Spot and Trade Institutional Money Moves

Algorithmic Trading with Human Interaction for:

Day Traders, Swing Traders, Long-Term Investors

Tuesday, October 19, 2010

Financial Market Investments: Stocks, Bonds, Options, Futures, Forex

Why do people invest: to make a return - some to spare time, but we consider that pleasure.
The best investment opportunities, aren’t they where you know you can recoup your investment at ease, by a legal system in place that protects you, a market that allows you to exit and investment without losing it all. We can never control the outcome of an investment, but can make certain what will happen in the event of an emergency exit.

The best investments are where you know what you are doing, then returns can be achieved through know how.

Another aspect to share: “the best investments are where you do not need a lot of people to make them happen and still reap the benefits.”

Financial markets are a wonderful investment opportunity, if you understand the rules and regulation and the dynamics of how they work.


- You need no clients, no collection, no organization, no technology… and still you can make fantastic returns.

- You can leverage your investment up to 1:100 without asking a bank for financing.

- You can be a real estate investor and never build a house, a car maker without any factories, a school faculty without students….

You can decide to be something different every day without justification and explanation to anybody.

Financial market investments allow you to make decisions from the comfort of your home without convincing bosses or supervisory boards. NO more pleasing others and listen to their stories you never cared about – it is you to decide and live as an independent financial market investor.

Come on board, learn NeverLossTrading and invest in 3 days to your financial freedom. ,

Monday, October 18, 2010

Stock Market: What Do Bank Earnings Tell Us?

Banks are the perfect place to show book money:

When the banks built accruals for potential bad loans – earnings went down;

and now Banks release over-accruals – and earnings go up.

This is basically what we saw in Citigroup today.

Banks show their real attainment in the development in the revenue numbers and this is where Citigroup came short (see our article:

JPM (JP Morgan-Chase-Manhattan) already announced on October 13, 2010 lower revenue numbers, but better earnings. Why is that? All banks are very restrictive in lending money, they enjoy a beautiful margin by the low fed rates and with that do not need to find new business to show profits: profits come from book money: margins, reserves.

With a restrictive – but for the banks comfortable – lending policy, we will not see bigger growth for the economy in the near term future and with that no release on employment numbers.

Based on the sound profits from all corporations in the 3rd quarter earnings release, we have the following investment policy:

- Short term we go with the market and trade towards the upside and we are looking to buy into a market retracement we are waiting for.

- Midterm we get ready for getting short in Banks and our candidate to pick is JPM (we collected a lot of material that indicates a 4th quarter write off from the trading side of JPM).

Good trading.

Stocks Market: Solid Earnings and Home Builder Confidence Increase

Today, Monday October 18, 2010, the National Association of Home Builders said that its home builder confidence index moved up to 16 in October after last month's reading of 13. The upward move also defied forecasts for the index to remain at 13. The increase came as market conditions, sales projections and consumer prospects all showed gains.
Further, the Federal Reserve reported that industrial production unexpectedly declined in September. The headline number showed a drop-off of 0.2 percent compared to the 0.2 percent uptick recorded in August. The fall surprised economists who had forecast an increase of 0.2 percent, while the figure also marked the first fall in production after six months of increases. The report also showed that capacity utilization inched down to 74.7 percent in September from 74.8 percent in August. Initial forecasts looked for the figure to remain flat at 74.8 percent.

We continue a slow grinding economic development with high unemployment rates and solid corporate earnings. Just compare to our last quarter report:

Overall the market continues positive based on strong earnings reports:

In earnings news, Citigroup Inc. released third quarter results showing net income of $0.07 per share compared to a loss last year, while edging out estimates for $0.06 per share for the quarter. The firm was able to turn a profit following a significant reduction in provisions for credit losses. Revenues for the quarter came in at $20.74 billion, short of revenue estimates of $21.15 billion for the quarter.

Halliburton Company reported third-quarter net income of $0.60 per share, above EPS estimates for $0.55 for the quarter. Total revenues were $4.67 billion, also beating expectations which called for $4.63 billion for the period.

Hasbro Inc. posted third-quarter net earnings of $1.09 per share, topping projections for $1.04 per share for the quarter. Net revenues rose 3 percent to $1.31 billion, also coming in above estimates which called for $1.29 billion in revenues for the quarter.

Tuesday, October 12, 2010

New Forex Regulations

The Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA), which determine leverage (and the resulting margin) requirements for Futures and Forex trading, have established new Forex leverage and maintenance requirements.
  • The new requirements, which will take effect Sunday October 17, 2010, at 5 p.m. EDT (4 p.m. CDT), will impact all currently open Forex positions, as well as any new Forex positions to be opened on or after October 17.
  • The maximum leverage requirements on all major currency pairs will be revised due to the rule revisions:
  • Major currency pairs will change from 100:1 to 50:1 maximum leverage (from 1% to 2%). Exotic or minor pairs will change from 25:1 to 20:1 maximum leverage (from 4% to 5%).
  • Major pairs consist of any pair with two of the following currencies: Australian Dollar (AUD), British Pound (GBP), Canadian Dollar (CAD), Danish Krone (DKK), Euro (EUR), Japanese Yen (JPY), New Zealand Dollar (NZD), Norwegian Krone (NOK), Swedish Krona (SEK), Swiss Franc (CHF), or US Dollar (USD). All other pairs are considered by the NFA to be exotic and are subject to the higher margin requirement.
Please check day trading requirements and overnight requirements with your Broker.

You will also need to maintain a 100% equity-to-margin ratio (risk level) at all times.

Liquidation of positions will occur once daily, at 5 a.m. EDT (4 a.m. CDT), if the risk level in your account falls to less than 100%, and intraday if the equity-to-margin ratio in your account falls to 25% or below, whichever comes first.

Wednesday, October 6, 2010

Economic Growth with High Unemployment

Bad employment numbers do no more shake the markets.

Wednesday October 6, 2010, before the start of trading, private payroll processor Automatic Data Processing Inc. (ADP) said that private sector employment fell by 39,000 jobs in September following a revised increase of 10,000 jobs in August.

The decrease came as a surprise to economists, who had expected employment to increase by about 18,000 jobs compared to the loss of 10,000 jobs originally reported for the previous month.

With the upward revision to the data for the previous month, the drop in jobs reported for September marks the first decrease in private sector employment reported by ADP since January.

However, ADP noted that the average monthly gain in employment over the seven previous months was a relatively modest 34,000, adding,

Juggling small numbers left and right: "There simply is no momentum in employment."
Corporate profits are still rising, while the job situation does not better. All government programs to sponsor employment failed and with the wave of mergers and acquisitions ahead of us, a significant change is not yet seen.

Key Consumer Goods Companies Announcements:

The discount wholesaler Costco (COST) said its fourth quarter net income rose to 97 cents per share on an 8 percent increase in net sales to $23.59 billion. Analysts estimated earnings of 95 cents per share on revenues of $24.22 billion.

Johnson & Johnson (JNJ) announced that it has reached an agreement to buy all outstanding shares of Crucell (CRXL) it does not already own for about 1.75 billion Euros in an all-cash offer. Johnson & Johnson currently owns 17.9 percent of Crucell's outstanding shares.

By the artificial amount of money coming to the market as a result of government interference (see our article: bad unemployment numbers do no more shake the market on its way up.

Take Advantage of Stocks, Bonds, Commodities Going Up by Government Action

“When governments interfere with the markets, let us not complain, but take advantage of the situation as educated financial market investors.”
A strange phenomena is happening in the financial markets:

- Stock Market Indexes: up

- Bonds and Notes: up

- Gold: up

- Crude Oil: up

This is a situation that only occurs when artificial demand comes into a market, increases the amount of money floating and it has to go somewhere. What happened?

The US central bank also finally unveiled a new asset purchase program to buy up government bonds and boost liquidity in the deflation-wracked economy. We talked about this in our prior publications, but now it gets official. The fed is the new force entering the markets and by that we see a beautiful increase in prices for all sectors. How long will it hold? Until one of the today´s buyers becomes a major seller and this can be anywhere between December and February, when new economic outlooks will hit the market. Meanwhile we will not see a great economic rise, but solid profits of US corporations and a world market that gets nervous.

By the action of the US central bank in particular Japan comes under pressure and has close to no instruments to counter the US offence in printing money and by that weakening the Dollar. As a reaction, the Bank of Japan cut its benchmark interest rate to almost zero as it seeks to revive a faltering recovery. Under pressure from the government, the BOJ cut rates to 0.0-0.1 percent from 0.1 percent. Now the Japanese copy the US action and they pump 5 trillion yen, or $60 billion into a market with no demand for money by (what a genius idea) the central bank of Japan to purchase government bonds, treasury bills and corporate bonds in an effort to weaken the local currency and improve liquidity in the world's third largest economy. But what is that gone give, if nobody wants to borrow money in Japan. It will just pull the Yen into carry trades against currencies with higher interest rates, like the AUD (Australian Dollar) and the Yen will make its march: up and the Japanese Exports will suffer.

To spell out the carry trade for you: Today, the Reserve Bank of Australia announced to hold interest rate at 4.50 percent. Experts had even expected Australia to increase rates by 25-basis points.

So now if you sell Yen for 0.1 interest and with the money your receive, you buy Australian Dollars at 4.5% interest, what is that gone give: +4.4% interest. But surely be careful, with a carry trade, there are two objectives. The first is obviously to make money on the interest rate differential. The second objective is to gain a profit from the capital appreciation.

Let us give an example: if an investor just puts $1,000 into an investment with a carry trade difference of 4.4%. The leverage in Forex of 1:100 let’s the investor control $100,000. Now we calculate the interest income on $100,000 x 4.4% p.a.=$4,400. On the basis of the margin put in the carry trade Forex pair: $1,000 this is a 440% p.a. return, if the value of the pair stays the same. If the pair even increases in value the investor will receive additional gains.

Sounds unbelievable? Yes, sure, but let us enlighten you of how it works:

The investor buys Australian Dollars and receives a 4.5% interest and pays with Japanese Yen at 0.1% interest. Sounds complicated? But in action it is very easy:


The danger in this pair is that the value of the Yen might increase after the money pumping action of the Bank of Japan will water out. So make your money short term and know where you put your stops to the transaction. On the other hand, the AUD might also increase and stabilize the pair longer term. The AUD’s value is very much tied to natural resources. With a weakening dollar – the biggest currency in the world, the price for natural resources is going to increase and by that the Australian Dollar has a good upside potential that might balance the pair long term.

We hope you get an understanding how NeverLossTrading can help you to be an educated financial market investor who can take advantage of key market action like the current government craziness of increasing the amount of money floating.

Sunday, October 3, 2010

Stock Markets in October 2010

“Positive Outlook for the stock- and financial markets”

Our Trend Indicators for the week of October 4, 2010 point up. Key news events this week will be based on reports about the employment situation. We should not expect wonders in the change of unemployment but: - no bad news will be considered good news- and sponsor the markets to trade toward the upside. Meanwhile institutional investors accepted that high unemployment is going jointly with high corporate earnings to come out soon. If we take the old method of P/E(Share Price/Earnings), and recognize that many quality shares are available around a P/E of 10-12 and with that offer perfect opportunities.

When what you say does not tell you much you should get an education of how to trade the financial markets: “3 days to financial freedom.”

Please check on the key events and if you are day trading, stay out of the markets at the highlighted times.