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U.S. Stocks Drop After ISM Manufacturing Gauge Retreats (adapted from bloomberg article)
U.S. stocks fell, ending the Standard & Poor’s 500 Index’s longest stretch without a 5 percent slide since 2006, as a gauge of manufacturing in the world’s largest economy declined more than estimated.
Telephone stocks plunged after AT&T Inc. introduced new service plans, the latest in an escalating price war among wireless carriers.
“Everyone walked in this year expecting a continuation of at least growing economic activity and the latest data we’ve been seeing throw a bit of cold water on that theory,” Bill Schultz, chief investment officer who oversees about $1.1 billion at McQueen Ball & Associates in Bethlehem, Pennsylvania, said by phone. “Economic activity was not as strong as people expected. People are taking a pause, reassessing where they stand.”
The S&P 500 has dropped 5.2 percent this year as the Federal Reserve trimmed its bond-buying program for the second time in as many months and emerging-market currencies tumbled amid signs growth was slowing in China. The country’s official Purchasing Managers’ Index decreased to a six-month low in January as output and orders slowed.
Worst MonthThe benchmark measure for U.S. equities retreated 3.6 percent in January, its worst opening month since 2010, as the gauge retreated in each of the month’s final three weeks, the longest streak since 2012.
Factory DataThe Institute for Supply Management’s factory index decreased to 51.3 from 56.5 the prior month, the Tempe, Arizona-based group’s report showed. The median forecast of 85 economists surveyed by Bloomberg called for a decrease to 56. Readings above 50 indicate expansion.
Debt CeilingTreasury Secretary Jacob J. Lew today said the U.S. risks breaching the federal debt limit by the end of this month and called on Congress to raise it immediately to sustain economic momentum. The debt ceiling was suspended through Feb. 7 under an agreement between President Barack Obama and congressional Republicans in October. The Treasury Department uses so-called extraordinary measures, or accounting maneuvers, stay under the ceiling.
Cellular PlansAll 10 main S&P 500 groups retreated at least 0.6 percent today, with phone stocks plunging 3.1 percent to lead declines. AT&T dropped 3.5 percent to $32.14 while Verizon Communications Inc. fell 2.8 percent to $46.67, the two biggest drops in the Dow.
6 easy ways to lose money in stocks (based on marketwatch article)
1. There’s always a bull market somewhere
There might be a bull market somewhere, but it won’t always be in stocks. And if there is a bull market somewhere, there must be a bear market somewhere, too. The problem with this comment is that it makes people believe the stock market always goes up. As many investors already know, that is most definitely not the case.
2. The ‘little guy’ is causing the market to fall
When the S&P 500 or some other market benchmark is falling, analysts always want to blame someone. The retail investor is an easy scapegoat. I heard a commentator make this ridiculous comment during a recent market selloff. Come on! The “little guy” (i.e. retail investors) do not have the power to move the markets (unless there is mass panic). In fact, the retail investor is usually the last to get out of the market, and often at the bottom.
3. Your stock will come back to even
The conventional wisdom is this: If your stock goes down, you should buy more because you are getting a bargain. If your stock goes up, you should buy more because you’ll be missing out on a great opportunity.
In reality, there are times when your stocks, even some of the best, do not come back to even or at all.4. Buy on the dip
Buying on the dip during a bull market or when the market is in an uptrend can work, but if you buy on the dip during a downtrend or bear market, you could get slaughtered.
Even worse, some people buy on the dip while they are holding losing positions. Here’s a rule: Don’t ever buy additional shares of a losing stock, especially if it is still going down.
5. You can get rich quickly
There is nothing more ridiculous than books that promise to make you rich in the stock market. Yes, you can win, build wealth, and make profits, but to believe that after reading a book you will get rich is ridiculous, and is only designed to sell books.
6. Buy low, sell high
Similar to buy on the dip, the “buy low and sell high” mantra has been drilled into investors since the early days of the stock market.
Unfortunately, this cliché has caused many investors to lose big in the market. For starters, the terms “low” and “high” are difficult to define. No one knows what is low or high until after stocks have reached these points.
Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2014.02.03 17:48
2013-02-03 15:00 GMT (or 16:00 MQ MT5 time) | [USD - ISM Manufacturing PMI]
if actual > forecast = good for currency (for USD in our case)
==========
U.S. Manufacturing Index Indicates Notably Slower Growth In January
While the Institute for Supply Management released a report on Monday showing modest growth in U.S. manufacturing activity in the month of January, the pace of growth slowed much more than economists had been anticipating.
The ISM said its purchasing managers index fell to 51.3 in January from a revised 56.5 in December. A reading above 50 indicates continued growth in the manufacturing sector, but economists had expected the index to show a much more modest decrease to a reading of 56.0.
With the much steeper than expected decrease, the purchasing managers index fell to its lowest level since hitting 50.0 in May of 2013.
Comex Gold Gets Safety Bid As Stocks Tumble After Weak PMI Report (based on kitco news)
U.S. gold futures rose sharply Monday as the equity market and dollar sagged after a weak manufacturing survey from the Institute for Supply Management.
Gold for April delivery settled after the pit session with a gain of $20.10 to $1,259.90 per ounce on the Comex division of the New York Mercantile Exchange. March silver settled up 28.9 cents to $19.409 an ounce.
“Gold obviously is garnering some strength as a safe-haven asset,” said Dave Meger, director of metals trading with Vision Financial Markets. “That came on the back of the weaker-than-expected ISM data this morning.”
The ISM Purchasing Managers Index reading came in at 51.3, the lowest level since last May, when expectations were for around 56.0. The December reading was 56.5.
“Gold continues to have a reverse correlation with equity markets and today equity markets remain under pressure and some of the gain in gold can be attributed to that,” said a research note from Triland Metals.
Some economists have suggested the weak January PMI may be largely the result of harsh winter weather in some of the more heavily populated parts of the U.S. Nevertheless, in the wake of the weak December jobs report issued last month, traders will be scrutinizing data closely to see if the economy hits a soft patch that in turn might prompt the Federal Open Market Committee to consider holding off on a scale-back of the bond-buying program designed to push down long-term interest rates, known as quantitative easing.
Prior to Monday’s surge, the market had been down around the 20-day average of $1,246.40, in turn not far above the 50-day average of $1,236.70.
MetaTrader 4 Now Features Market: Trading Robots Are Available to 7 Million Traders
LIMASSOL, Cyprus, Feb. 4, 2014 /PRNewswire/ -- Today MetaQuotes Software Corp. has launched MetaTrader Market( https://www.mql5.com/en/market/mt4 ) - the store of trading applications for traders. Millions of MetaTrader 4( https://www.metaquotes.net/en/metatrader4 ) users have gained quick access to hundreds of ready-made trading robots and technical indicators right from the trading platform.
2013-02-04 03:30 GMT (or 04:30 MQ MT5 time) | [AUD - RBA Cash Target]
if actual > forecast = good for currency (for AUD in our case)
==========
Australia's Central Bank Keeps Policy Rate Unchanged
The Reserve Bank of Australia on Tuesday retained its benchmark cash rate unchanged at 2.5 percent as expected, saying that interest rate stability is the most "prudent course" for monetary policy at present.
In a statement today, Governor Glenn Stevens said that the bank's monetary policy "is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target."
"On present indications, the most prudent course is likely to be a period of stability in interest rates," he noted.
The Reserve Bank Board expects inflation to be somewhat higher than forecast three months ago, but still consistent with the 2-3 percent target over the next two years, Stevens noted.
He also pointed out that the exchange rate had declined further, which, if sustained, would assist in achieving balanced growth in the economy.
How to Invest In U.S. Bonds (based on Forbes article)
U.S. bond investing has a reputation for being arcane, and understandably so.
==============
While owning bonds directly is just about the cheapest way to invest, there is a strong argument to be made for owning them via exchange-traded funds (ETFs) instead. The risks are similar but you get diverisifcation the fee for buying a bond ETF is usually far lower than an actively managed bond mutual fund.
Here are some pointers for looking at bond ETFs:
1. What does the fund own?
There are dozens of flavors of bonds out there, from corporates and municipals to foreign government bonds and everything between. If what you seek is exposure to the U.S. Treasury market, make sure your ETF owns only U.S. federal government debt.
Secondly, be sure of the length of the bonds the fund holds. A U.S. bond ETF often will say right in its name the words “Treasury” and the lengths to maturity, such as 1-3 or 1-5. Read the prospectus carefully.
2. How much does it cost?
You can buy a short-term U.S. government bond ETF for as low as 0.08%. The average bond mutual fund charged 0.61% at the end of 2012, according to ICI data. That’s a huge gap in price!
You might be convinced the money on fees is worth spending, but often it is not. In fact, research shows that most actively managed funds underpeform the market precisely because of the fees they charge.
3. Why am I buying it now?
Finally, know why you own bonds in the first place. Correctly managed in a well-designed portfolio, bonds can lower volatility and add to your total return. Specific ETFs can provide exposure to different parts of the bond market for this purpose or even the whole market through what’s known as a total market fund.
2013-02-04 08:00 GMT (or 09:00 MQ MT5 time) | [EUR - Spanish Unemployment Change]
if actual < forecast = good for currency (for EUR in our case)
==========
Spanish jobless claims surge by 113,100 in January
The number of unemployed people in Spain rose significantly in January, fuelling concerns over the country’s economic outlook, official data showed on Tuesday.
In a report, Spain’s Employment Ministry said the number of unemployed people increased by a seasonally adjusted 113,100 last month, disappointing expectations for a decline of 21,000. The number of unemployed people fell by 107,600 in December.
Following the release of the data, the euro added to losses against the U.S. dollar, with EUR/USD inching down 0.13% to trade at 1.3510, compared to 1.3526 ahead of the data.
2013-02-04 09:30 GMT (or 10:30 MQ MT5 time) | [GBP - Construction PMI]
if actual > forecast = good for currency (for GBP in our case)
==========
UK Construction Activity Growth Strongest Since 2007
British construction sector activity expanded at the fastest pace in nearly six-and-a-half years in January, a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) revealed Tuesday.
The purchasing managers' index, a measure of the country's construction sector performance, rose to 64.6 in January from 62.1 in December. Economists had forecast the index to fall to 61.5.
The January reading was the highest since August 2007. The index has now posted above the boom-or-bust threshold of 50 for nine successive months.
Prices declined as expected after putting in a Bearish Engulfing candlestick pattern. The pair is now testing support at 1.6260, the 50% Fibonacci retracement, with a break below that targeting the 61.8% level at 1.6164. Alternatively, a close back above the 38.2% Fib at 1.6356 aims for the underside of a rising channel bottom set from set from mid-December, now at 1.6428.
Risk/reward considering argue against taking a trade with prices in close proximity to near-term support. Alternatively, attempting to pick a bottom and trading the pair to the long side presumes support will hold, which is an assumption that is thus far baseless. As such, we remain sidelined for now.
NZD/USD Fundamental Analysis February 5, 2014 (based on fxempire article)
The NZD/USD gained 40 points this morning against the weak US dollar and a jump in commodity prices which is helping to support the kiwi economy. The pair is trading at 0.8126 after falling below the 81 level earlier this week. New Zealand commodity prices have risen 23 per cent over the past year, according to the ANZ Commodity Price Index. International prices for 10 of New Zealand’s main commodities increased in the month, three fell and four were unchanged. Butter prices led the gains, up four per cent from December and 33 per cent above January last year. Prices of wood pulp and skim milk powder rose three per cent, while wool, cheese and whole milk powder prices increased two per cent and casein and logs advanced one per cent. ANZ said the forestry sub-group reached a record in January and the dairy sub-group rose to a nine-month high.
Economic Data February 4, 2014 actual v. forecast
Date
Currency
Event
Actual
Forecast
Previous
Feb. 04
KRW
South Korean CPI (YoY)
1.1%
1.1%
1.1%
KRW
South Korean CPI (MoM)
0.5%
0.5%
0.1%
JPY
Monetary Base (YoY)
51.9%
47.2%
46.6%
NZD
ANZ Commodity Price Index
1.2%
1.0%
AUD
Interest Rate Decision
2.50%
2.50%
2.50%
AUD
RBA Rate Statement
Upcoming Economic Events that affect the AUD, NZD, JPY and USD
Date
Time
Currency
Event
Forecast
Previous
Feb. 05
01:45
CNY
Chinese HSBC Services PMI
50.9
13:15
USD
ADP Nonfarm Employment Change
180K
238K
15:00
USD
ISM Non-Manufacturing PMI
53.5
53.0
15:00
USD
ISM Non-Manufacturing Employment
55.6