Forex Investment

Former IBD 100 stock Lam Research () was delivered a one-two punch in Wednesday’s session. While the broader averages closed higher, many semiconductor stocks, particularly equipment manufacturers were hit as a somewhat disappointing earnings report from heavyweight Applied Materials () was ill-received by investors. The downside pin action in the stock made its impact felt on related issues such as LRCX and even current growth leader Varian Semiconductor (); which was also part of a Credit Suisse conference.

Lam Research also had a second-tier brokerage, Merriman Curhan cut the stock to “Neutral” from “Buy”. Combined, today’s one-two punch sent LRCX shares gapping lower and closing down -1.51 at 51.68. With that said, though, and while the headlines certainly hint at a grizzly verdict, is LRCX a lamb ready for slaughter? Or, might the stock be appreciated with a more bullish gaze courtesy of one or more optionable alternatives? In the following, I’ll offer up a strategy or two, which upon doing the homework, investors can decide for themselves if its truly a good time to “Buy, Buy, Buy!” or some other well-structured option.

Buying hard pullbacks isn’t a style many investors feel comfortable with. However, a couple technical levels have been tested with Wednesday’s drop in LRCX. Further, when combined with other tools of the trade and maybe a bit of anticipation, traders might reach a bullish conclusion like the one offered. So, what evidence do we have at this point? First, LRCX tested and held above its 50-Day exponential moving average and 38% Fibonacci retracement from its 2007 lows. Second, while volume ran well-above average and might suggest distribution, the stock actually closed in the upper part of its trading range and represents a decision bar known as a Doji in candlestick lingo.

If today’s pivot low in LRCX were to hold up, traders might want to look at the weekly view for confirmation. The reason being, the price action could easily mark a handle approximately 9% in depth and well-suited to the bullish price structure on that time frame. For traders this also means entering closer to determined supports, which affords the ability to exit with less stock risk, barring an outsized contra gap, than would be possible with the more traditional breakout entry. Further, in conjunction with a well-suited limited risk optionable strategy, our chances for success are increased over the long run.

Looking at the options board in the second half of trade, the implied-to-statistical relationships suggested that spreading versus an outright purchase for any bullish strategies held a slight edge. With that being the case, two bullish position types that could also appreciate a theoretical edge are the Bull Vertical and the bullish Long Butterfly. Shown above are the risk graphs of the June 50 / 55 Bull Call and the June Fly, which uses the 60 Strike to maintain a limited risk structure.

The graph above may look a bit odd to some traders and that’s because we’re focused solely on what the risk versus reward prospects of each are, ten days forward. With the initial risk involving less than 4% in the stock based on money management which uses the Doji low or perhaps a stop 1% below the 50-Day simple moving average, any trades would likely be tied to a swing or shorter-term positioning. That means a ten day assessment is a better guide than looking at the risk and reward on an expiration basis.

In checking out the characteristics of each, we can quickly get a feel for the fact that this far out, that the Butterfly doesn’t really serve the trader intent on trading in this particular style too well. It affords a bit of risk reduction if we look at Points 1 and 2, which are the fore mentioned money stops. However, the slightly stronger defense pales to the ability to actually profit and / or adjust into a stronger and longer-minded position, should some Lam be served up like the bull in the coming days ahead.

Visit the http://www.investors.com/FinancialDictionary/List.asp?type=s&key=11 for an extensive list of option-related terms.

The observations provided are not investment advice or a recommendation, the suitability of which is considered the responsibility of the trader.

Copyright 2007 through Optionetics, Inc. All rights reserved. http://www.optionetics.com?source=ibdweb is a Trademark or a registered Trademark of Optionetics, Inc., in the United States and/or in other countries.

Action Insight | Written by ActionForex.com | Nov 13 07 13:43 GMT |
Forex Mid-Day Technical Report Sterling Boosted by CPI, ZEW Limits Euro’s Rebound

Most currencies recover against dollar and yen today as carry trade unwinding takes a breath. In particular, Sterling was boosted by stronger than expected inflation data. Meanwhile, Euro’s rebound was limited after disappointing ZEW. The net result can also be seen in the pullback in EUR/GBP cross today. Further consolidation is likely today with a light economic calendar in US with Fed budget and pending home sales featured only.

Sterling continues to rebound today, riding on stronger than expected CPI inflation report. Headline CPI accelerated much faster than expectation to 2.1% yoy, comparing to consensus of 1.9% and breached BoE’s target rate of 2.0%. Retail price index also accelerated to 4.2% yoy. The data suggests that there is little room for BoE to cut rates. Attention will turn to tomorrow’s Quarterly Inflation Report from BoE for updated projections. The positive impact on Sterling was partly offset by weaker than expected RICS house prices growth.

Euro attempted a rebound earlier today but upside is so far limited after disappointing data from Eurozone. German investors sentiments worsened much more than expected in November. The ZEW Economic Sentiment index dropped to a 15 year low of -32.5 in Nov, much weaker than consensus of -20. Eurozone ZEW also dropped steeply to -30 comparing to consensus of -20. ZEW president Wolfgang Franz said that the depreciation of dollar is putting a burden on German exports and economic development may lose “considerable speed”. Eurozone Sep industrial production dropped -0.7% mom, dragging yoy rate to 3.5%, also missed expected of -0.2% mom, 4.7% yoy.

Overnight, BoJ left rates unchanged at 0.50% as widely expected. The vote split was again 8-1, with ultra-hawk Atsushi Mizuno continued to be the sole dissenting vote in favor of an interest rate rise, the same as in the past six meetings. In the monthly report, BoJ continues to expect that Japanese economy is expanding moderately. BoJ Governor Fukui downplayed the downside risk of the global economy to Japan and referred to today’s release of stronger than expected Q3 GDP figures. But he reiterated again that there is no preset time for raising interest rates. EUR/USD

Daily Pivots: (S1) 1.4480; (P) 1.4577; (R1) 1.4629; «www.actionforex.com»

EUR/USD’s retreat from 1.4571 was supported by 4 hours 55 EMA and short term rising channel and recovers from there. As discussed before, an intraday low is in place and further recovery should be seen towards 1.4663 resistance. Break will indicate that correction from 1.4571 has completed and encourage retest of this high. On the downside, below 1.4519 will indicate that correction from 1.4751 is still in progress. But rise from 1.4014 should still be in force as long as 1.4414 clusters support (50% retracement of 1.4124 to 1.4751 at 1.4438) remains intact

However, note that break of 1.4441 will firstly indicate that rise from 1.4014 has completed on mild bearish divergence condition in 4 hours MACD and RSI. Secondly, this will warn that whole rise from 1.3360 has completed with a five wave rally to 1.4751, after meeting 100% projection of 1.3550 to 1.4281 from 1.4014 at 1.4745. In such case, a medium term top is likely in place. Lengthier consolidation could then be seen with a dip into 1.4014/4282 support zone before resuming the medium term up trend.

The long term view remains unchanged. Regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high), with subsequent correction ended at 1.1639. Such rally is expected to extend further to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance. A break below 1.3851 is resistance turned support is needed to be the first signal that such rally has completed. Otherwise, medium term outlook remains bullish.

GBP/USD

Daily Pivots: (S1) 2.0412; (P) 2.0640; (R1) 2.0756; «www.actionforex.com»

Cable’s fall from 2.1161 was contained by 2.0538 cluster support (50% retracement of 1.9879 to 2.1161 at 2.0520) and recovers from there. As discussed before, an intraday low is in place and further recovery should be seen towards 2.0773 cluster resistance. Also, rise from 1.9879 remains in force as long as 2.0520/38 cluster support holds. Break of 2.0773 will indicates that correction from 2.1161 has likely completed and bring stronger rally to retest this high.

However, note that decisive break of 2.0520/38 cluster support will indicate that whole rise from 1.9652 has already completed, after touching medium term rising channel resistance. In such case, focus will be back to medium term rising channel support (now at 1.9986).

In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. Break of 61.8% projection level at 2.0677 now encourages further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.

USD/CHF

Daily Pivots: (S1) 1.1233; (P) 1.1266; (R1) 1.1316; «www.actionforex.com».

USD/CHF continues to consolidate above 1.1187. Further decline is still in favor as long as 1.1340 minor resistance holds. Below 1.1187 will encourage fall to test next important medium term support at 1.1100 (95 low). On the upside, above 1.1340 will indicate that a short term bottom is possibly formed and bring recovery to 4 hours 55 EMA (now at 1.1389) and above. But upside should be limited below 1.1597 support turned resistance and bring another fall.

In the bigger picture, medium term down trend from 1.3283 (05 high) has now breached medium term support of 1.1288. The current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend resumed. With this interpretation, next downside target is 1.1100 clusters support (95 low and 100% projection of 1.3283 to 1.1919 from 1.2467 at 1.1103). Hence, downside could be supported there initially on oversold condition and bring rebound.

On the upside, even though a stronger rebound would be seen in case of a break of 1.1597 resistance, break of 1.1891 resistance is needed to indicate fall from 1.2467 has completed. Otherwise, further decline is still in favor after correction.

USD/JPY

Daily Pivots: (S1) 108.75; (P) 109.77; (R1) 110.42; «www.actionforex.com».

USD/JPY continues to consolidate above 109.12 low today, after being support slightly above 108.99 medium term support. At this point, further decline is still expected as long as 110.74 resistance holds. Sustained break of 108.99 will encourage further decline to next short term target of 100% projection of 124.13 to 111.59 from 117.94 at 105.40. On the upside, above 110.74 will indicate a short term bottom is possibly in place and bring recovery to 112.04/113.39 resistance zone. But upside should be limited there and bring another fall.

In the bigger picture, the three wave structure of the up trend from 101.65 to 124.13 suggests that it’s corrective in nature. Such development flipped favor to the case that the rally from 101.65 could indeed be the final leg of a long term triangle formation (147.68, 101.22, 135.20, 101.65, 124.13). The break of falling trend line (147.68, 135.20) was merely a throwover in the last leg. Sustained trading below 108.99 low will add more credence to this case and put key long term support zone of 101.22/65 into focus. On the upside, break of 115.91 resistance is needed to be the first signal that fall from 124.13 has completed. Otherwise, medium term outlook remains bearish.

EUR/JPY

Daily Pivots: (S1) 157.76; (P) 160.04; (R1) 161.26; «www.actionforex.com»

EUR/;JPY made an intraday low after reaching 158.67. At this point, further consolidation and recover could be seen. However, as long as upside is limited below 164.00 resistance, current recovery from 158.67 is treated as correction to fall from 167.62 only and another decline is still in favor. Below 158.67 will encourage further fall towards 61.8% retracement of 149.27 to 167.72 at 156.31 first.

Also, note that prior break of 160.67 clusters support (38.2% retracement of 149.27 to 167.77 at 160.70) indicates that EUR/JPY is probably still bounded in large scale consolidation pattern that started at 168.93. That is, the current fall from 167.72 represents the last falling leg of such consolidation and retest of 149.27 could be seen before completing this consolidation.

In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed. Meanwhile, on the downside, break of 149.27 low will also have the long term rising channel taken out, which in turn add much weight to the case that rise from 88.97 has indeed completed at 168.83 and bring much deeper medium term decline.

Forex News Digest

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«www.bloomberg.com»

«c.moreover.com»
Tue, 13 Nov 2007 10:42:00 GMT from International Herald Tribune

«c.moreover.com»
Tue, 13 Nov 2007 10:37:00 GMT from Metronews

«c.moreover.com»
Tue, 13 Nov 2007 10:22:00 GMT from Reuters

«c.moreover.com»
Tue, 13 Nov 2007 09:57:00 GMT from Reuters

«c.moreover.com»
Tue, 13 Nov 2007 09:44:00 GMT from Canoe Money

«c.moreover.com»
Tue, 13 Nov 2007 09:36:00 GMT from Marketing News International

«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
JPY BOJ rate decision 0.50% 0.50% 0.50%
23:50 JPY Japan GDP annualized Q3 2.60% 1.80% -1.20% -1.60%
23:50 JPY GDP Q/Q Q3 0.60% 0.50% -0.30% -0.30%
23:50 JPY GDP deflator Y/Y Q3 -0.30% -0.30% -0.30%
00:01 GBP U.K. RICS house prices Oct -22.2 -18.00% -14.60% -14.9
06:00 JPY BOJ Monthly report
09:30 GBP U.K. CPI M/M Oct 0.50% 0.30% 0.10%
09:30 GBP U.K. CPI Y/Y Oct 2.10% 1.90% 1.80%
09:30 GBP U.K. RPI M/M Oct 0.40% 0.30% 0.30%
09:30 GBP U.K. RPI Y/Y Oct 4.20% 4.10% 3.90%
09:30 GBP U.K. RPI - X M/M Oct 0.40% 0.30% 0.30%
09:30 GBP U.K. RPI - X Y/Y Oct 3.10% 3.00% 2.80%
10:00 EUR Eurozone Industrial prod’n M/M Sep -0.70% -0.20% 1.20%
10:00 EUR Eurozone Industrial prod’n Y/Y Sep 3.50% 4.70% 4.30%
10:00 EUR Eurozone ZEW Econ. Sent. Nov -30 -20 -19
10:00 EUR Germany ZEW Econ. Sent. Nov -32.5 -20 -18.1
19:00 USD U.S. Fed budget Oct -54.0B -49.32B
20:00 USD U.S. Pending home sales M/M Sep -2.50% -6.50%
20:00 USD U.S. Pending home sales Sep N/A 85.5

«www.actionforex.com»

There are moments in the febrile atmosphere of US politics when you have to pinch yourself to remind yourself what date it is. The pack of at least 14 contestants for the 2008 presidential race are campaigning with the kind of fury associated with the closing stages of an election. Do they know there are still 611 days to go?

One such moment occurred this week when the latest polling intelligence was released to gasps of astonishment. The figures showed that Rudolph Giuliani had pulled ahead of his main rival, Senator John McCain of Arizona, by 23%, and is in front of the leading Democrat contender, Hillary Clinton, confounding critics who portray the former mayor of New York as unelectable.

Mr Giuliani sought to capitalise on this good news yesterday when he addressed the people he most needs to convince if he is to secure the Republican nomination early next year - members of the socially conservative wing of the party, holding its annual get-together in Washington.

That he was invited to address the meeting at all is in itself a sign of how far his star has risen. Two years ago the Conservative Political Action Conference, as the gathering is called, rebuffed this pro-abortion, pro-gun control, and pro-homosexuality New Yorker.

The simple explanation for his success is his image as the nation’s hero of 9/11. He did not mention his role on September 11 directly in his speech yesterday, but it was the unspoken theme. “What we all need to do, is to understand that America has the right ideas. We should not be embarrassed about ourselves,” he said. “We shouldn’t have our heads down. Every single one of our problems has to be solved from our strengths. And we have great strength. We are the luckiest people in the world. We have freedom.”

The story of what Mr Giuliani did on September 11 is the stuff of legend: how he was told of the first plane hitting the Twin Towers while at breakfast and hurried to the site; how he made a harrowing march through the dust and raining ash of the stricken buildings; and how he addressed the people of New York with a message of hope while George Bush was nowhere to be seen.

That day, famously, turned him into America’s mayor, earned him an honorary British knighthood and the title of Time person of the year, and elicited comparisons to Winston Churchill. The glow has sustained him ever since.

After he left City Hall less than four months after the attacks on New York, he become a mainstay of the speaker circuit. In 146 trips to various parts of the US he has built up a fan base, as well as earning the loyalty of at least 170 Republican politicians for whom he has campaigned - two valuable weapons in his would-be presidential armoury.

But the closer he gets to formally announcing his intention to run for the White House, the louder the questions become about his fitness for office. There are the questions about his health as a survivor of prostate cancer, though he is fully recovered, and his relative lack of experience. There have only been two former mayors who went on to become president (Grover Cleveland, Buffalo, 1885; Calvin Coolidge, Northampton, 1923) and both had wider exposure to elected office than Mr Giuliani.

“Right now he’s basking in the glow of his 9/11 image,” said Thomas Mann, a senior fellow of the Brookings Institution in Washington. “But he faces six months of intense scrutiny in which Republicans are going to become much more familiar with his record.”

That process has begun, with two books and a documentary raking over his leadership - debunking his record as mayor, and even doubting his image as the hero of 9/11. His achievements during his two terms as mayor were impressive, notably the “zero tolerance” reduction in crime by 57%, and the cut in the murder rate, which fell by 65%. But, according to these critiques, the headlines obscured the backbiting that went on within City Hall under Mr Giuliani.

Flawed or Flawless?, a biography by Deborah and Gerald Strober compiled through interviews with people who knew and worked with him, contains several scathing references. Carol Bellamy, a New York state senator and former law school classmate of Mr Giuliani, told the authors: “There’s quite a difference between being strong and fighting all the time. It seemed that, if you could pick a fight or not pick a fight, he picked a fight.”

Giuliani Time, a new film by Kevin Keating, argues that his brand of politics polarised the city on racial lines, and increased the gap between rich and poor. It shows Ed Koch, Mr Giuliani’s predecessor but one as mayor, saying of him: “He uses the levers of power to punish any critic … That’s why I have referred to him as Pinochet, Caligula. Maybe it’s a combination of the two.”

The most excoriating analysis comes from Wayne Barrett, a senior editor at Village Voice, and Dan Collins in their book Grand Illusion. They argue that quite apart from being the hero of 9/11, which they call a myth, Mr Giuliani failed to prepare the city for a major attack, leaving it fatally exposed. They investigate the faulty radio systems which put firefighters’ lives at risk, and decry Mr Giuliani’s decision to place the city’s emergency command post, which should have been where the rescue mission was coordinated, in the worst possible position: 23 floors up the World Trade Centre, which was already known to be a favoured terrorist target.

Barrett believes that unless the other presidential candidates or the media begin seriously to question Mr Giuliani’s record on terrorism, nothing will stop him. “In a country that is increasingly devoted to spin, it has become almost unpatriotic to question his image as the 9/11 hero,” Barrett told the Guardian.

Mr Giuliani faces an uphill fight to convince the most active members of the Republican party, the social conservatives and religious right who traditionally mobilise much of the turnout in the primaries, that he is worthy of their support. In recent weeks he has been making awkward attempts to reposition himself on key social issues. He has invoked the name of his “hero”, Ronald Reagan. He has insisted he hates abortion, and would appoint conservative judges to uphold the fundamentals of the constitution.

He has tried too to shrug off the embarrassment of his three marriages, including the way his second wife Donna Hanover discovered he was leaving her when she heard him say so in a televised press conference (after which he sought refuge in the apartment of a gay couple). He told radio listeners in Iowa: “When voters start comparing people’s personal lives and the mistakes they’ve made, you know, we’re all going to come out as human beings.”

None of which satisfies the likes of Tim Wildmon, president of the Mississippi-based evangelical group American Family Association. “All America appreciated what Mayor Giuliani did for New York and the spirit of the country. But he is disqualified from receiving the support of social conservatives like me, because he’s totally opposed to what we stand for. ”

So despite this week’s polls Mr Giuliani still has a Catch-22 to overcome. He is undoubtedly hugely popular in the country at large, and may well be the Republicans’ best hope of holding on to the White House, partly because he comes across as a moderate. But that will count for nothing unless he can overcome the fundamentalist core of his own party, and convince them that the hero of 9/11 is no New York liberal.

Viewers who enjoy their late-night quizzes will be able to enjoy ITV Play once again as it gets the green light to return to the screen.

Saturday’s semi-final of Dancing On Ice, featuring Jayne Torvill and Christopher Dean, was broadcast on ITV1 after it was cleared in the probe.

But money-spinning digital phone-in channel ITV Play, which earned 20m in its first year for ITV, has been more controversial.

The digital quiz channel is still being investigated as part of the independent review.

But the strand screened on ITV1 and ITV2 late at night will return to the terrestrial channels after being cleared.

Phone-in quizzes have been criticised for enticing viewers to call premium-rate numbers, costing 75p at time, with little chance of getting through.

ITV Play’s Quizmania programme, which included a balaclava and Rawlplugs in a test of 12 things you are most likely to find in a woman’s handbag, was censured by Ofcom earlier this year.

Chancellor Gordon Brown has ordered a Treasury investigation into whether such quizzes should be rebranded as lotteries and regulated accordingly.

The commercial broadcaster was said to have been facing losses of 1.5m a week because of its decision to suspend all premium-rate interactive services.

MUNICH (Thomson Financial) - Consumer prices in the German state of Bavaria rose 0.4 pct in April from March and were up 2.1 pct year-on-year, according to figures from the Bavarian Statistics Office.

The Federal Statistics Office uses consumer prices data from Baden-Wuerttemberg, Hesse, North Rhine-Westphalia, Saxony, Brandenburg and Bavaria to determine its provisional CPI for Germany.

maria.sheahan@thomson.com

mas/cmr

COPYRIGHT

Copyright AFX News Limited 2007. All rights reserved.

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.