Traders' Library Blog

IRSTS - The 1-2-3 Wave Count

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

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

HIGH-Low ZIGZAG

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

Volatility in the zigzag

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

The basic count

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

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

Correction levels

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

Sylvain Vervoort   http://stocata.org/ 

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Top 10 Forex Events Outlook: May 13-17

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stocata S&P500 Analysis: May 12, 2013.

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

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

Sylvain Vervoort   http://stocata.org/

Top 10 Forex Events Outlook: May 6-10

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stocata S&P500 Analysis: May 5, 2013.

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

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

Sylvain Vervoort   http://stocata.org/ 

Free Webinar with Steve Nison

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When: May 14, 2013 at 4:30 PM

What: Free webinar

Candlestick Charting Essentials: Catching the Next Big Move

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stocata S&P500 Analysis: April 27, 2013.

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

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

Sylvain Vervoort   http://stocata.org/

 

Top 10 Forex Events Outlook: Apr. 22-26

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stocata S&P500 Analysis: April 20, 2013.

Last week I wrote:
"Many times I say "it always takes longer than you think". The up move Monday and Tuesday was not a good sign and I was expecting the long term top to be broken. Wednesday finished the job bringing the index above the long term high, creating a new top wave 3.9. There were probably a large number of buy to cover orders available from short sellers not risking more losses. A nice opportunity to start taking profit for the other ones. At the closing I decided not to close the open short position, because the index was very close to the R1 pivot resistance, the 161.8% Fibonacci target and the upper side of the volatility band. All this was reached with a much smaller move on Thursday. Friday we got a first reaction. You never know, but I believe we should expect a correction move down. This will probably be a longer term correction with a first down target around 1475. What do I want to risk staying in the short trade? Most next up targets point to 1620. That would mean a loss of about 4% for our open short trade. That is acceptable.".

I believe we past the point of "it always takes longer than you think" and that the down move has started. Monday we got a very nice large candle confirmation down for the bearish harami candle pattern at the top. Thursday the index found support on the 50 day average. We should expect some consolidation. The correction wave 2 that started from the top wave 3.9 changed from a wave 2 to a wave 1, passing the low of the previous wave 2. That means we are now expecting a wave 2 up correction. I assume this correction will be limited to about 1570. I tried some down projections and that gives me a first down move to about 1465 by the second half of May. The total closed profit trading the index is 128.3% from the start in March  2009. We have an open short position. The expert is black.

Sylvain Vervoort  http://stocata.org/

Top 10 Forex Events Outlook: Apr. 15-19

Apr. 15, 2013 (Allthingsforex.com) – The G20 meeting and notable economic data from Japan will place the yen in the center of the market’s attention as “currency wars” once again becomes a hot topic for discussion in the week ahead.

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

1.    CNY- China GDP- Gross Domestic Product, the main measure of economic activity and growth, Sun., Apr. 14, 10:00 pm, ET.

The world’s second-largest economy was expected to hum right along with 8.0% q/y expansion in the first quarter of 2013, after growing by 7.9% q/y in the final quarter of last year. However, the GDP report disappointed with slower pace of growth by 7.7% q/y in Q1 2013. The weak Chinese data brought down commodity prices and dragged lower the higher-yielding commodity currencies, the AUD and NZD.

2.    GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Apr. 16, 4:30 am, ET.

Inflationary pressures in the U.K. are forecast to remain at 2.8% y/y in March, same as the 2.8% y/y reading in the previous month. If the threat of a triple-dip recession in the U.K. materializes, inflation will not be an obstacle for the Bank of England to ease monetary policy further in upcoming months.

3.    EUR- Euro-zone ZEW Economic Sentiment Index, a leading indicator of economic conditions measuring the outlook of financial experts, Tues., Apr. 16, 5:00 am, ET.

After a few months of improvement in the economic outlook, the ZEW index is expected to pull back with a reading of 45.6 in April compared with 48.5 in the previous month. A new sign that economic conditions in the euro-area are deteriorating could weigh on the EUR as the market begins to price expectations that the European Central Bank might start to play “QE catch-up” with the Fed and the Bank of Japan as early as the next meeting on May 2.

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

Housing starts for the month of March are expected to be a bit higher to 924K from 917K in February. The report carries a risk of a negative surprise following another leading indicator of housing market activity, the National Association of Home Builders/Wells Fargo index, which fell to 42 in April from 44 in March, the third consecutive month of decline.

5.    USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Tues., Apr. 16, 9:15 am, ET.

Industrial production is forecast to increase for another month, but at a slower pace, by 0.3% m/m in March, after rising by 0.8% m/m in February.

6.     GBP- Bank of England Meeting Minutes, a detailed report of the bank’s latest meeting containing an outlook on monetary policy and the economy, Wed., Apr. 17, 4:30 am, ET.

Bank of England sat on the sidelines at its April meeting and has made it clear in recent months that policy makers are not in a hurry to do more easing. However, the GBP could see pressures rising if the minutes reveal that more Monetary Policy Committee members, including the Governor Mervyn King, voted for an increase of the Asset Purchase Program from 375 billion to 400 billion pounds, and if the option of additional rate cuts was once again placed on the table.

7.    CAD- Bank of Canada Interest Rate Announcement, Wed., Apr. 17, 9:00 am, ET.

With the U.S. and China, the world’s two largest economies, starting to show signs of a slowdown, the Bank of Canada will not be in a position to make any changes to its existing monetary policy and will more than likely leave the benchmark rate at the current 1.0% level. Compared with the rest of the major central banks, the Bank of Canada still remains as the most likely candidate to tighten monetary policy. However, with the world in the midst of a “currency war” as competitive currency devaluation heats up, the decision to call the end of the accommodative monetary policy would probably be pushed further into 2014/2015.

8.    JPY- Japan Trade Balance, an important gauge of economic activity measuring the difference between imports and exports, Wed., Apr. 17, 7:50 pm, ET.

Despite of the yen’s weakness, the consensus forecasts point to another month of trade deficit by 494 billion yen in March from a deficit of 777 billion yen in February. Signs that the Japanese economy is not improving will keep the yen under pressure on expectations that the government and the Bank of Japan could step up their efforts to devalue the currency and to spur export growth.

9.    USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring claims for unemployment benefits, Thurs., Apr. 19, 8:30 am, ET.

Recovering after the unexpected spike, the U.S. jobless claims are forecast to remain in a range with a reading of 447K, close to last week’s 446K. If the forecast is accurate, the spike to 388K could be dismissed as a one-off event. On the other hand, another surprising increase could trigger concerns that a new trend of rising claims for unemployment benefits could be in its early stages of development.

10.     JPY- G20 Meeting, Thurs., Apr. 18, and Fri., Apr. 19, two-day event.

Finance ministers and central bankers from the 20 most-developed industrialized nations in the world will gather as traders pay close attention to any statements or agreements that could be made during the G20 meeting on the issues of “currency wars” and competitive currency devaluation. The G20 did not directly criticize Japan at the last meeting. However, with the yen depreciating rapidly due to the unprecedented measures taken by the Bank of Japan, it would be interesting to see if the efforts of Japanese officials to weaken their currency will be criticized by their G20 colleagues this time around. The JPY negative trend is still intact, but we could see some unwinding of short yen positions ahead of the meeting.

Indicator Rules For Swing Trading Strategies Part 1

In today's volatile markets, making money consistently is a challenge. You need a good strategy with reliable trading rules. This seven-part series will discuss such a strategy and its trading rules. In this, the first part, an overview is presented.

Too many people believe that if they could just get their hands on some secret trading rules, making money in the stock market will be easy. You can't blame them: They want to be like that trader who effortlessly made more than 100 pips a day using a fully automated forex trading system. On the other extreme, there are people who say that if you want to be a successful trader, you have to spend long hours studying and analyzing the markets.

Which side should you be on?

If you want to be successful in anything, you need to work hard. But your time and effort should be well spent. For example, if you spend your time studying fundamentals, it will likely make you money in the long term, in a sustained up or down market. But in volatile markets, you may not make money consistently. This may tempt you to turn to an automated trading system, but think about this: Would you sell a system that consistently generated, say, $5,000 profit each month?

Before you can make any money, you need a trading strategy with reliable trading rules that has been shown to make money in backward and forward testing using historical data. To do that, you need to learn the basics — that is, technical analysis, money & risk management, and trading knowledge — and you need to gain experience. I am going to put you on the right track with my indicator rules for a swing trading strategy (IRSTS). It will take a series of articles to demonstrate and explain the strategy. I will also introduce some new indicators that I use in my trading. Let's start with an overview of the IRSTS
strategy.

The basic chart template

In Figure 1 you see my basic chart template. I use the following indications
on the daily chart:

1 - A standard candlestick chart with candlestick patterns at select turning points.
2 - A 50-day simple moving average (blue).
3 - A 100-day simple moving average (green).
4 - A 200-day simple moving average (red).
5 - A dotted orange eight-day exponential moving average (EMA).
6 - An upper and lower volatility band (dotted magenta line).
7 - A percentage- and volatility-adjusted high-low zigzag (light blue).
8 - A Bollinger Band %b indicator in the lower subwindow (light blue).
9 - A standard stochastic oscillator in the lower subwindow (dotted red).

The IRSTS trading rules

Enter a trade when all of these eight conditions are met:
1 - The closing price breaks above or below the eightday exponential average.
2 - A valid candle pattern is visible at the last turning point.
3 - The turning point is close to a volatility band or an average.
4 - The expected zigzag wave is a wave 1 or 3.
5 - The expected price move is supported by oscillators.
6 - Support and resistance levels are in favor of the planned trade.
7 - Closing price breaks through the last possible trendline.
8 - The risk of the trade is within acceptable limits.

Your best chance for success is when all the rules are complied with. But no
set of rules is perfect, which means there are bound to be exceptions.

Moving on

This introduction to the IRSTS only scratches the surface. There is a lot
more to learn. In this series of articles, you'll find out how to use the
high-low zigzag indicator, count waves, identify patterns (old and new) at the
zigzag turning points, and program volatility bands and oscillators. Once you
become familiar with the various components that make up the IRSTS, you'll see how it comes together. Join me in this journey as we set out to explore the
IRSTS.

...Continued in May issue of Technical Analysis of Stocks & Commodities

Sylvain Vervoort   http://stocata.org/

 

Stocata S&P500 Analysis: April 13, 2013.

Last week I wrote:
"With this week's high of 1573.66, the index did not reach the long term high of October 2007  of 1576.09. Maybe we just had a normal correction week, but keep in mind that turning down now basically means the long term down correction is started. The down correction started Wednesday with a larger down move towards the monthly pivot median level PP and the previous wave 2 low, creating an expert sell signal. This level was broken on Friday, coming close to the lower side of the up moving pitchfork and the 50 day average.
Generally a limited up reaction (50%) after a larger down day is a good entry point for opening a new position. Reason I used the opening on Friday for a new short position at 1559.8. This new position is shown in the trading table below. I do expect a further move down. First target is pivot support S1 around 1525. This is also the lower side of the BBS band and the 50 day average. I keep a stop around 1580".

Many times I say "it always takes longer than you think". The up move Monday and Tuesday was not a good sign and I was expecting the long term top to be broken. Wednesday finished the job bringing the index above the long term high, creating a new top wave 3.9. There were probably a large number of buy to cover orders available from short sellers not risking more losses. A nice opportunity to start taking profit for the other ones. At the closing I decided not to close the open short position, because the index was very close to the R1 pivot resistance, the 161.8% Fibonacci target and the upper side of the volatility band. All this was reached with a much smaller move on Thursday. Friday we got a first reaction. You never know, but I believe we should expect a correction move down. This will probably be a longer term correction with a first down target around 1475. What do I want to risk staying in the short trade? Most next up targets point to 1620. That would mean a loss of about 4% for our open short trade. That is acceptable.

Sylvain Vervoort   http://stocata.org/

Free Monthly Video: Only in your account this month!

This month's free online video is Simple Fibonacci Trading: Profitable Techniques Anyone Can Use by Michael Jardine.

Optimize your trading profits and gain more trading confidence with this highly informative video presentation by Fibonacci expert Michael Jardine, author and founder of Enthios.com. Building off the foundations first outlined in his best-selling book, New Frontiers in Fibonacci Trading, Jardine illustrates how to integrate the Fibonacci basics into any trading or investment system for more profitable and money-making results.

You'll gain insight in powerful Fibonacci fundamentals such as:
· Building blocks of price action
· Wave sequence
· Market structures
· Retracement patterns
and much more.

Jardine also introduces you - for the first time ever - to the universal chart, a simple trading method improved by the use of Fibonacci ratios. Novice and advanced traders alike will benefit from this extremely valuable and instructive presentation. Learn how to incorporate Fibonacci with your other trading systems and you will be a more knowledgeable and conversant trader in no time.

Log in now to acces your free video! 

Only available this month!

Don’t have an account, don’t worry it is easy to get set up!

Once you are logged in, click on the tab Online Library.  You will find your free video here.

Top 10 Forex Events Outlook: Apr. 8-12

Apr. 6, 2013 (Allthingsforex.com) – In the aftermath of the Bank of Japan’s “shock and awe” decision to double down on its monthly asset purchases, the week ahead could offer reassurance of the Fed’s commitment to continue its aggressive monetary policy easing, while traders watch a sequence of important economic data from the U.S., the U.K. and the euro-zone and gauge economic conditions on both sides of the Atlantic.

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

1.    JPY- Japan Current Account, an important measure of foreign trade, Sun., Apr. 7, 7:50 pm, ET.

For three consecutive months, the current account deficit in Japan has been on the rise and this alarming trend is expected to continue with the deficit forecast to expand above 400 billion yen in March following a jump to 364.8 billion yen in the previous month. The report could offer a clue for the one of the reasons behind the Bank of Japan’s decision to go all in and could give further impetus to yen selling on expectations that a rising account deficit could force the Japanese government and the Bank of Japan to consider even more aggressive measures to weaken the currency and to stimulate the economy.

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

After staying flat in January, industrial activity in the euro-zone’s largest economy is forecast to pick up the pace with an increase by 0.3% m/m in February.

3.    CHF- Swiss CPI- Consumer Price Index, the main measure of inflation preferred by the Swiss National Bank, Tues., Apr. 9, 3:15 am, ET.

Inflationary pressures in Switzerland are forecast to increase by 0.3% m/m in March for a second consecutive month, which could lift the overall yearly inflation reading. On the other hand, should the inflation gauge remain in deflation territory, the Swiss National Bank will be in no hurry to let go of the franc ceiling which was set at 1.20 per euro in September, 2011.

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

The jump to a seven-month high in the Services PMI last week has somewhat eased the fears of a triple-dip recession in the U.K. and this report could do the same with industrial production forecast to increase by 0.3% m/m in February after dropping by 1.2% m/m in January. The GBP could attract more bids if the U.K. economic data continues to boost optimism and reduces the odds of additional easing by the Bank of England.

5.    USD- U.S. FOMC Meeting Minutes, a detailed report of the Fed’s latest meeting containing an outlook on monetary policy and the economy, Wed., Apr. 10, 2:00 pm, ET.

Series of weaker than expected reports from the U.S. have raised concerns that the economy may be losing momentum, increasing the probability that the Fed will not be in a rush to tighten monetary policy. The minutes could confirm these expectations by echoing the Fed’s decision to stay on the QE course until the unemployment rate drops below 6.5% or inflation rises above 2.5%. The USD could see pressures rising if the report reassures the markets that the Fed will continue full speed ahead with open-ended quantitative easing.

6.     AUD- Australia Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., Apr. 10, 9:30 pm, ET.

Following last month’s blockbuster jobs report which showed a record job creation of 71,500 new jobs, the Australian economy is expected to lose 7,200 jobs in March, while the unemployment rate remains unchanged at 5.4%. A weak employment report could raise the odds of a rate cut by the Reserve Bank of Australia and could weigh on the Australian dollar.

7.    USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Apr. 11, 8:30 am, ET.

The U.S. jobless claims are forecast to pull back to 362K from last week’s unexpected jump to 385K. If this is the case, the spike could be dismissed as a one-off event. On the other hand, another surprising increase could trigger concerns that a new trend of rising claims for unemployment benefits could be in its early stages of development.

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

Identical to the German report, industrial activity in the Euro-zone is forecast to gain traction with a 0.2% m/m increase in February after dropping by 0.4% m/m in the previous month. The EUR could get a boost if the report instills optimism that the region’s economy may be on the path to recovery.

9.     USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Fri., Apr. 12, 8:30 am, ET.

Consumer spending in the U.S. is expected to register an increase for another month, but at a slower pace, with retail sales rising by 0.2% m/m in March, compared with 1.1% m/m in February.

10.    USD- U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Apr. 12, 9:55 am, ET.

The preliminary estimate of the U.S. consumer sentiment index is forecast to show a small improvement with a reading of 78.8 in April from 78.6 in the previous month. Following the dismal Non-Farm Payrolls last Friday, a surprising drop in consumer sentiment and a sequence of weaker U.S. economic data in the week ahead could elevate fears that conditions in the world’s largest economy may be deteriorating.

Stocata S&P500 Analysis: April 6, 2013.

Last week I wrote: "Looking at the daily chart it looks like the only way the index can go is higher. Once more we have a higher top with wave 3.8. However, I believe the most important for now is that the index is just a few points away from the long term high of October 2007. Turning down before that level or even closing the coming month of April below that level may be the sign for a long term large correction. Keep that in mind and protect your long term long positions. The expert turned green again, but I believe it is better not to have an open position for the moment. It still can go higher, but I do consider a long position too risky with the index so close to the long term high. More comments on the WEEKLY and MONTHLY charts.".

With this week's high of 1573.66, the index did not reach the long term high of October 2007 at 1576.09. Maybe we just had a normal correction week, but keep in mind that turning down now basically means the long term down correction is started. The down correction started Wednesday with a larger down move towards the monthly pivot median level PP and the previous wave 2 low, creating an expert sell signal. This level was broken on Friday, coming close to the lower side of the up moving pitchfork and the 50 day average. Generally a limited up reaction (50%) after a larger down day is a good entry point for opening a new position. Reason I used the opening on Friday for a new short position at 1559.8. This new position is shown in the trading table. I do expect a further move down. First target is the pivot support S1 around 1525. This is also the lower side of the BBS band and the 50 day average. I keep a stop around 1580. More comments here on the WEEKLY and MONTHLY charts. The total closed profit trading the index is 128.3% from the start in March  2009. We have an open short position. The expert is black.

Sylvain Vervoort   http://stocata.org/

Top 10 Forex Events Outlook: Apr. 1-5

Apr. 1, 2013 (Allthingsforex.com) – Four monetary policy announcements by major central banks and the U.S. Non-Farm Payrolls and Employment Situation report will make for a busy start of the second quarter as traders continue to monitor the situation in Cyprus and await to find out if the European Central Bank will be able to restore confidence following a few tumultuous weeks in the euro-area.

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

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

Manufacturing growth in the U.S. is forecast to expand at a slower pace with an index reading of 54.1 in March from 54.2 in February.

2.    AUD- Reserve Bank of Australia Interest Rate Announcement, Mon., Apr. 1, 11:30 pm, ET.

Contrary to the expectations of a rate cut, the Reserve Bank of Australia sat on the sidelines last month and could do the same in April as the Australian economy and labor market seem to be gaining traction. On the other hand, the Reserve Bank of Australia could warn about persistent currency strength and could still keep the door open to a 25 bps rate cut if the economy starts to lose momentum. The Australian dollar could attract more bids if the central bank shows no desire to cuts rates in upcoming months.

3.    USD- U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., Apr. 3, 8:15 am, ET.

The U.S. private sector is forecast to register another month of stronger job creation with up to 216K jobs added in March, compared with 198K jobs in February.

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

In line with the current trend of improvement, the U.S. services sector is forecast to expand further with a non-manufacturing index reading of 56.1 in March from 56.0 in February.

5.    JPY- Bank of Japan Interest Rate Announcement, Thurs., Apr. 4, around 12:00 am, ET.

As the new Bank of Japan Governor Haruhiko Kuroda presides over his first monetary policy meeting, expectations are high that he might announce new bold measures to fight deflation and to help him achieve his goal of reaching the 2% inflation target in two years. Policy makers are likely to reiterate their commitment to aggressive monetary policy easing, continuing full speed ahead with their open-ended QE program until the 2% inflation target is in sight. However, if the Bank of Japan’s meeting does not deliver a “shock and awe” announcement, the yen could see a more significant price correction of its losses since last November.

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

The chronic contraction in the euro-zone manufacturing and services sectors is forecast to continue as the Composite PMI remains below the 50 boom/bust line for a twentieth consecutive month with a final reading of 46.5 in March, confirming the preliminary estimate. The euro could stay under pressure if the report fails to instill optimism that conditions in the euro-area are improving.

7.    GBP- Bank of England Interest Rate Announcement, Thurs., Apr. 4, 7:00 am, ET.

Although in the last couple of months the Bank of England policy makers have shown that they are not in a hurry to do more QE, with the U.K. economy contracting in the final quarter of last year and possibly in Q1 2013, a triple-dip recession will increase the odds that the Bank of England would have to consider another expansion of its Asset Purchase Program, and possibly even a rate cut in upcoming months. The Monetary Policy Committee would probably prefer to sit on the sidelines and maintain the existing monetary policy at the April meeting until they see the first Q1 2013 GDP estimate, scheduled for release on April 25. The pound has found some bids as a euro alternative during the Cyprus debacle, but could come under pressure again if the market sees a Q1 contraction in the U.K. and begins to price expectations that the Bank of England might have no other choice but to ease monetary policy further.

8.    EUR- European Central Bank Interest Rate Announcement, Thurs., Apr. 4, 7:45 am, ET.

The current economic reality in the euro-zone continues to spell recession with chronic contraction in the area’s manufacturing and services sectors. As if this is not bad enough, the bailout drama in Cyprus has created more uncertainty and a sense of distrust, while the euro-area’s third-largest economy Italy still remains without a government. As a result, the European Central Bank is faced with major challenges to find a way to help the economy grow and to calm the nerves of investors. The euro would be likely to head lower into the $1.20′s if the European Central Bank reduces the benchmark rate or hints of an impending rate cut in the near future.

9.    EUR- Euro-zone Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Fri., Apr. 5, 5:00 am, ET.

As a sign of more doom and gloom in the region’s economy, consumer spending in the euro-area is forecast to drop by 0.3% m/m in February, compared with the 1.2% m/m increase in the previous month.

10.    USD- U.S. Non-Farm Payrolls and Employment Situation, the main indicator of U.S. economic health measuring job creation and unemployment, Fri., Apr. 5, 8:30 am, ET.

The consensus forecasts point to another month of decent job creation in line with the recent trend of improvement in the U.S. labor market. The U.S. economy is expected to add 190K jobs in March compared with 236K in February, while the unemployment rate stays unchanged at 7.7%. The USD could benefit from an upbeat NFP report on expectations that the Fed could take the first step toward monetary policy tightening sooner rather than later.

Stocata S&P500 Analysis: March 30, 2013.

Last week I wrote:
"Last week I concluded: I do expect a reaction down. Tuesday there was a low of 1538, close to the 61.8% Fibonacci retracement over the last move up. But for now it looks like we are in a flat correction. That makes it difficult to predict what is coming next week. I must repeat what I mentioned last week: moving up past 1576.09 we will be at the long term highest high value. Passing this level with a closing price would mean the long term up trend will continue. Turning down would mean a long term down correction is started, which could bring the index down to below 650! Watch your long term long positions! I do not want to take any position now. There is I believe a 50/50 chance for a move in either direction.".

Looking at the daily chart it looks like the only way the index can go is higher. Once more we have a higher top with wave 3.8. However, I believe the most important for now is that the index is just a few points away from the long term high of October 2007. Turning down before that level or even closing the coming month of April below that level may be the sign for a long term large correction. Keep that in mind and protect your long term long positions. The expert turned green again, but I believe it is better not to have an open position for the moment. It still can go higher, but I do consider a long position too risky with the index so close to the long term high. More comments on the WEEKLY and MONTHLY charts. The total closed profit trading the index is 128.3% from the start in March  2009. We have no open position. The expert is green.

Sylvain Vervoort  http://stocata.org/

The Housing Crisis Is Coming Back!

Singapore- The housing crisis was a huge disaster for the US and the world. Yet ALL the causes of it are still there. ALL of them.

The Community Reinvestment Act was never repealed. Yes, Fanny and Freddy are no longer there but the FHA has stepped neatly into their role. Do you think that Wall Street has gone underground? And, of course, Congress is still there promoting house ownership to everyone whether they can afford it or not.

A lot of people think that the Dodd-Frank law was there to solve the causes of the housing crisis. In fact, it did nothing to stop any of the reasons for the crisis.

From today's Wall Street Journal:
"The Federal Housing Administration is expected to report later this week that it could exhaust its reserves because of rising mortgage delinquencies, according to people familiar with the matter. That could result in the agency needing to draw on taxpayer funding for the first time in its 78-year history.

The FHA guarantees fewer mortgages than either Fannie or Freddie, but it now has more seriously delinquent loans than either of the mortgage-finance giants. Overall, the FHA insured nearly 739,000 loans that were 90 days or more past due or in foreclosure at the end of September, an increase of more than 100,000 loans from one year ago. That represents around 9.6% of its $1.08 trillion in mortgages guarantees.

The FHA's annual audit estimates how much money the agency would need to pay off all claims on projected losses, against how much it has in reserves. Last year, that buffer stood at $1.2 billion, representing around 0.12% of its loan guarantees. Federal law requires the agency to stay above a 2% level, which it breached three years ago."