»
Mon, 2 Jul 2007 01:25:00 GMT from Reuters

«c.moreover.com»
Mon, 2 Jul 2007 00:43:00 GMT from Sydney Morning Herald

«c.moreover.com»
Mon, 2 Jul 2007 00:22:00 GMT from Economictimes

«c.moreover.com»
Mon, 2 Jul 2007 00:06:00 GMT from Bloomberg

«c.moreover.com»
Sun, 1 Jul 2007 23:59:00 GMT from stuff.co.nz

«c.moreover.com»
Sun, 1 Jul 2007 23:23:00 GMT from Bloomberg

«c.moreover.com»
Sun, 1 Jul 2007 22:36:00 GMT from Bloomberg

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Tankan capex Q2 7.70% 9.00% 2.90%
23:50 JPY Japan Tankan big mfg Q2 23 23 23
23:50 JPY Japan Tankan big non-mfg Q2 22 22 22
7:30 CHF Swiss PMI Jun 59.8 58.9
7:55 EUR Germany Manufacturing PMI Jun 56.4 56.1
8:00 EUR Eurozone Manufacturing PMI Jun 55.4 55
8:30 GBP U.K. Manufacturing PMI Jun 54.7 54.9
14:00 USD U.S. ISM manufacturing Jun 55 55
14:00 USD U.S. ISM Manu. Price Paid Jun 69 71
Canada Market holiday

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