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Friday, February 19, 2010

A collection of pages for interest rates and Inflation

There are plenty of websites on international interest rates and other economic information. Here is a collection of 5 which could give you quite an interesting insight of the current money conditions in the world.

1. - an informative website where one could learn what Euribor is and how its value could affect the mortgages or one's personal savings.
2. - the website has an English version where one could check the current International Interest Rates. The page about USD LIBOR gives a plenty of information up to date. The website also provides some free tables and graphics about EURIBOR, EONIA, ECB Refinancing Rate and FED federal funds rate which you could use on your own website.
3. - in the LIBOR section of the website there is a lot of historical and up-to-date data on LIBOR rates.
4. Central Bank Interest Rates - this is a subsection of the previous website which summarizes the current interest rates of major central banks and also provides insight on the previous changes and behaviour of each of the banks.
5. Inflation Information - again a subsection of global-rates. A great source of historical information collected in one place. The US CPI of 2.6 released today is still not marked on the site but I hope this will be corrected soon.

Citigroup (C) stock is with a positive risk/reward profile

A notice on the Fly on the Wall website from today reads that Deutsche Bank believes the risk/reward ratio on the shares of Citigroup is positive. The bank reiterated its Buy rating on the Citigroup stock with a price target set at $5.50. Deutsche Bank expects that when the government releases its shares in Citigroup there will be a renewed interest in the bank stock.

This seems logical as when you expect there is a big seller ahead you don't rush in and buy. Especially if you don't see many more big enough like you to do it. But as the time passes by, some of your competitors get in. As the chances of a complete loss of your investment become lesser, you are more willing to put some money on a positive risk/reward ratio. Which could be somewhat confusing as even a ratio of 3/1 is still positive. But the meaning of the "positive risk/reward ratio" in investing is slightly different than the maths formulas.

A positive risk/reward ratio means that the amount you are expecting to win is more than or equal to the amount you are willing to lose on a single deal. So a positive risk/reward and a price target of $5.5 means that the maximum loss Deutsche Bank sees in the Citi stock is about $2.05 (according to current prices). So basically they don't believe the stock will fall below $1.4. Which still is quite a fall. Such a big fall does not seem to be supported by the graphs of the stock though.
On the other hand this could also be interpreted as they don't expect the bank to fail as an institution and default which were the main fears which brought the price to the current levels in the midst of the crisis.

Time will tell but the fact stays that after Goldman Sachs initiated their coverage of Citi (even with a neutral rating) earlier in the month another big analyst speaks aloud about the Citi stock.

Wednesday, February 17, 2010

Some banks technical overview (BAC, JPM, C)

Bank of America (BAC)

First the daily graph of Bank of America (BAC). What is clearly seen there is the bullish divergence between the price and the indicators (marked by the blue lines on the graph). Given that configuration yesterday's jump in the price was no surprise. The volume is around the average for the stock and still a bit higher than the several previous trading days. What keeps the warning sign on the above graph is the Moving Averages configuration which are in a negative formation. So let's look at the weekly graph.

The given divergences on the daily graph combined with the weekly graph where the stock looks a bit oversold could lead to a further advance in the price at least in a short term. If the price follows such a scenario the first possible level could be around $15.70 where is the MA30 on the weekly graph. If that gets broken the weekly graph will also have a positive formation and the price could advance to $18.40 where is the MA30 on the monthly graph and a resistance level for several times during the past months.
J. P. Morgan (JPM)

The situation at J.P.Morgan & Chase (JPM) stock looks quite similar. The divergences are on but the Moving Averages still haven't crossed on the positive side. A bar that leads the price above the MA30 is very possible for today. The highest possible point could be the previous resistance level around $41.

The weekly graph is quite the same as the one of Bank of America (BAC) os it's not shown here.

The interesting thing in the graphs of the two banks comes from the monthly ones.

They both look headed to being strongly oversold and still the MACD histogram stays on the positive side. A pointing up Stochastic would give more freedom to say a major upward movement has begun but it obviously has not. It might take a bit more time before everything is settled and these price levels are not seen again in the years to come.

Obviously the stocks of the two banks have different price behavior with the JPM being more stable and seemingly stuck between it's two moving averages. This however speaks nothing more than just giving a hint about how risky each of the positions is.

Citigroup (C)

The same formation on the monthly graph is seen on the Citigroup (C) graph. It more closely resembles the BAC monthly one which is normal as both banks were perceived as troubled ones during the crisis.
Citi however still lacks major institutional investors in their base. This has both positive and negative impact on the stock. The small percentage of institutional holdings has helped keeping the price low compared to the BAC one. The good thin about that is that the low price attracts a lot of small traders. Such a price also minimizes the risk by the simple assumption that losing $3 per share is less than losing $15 per share. This all makes the stock being loved by daytraders. The notion that the stock is not so risky attracts a lot of optimism in the trading which on its turn (as being held mostly by the public) exhausts very fast and the buying power for the stock vanishes.
Still there are bullish divergences also seen on the Citi daily graph but they don't seem so obvious and clear as in the graphs of the other two banks. For the current upward movement to sustain it would be good to see the price goes (and closes) above $3.40/50 on the weekly graph.

Tuesday, February 16, 2010

EUR / USD Technical View

As it can be seen on the following graph the fifth wave from the downward path for the Euro (and the increase of the value of the Dollar) that was expected in the EUR/USD Wave analysis published at the start of the last week already took part. Now the current down Euro movement might experience some correction.

  The Euro didn't fall below 1.35 so the level around 1.3530 could be considered as a current support level. The down waves are marked on the graph by the vertical red lines.

The green horizontal lines represent the Fibonacci retracement levels of the current second part of the Euro fall. Now the exchange value has reached the first level at 1.377. As this is a turnaround point of a greater magnitude than the inside waves this level should be broken and the rate to reach at least 1.392/404 (where are the 38.2 and 50% retracements).

Such view is supported by the indicators and the bullish divergences seen there. They are marked on the left graph by thick red lines. A triple point divergence might lead the price even higher than the 50% Fibonacci retracement. Still the monthly graph is pointing down so a major turning of the macro down trend for the Euro in the near term is less possible than the other options.

Monday, February 8, 2010

EUR USD Wave analysis

In the post about the strong technical support for the rise of the US Dollar at the end of December 2009 the graphs showed the upcoming movement. Since then the Dollar has risen towards the Euro with about 5% (which is almost 7 cents or 700 pips). As the situation developed the aim of this post is to present some clearly seen wave movements inside the bigger uptrend for the Dollar and also in the parts that make that bigger trend itself.

On the left is the Daily graph of EUR/USD pair for the past almost 3 months. What is clearly seen there is that the uptrend for the Dollar is developed in waves. This period could be divided into two main parts:
  • the first big fall to 1.42 (A)
  • the second fall which we witness now (B)
The first upward movement took part in 5 waves (marked with the blue lines on the graph) and at the end of them there was a retracement to the 38.2% level at 1.4570/80.

What those waves could show us is that the current movement is not finished yet and there should be a Fifth down wave for the Euro to follow. This is supported by the indicators where on the monthly graph the Stochastic still hasn't reached its lowest levels and continues to point downward.

Another interesting thing which could be noticed on the graphs are the levels of retracement which follows each of the Euro down waves.
The graph on the left shows the second part of the big upward Dollar move.
In most of the waves the retracement led to a 38.2% to 50% correction of the downfall for the Euro. What we could expect now in a short term is an upward Euro movement at least to 38.2% level which is around 1.3750/60.
After that level is reached the last fifth down wave could follow which will lead to another increase of the Dollar towards the Euro to levels below 1.35.

Friday, February 5, 2010

S&P 500 technical review

Yesterday's slide of US stock markets might have surprised a lot of people. Without doubt it was a fierce and strong decline despite the upward mood of the crowd. One of the biggest problems with the last several increases is the volume behind them. At last there was no one to buy. Some news interpreted as bad pulled the trigger.
Anyway, let's see the graphs.

The 1 hour graph of S&P 500 shows some signs of bullish divergences between the value of the index and the indicators - those marked by the straight red lines. Nearly the same is the picture on the 30min graph.

The decline in the Unemployment rate (which was reported as 9.7% - less than the 10% seen in the last month) might give the market the needed fuel for such a short term increase.

The obstacle before any major increase of the markets at the current time  could be seen on the Weekly graph. The bearish divergence that is clearly seen there takes the lead now. The Stochastic clearly points downward but MACD is still positive. There is a chance that the index gets caught between the two Moving Averages for some time. That would mean a bottom value of about 1035/45 in a first place as that level corresponds well with the EMA50 and 23.60% level of the Fibonacci retracement from the current top. If the markets seeks deeper negativism in order to continue to rise, the next level could be found around 950-1000.

Still the movement of the markets precedes the real Economic news so what we witness from the last days of January might very well be just "selling the news".