LATEST:-U.S. Stocks Fall, S&P 500 Completes Fourth Straight Weekly Loss

Thursday, January 7, 2010

July 10 (Bloomberg) -- U.S. stocks dropped, sending the Standard & Poor’s 500 Index to a fourth straight weekly loss, as a deeper-than-estimated slide in consumer confidence added to concern the economic recovery will be delayed.

CIT Group Inc., the century-old lender that trades in the bond market as if it may fail, slid 18 percent on concern the Federal Deposit Insurance Corp. won’t guarantee its bond sales. Chevron Corp. helped lead the Dow Jones Industrial Average lower as oil completed its worst weekly drop since January and the company said the weaker dollar was slashing profit. Technology shares rose, limiting the market’s slide, following analyst upgrades of Yahoo! Inc. and MEMC Electronic Materials Inc.

“We’re finding out that the economy is not recovering in any significant way at all,” said Christian Thwaites, president and chief executive officer of Sentinel Investments in Montpelier, Vermont, which manages $19 billion. “The market is still relatively expensive on a current earnings basis.”

The S&P 500 slipped 0.4 percent to 879.13 at 4:08 p.m. in New York and lost 1.9 percent over the past five days, capping its longest weekly losing streak since March. The Dow declined 36.65, or 0.5 percent, to 8,146.52. Less than 7 billion shares changed hands on all U.S. exchanges, the slowest trading day since Jan. 2. Equities extended their declines as the Reuters/University of Michigan index of consumer confidence trailed economist estimates.

Recession Concern

The S&P 500 has dropped more than 7.1 percent since June 12 on concern its rebound of as much as 40 percent since March outpaced prospects for a recovery from the longest slump in profits on record. The index is trading for about 14 times its companies’ earnings over the past 12 months, compared with about 10 times on March 9, the day the gauge slid to a 12-year low.

The worst recession in half a century may be prolonged because consumers see few signs that job losses and declines in home prices are ending, economists Nouriel Roubini and Robert Shiller said.

The U.S. needs another stimulus package because President Barack Obama’s initial $787 billion plan hasn’t been implemented fast enough, according to Shiller. Roubini, the economics professor at New York University who predicted the financial crisis, said the recession will likely continue for six months as companies struggle to pay their creditors.

The economy shrank 5.5 percent in the first quarter and 6.3 percent in the fourth quarter of 2008, the worst six months since 1958, according to data compiled by Bloomberg.

Analysts estimate profits of S&P 500 companies fell 35 percent last quarter from a year earlier after plunging 33 percent in the first quarter, Bloomberg data show. They forecast a 21 percent year-on-year drop in the third quarter.

Chevron’s Slide

Chevron declined 2.7 percent to $61.40. The second-biggest U.S. energy producer said the falling dollar slashed overseas profit from oil and natural-gas wells by almost $7 million a day during April and May, more than double the impact of currency fluctuations during the second quarter of 2008.

Crude oil fell 0.9 percent to $59.89 a barrel in New York, the lowest settlement in almost two months, on concern a prolonged global recession will sap demand for energy. Crude plunged 10 percent this week.

CIT Group tumbled 18 percent to $1.53. The Federal Deposit Insurance Corp. is unwilling to guarantee the company’s bond sales because the commercial lender’s credit quality is worsening, according to people familiar with the regulator’s thinking.

Technology Outperforms

Technology companies added 0.4 percent as a group, the best performance among 10 industries in the S&P 500. MEMC Electronic Materials rose 3 percent to $16.61. The maker of silicon wafers for solar modules and semiconductors was raised to “buy” from “hold” at Citigroup Inc., which said the company is “starting to reap meaningful cost reductions.”

Yahoo gained 2.6 percent to $14.93. The owner of the world’s second-most-used Internet search engine was raised to “market weight” from “underweight” by Thomas Weisel Partners analyst Christa Quarles.

SanDisk Corp. increased 3.2 percent to $14.47. Morgan Stanley lifted its 2010 earnings-per-share estimate for the biggest maker of flash-memory cards and said the company’s 2009 loss was likely to be narrower than it previously estimated.

Dell Inc. rose 0.5 percent to $13.22. Goldman Sachs upgraded the world’s second-biggest maker of personal computers to “conviction buy” from “neutral.” Goldman raised its rating on the computer-hardware industry to “attractive” from “neutral,” saying “downward estimate revisions are mostly behind us” and “we see greater upside than downside to estimates into the seasonally stronger second half of the year and in 2010.”

Faster Growth Forecast

The U.S. economy will expand faster than previously forecast in the second half of this year and in 2010 as a revival in consumer spending signals an end to the recession, a Bloomberg News survey showed.

Growth will average 1.5 percent in the July-to-December period, compared with last month’s 1.2 percent projection, according to the median of 57 forecasts in the survey taken from July 2 to July 8. The jobless rate will exceed 10 percent early next year and average 9.8 percent for 2010.

IBM fell 1.2 percent to $100.83. The world’s biggest computer-services provider was downgraded to “neutral” from “buy” at Goldman Sachs, which said investors will “shift their focus from earnings resiliency in a period of soft demand to companies with greater operating leverage and higher top-line growth as tech spending improves.”

READ MORE - LATEST:-U.S. Stocks Fall, S&P 500 Completes Fourth Straight Weekly Loss

LATEST:- More and better human resource needed in Islamic Finance: Dr. Ishrat

KARACHI: Former Governor, State Bank of Pakistan, Dr Ishrat Hussain has said there is a need to invest in creation of a pool of bankers conversant with Islamic banking in order to help the sector grow faster.

Speaking at the inaugural session of Islamic Capital Conference on Wednesday, he said there is a shortage of human resources in Pakistan with expertise in Islamic banking.

He further said there was need for standardisation of Islamic banking products, in absence of which, the cost of transactions would rise substantially because of requirement of fatwa for every transaction.

Increased penetration in rural areas: Number of borrowers from banks, which rose to 5.5 million from one million during the last eight years, could easily double if Islamic banks take measures to penetrate in the rural areas, shanty towns in urban centres, mandi towns, comprising of small and medium enterprises, small farmers and self-employed persons, he said.

Access to agriculture credit, SME financing, low cost housing finance, etc. will relax the credit constraint these individuals and businesses face today in expanding their business or investing in productivity or building assets, he said.

He said most of the conventional banks’ presence is limited to metropolitan areas and big cities. Large rural areas and mandi towns have a large untapped client base waiting for Islamic financial products to become accessible and available to them.

“Islamic banks can spread their geographical presence by locating their branches or other delivery channels in these potentially attractive but underserved areas and use IT tools and alliances with post offices, and other distribution outlets to develop a cost-effective business model,” he said.

He said rural areas in Pakistan are a reliable and sustainable pool for mobilising low cost deposits, which can provide a stable source of funding for Islamic banks that will not only cover their extra costs but also give them a competitive edge.

“Ijara products for agriculture implements, tube-wells, processing and dairy equipment, cold storage, warehousing, transport, etc. will be highly popular in these areas,” he said.

Extra precautions: He said Islamic banks had to take extra precautions and safeguards to ensure that they meet the exhaustive requirements to be Shariah compliant. “The perception that Islamic banks are simply mimicking conventional finance products is not going to go well with the large illiterate and uneducated population that forms the bulk of the future client base for Islamic banks,” he said. “This requires that the clients of Islamic banking must have business that should be socially beneficial for the society creating real wealth and adding value to the economy rather than making paper transactions.”

He said commingling of funds and even a semblance of contamination with non-Shariah compliant products and services should be scrupulously avoided. “The Islamic banks must ensure that funds are directed towards identifiable and acceptable productive activities,” he said.

He said there was a huge demand for Islamic capital in Pakistan and Bangladesh, but there was limited supply. Conversely, there was huge amount of Islamic capital in the GCC countries, but the demand was thin, he said.
READ MORE - LATEST:- More and better human resource needed in Islamic Finance: Dr. Ishrat

Wall Street set to fall on recovery caution, oil

EW YORK (Reuters) – Wall Street was poised to fall nearly 1 percent at the open on Monday, weighed by worries about the potential strength and timing of an economic recovery as a slump in oil prices was set to pressure energy shares.

Oil touched a five-week low and fell to around $64 a barrel as investors remained cautious over the prospects of a speedy global economic turnaround in the wake of last week's grim U.S. jobs data. Shares of Exxon Mobil (XOM.N) were down 1.7 percent at $67.30 in premarket trade.

Although the weaker oil prices bode well for recession-weary consumers, strong commodity prices have been viewed as a signal the global economy is stabilizing.

Last week's much weaker-than-expected jobs data weighed heavily on the market as investors questioned what the economic recovery will look like and when improvement will be seen.

The S&P 500 is up 32.5 percent from March's 12-year lows after a rally spurred by bets the economy will show signs of recovery later in the year. The market run-up has stalled of late as investors have become more cautious and booked some profits.

Market-watchers were also focusing on the start of earnings season, which kicks off with Alcoa Inc (AA.N) this week.

"A little bit of fear factor is back into the marketplace," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"The unemployment report was not a good report, and it does cast some doubt, but I don't think it reverses the trend (of stabilization)," he said.

Investors will take in the latest data with a look at the services sector as the Institute for Supply Management releases its June nonmanufacturing index at 10:00 a.m. EDT.

Economists' median forecast in a Reuters poll call for a nonmanufacturing index reading of 46.0, below the 50 mark which divides expansion from contraction but up from May's reading of 44.0.

S&P 500 futures fell 7.5 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures slid 57 points, and Nasdaq 100 futures lost 7 points.

A U.S. judge on Sunday approved General Motors Corp's (GMGMQ.PK) bankruptcy sale in a move that will allow the company's most profitable assets to exit bankruptcy protection under government ownership.

Over the weekend, Vice President Joe Biden said the White House does not favor another stimulus package now, though he said that when the current administration came into office, it misread how bad the economy was.

Stocks tumbled on Thursday, driving the S&P 500 down to its third-straight weekly loss after data showed a slide in June non-farm payrolls. U.S. markets were closed on Friday for the Independence Day holiday.

(Editing by Padraic Cassidy)

READ MORE - Wall Street set to fall on recovery caution, oil

LATEST:-Crude Oil Trades Near $71, Snapping Four Weeks of Increases

By Christian Schmollinger

June 19 (Bloomberg) -- Crude oil snapped four weeks of gains, trading little changed near $71 a barrel in New York, as fuel demand remained weak even as data showed that the global economy may be recovering from the recession.

Oil traded in a $3 range this week after rising 28 percent in the previous four. The index of U.S. leading economic indicators rose in May, the U.S. Commerce Department said yesterday. Petroleum products demand in the U.S., the world’s largest energy user, fell 6 percent over the past four weeks to June 12 from a year ago, the Energy Department said June 17.

“The available data do show that the world is no longer dropping off a cliff,” said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. “The concern is that if you look at oil demand, it hasn’t really turned a corner.”

Crude oil for July delivery was at $71.55 a barrel, up 18 cents, in electronic trading on the New York Mercantile Exchange at 2:43 p.m. Singapore time. Prices have risen 60 percent this year and reached a seven-month high of $73.23 on June 11. Oil prices are poised to fall 0.7 percent this week.

The July contract expires June 22. The more-active August contract was at $72.09 a barrel, up 18 cents, at 2:44 p.m. Singapore time.

Inflation Hedge

Investors have pushed oil higher by buying contracts as an inflation hedge to offset a decline in the dollar.

“We’ve moved quite high at a time the international economy is in a recession,” said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. “Oil prices at $70 are at a solid level.”

Oil has gained 56 percent since April 20 as the dollar index, a measure of the greenback’s value against six other currencies, has had a 6.9 percent drop. The euro has fallen 0.7 percent against the U.S. currency this week.

Crude futures may fall next week on speculation U.S. fuel stockpiles will increase as the recession and rising prices sap consumption, according to a Bloomberg News survey.

Fourteen of 32 analysts surveyed, or 44 percent, said futures will decline through June 26. Thirteen respondents, or 41 percent, forecast that the market will be little changed and five said prices will climb. Last week, 49 percent of analysts said oil would increase.

OPEC Output

Goldman Sachs Group Inc. analysts said yesterday that while some short-term “liquidation risk” is evident in oil markets, they expect “an improvement in fundamentals to begin to take hold in the next several months,” pushing prices to $85 a barrel before the end of the year.

Oil prices at $70 a barrel are satisfactory for producers and consumers, Organization of Petroleum Exporting Countries President JOSE told reporters in Luanda, Angola. Vasconcelos, who’s also the country’s oil minister, said the gain in oil prices is a positive sign for the world economy.

The 12-member group will trim shipments 0.2 percent in the four weeks ended July 2, according to consultant Oil Movements. OPEC will reduce exports in the period to 22.78 million barrels a day, from 22.82 million in the month ended June 6, the Halifax, England-based tanker-tracker said today.

Brent crude for August settlement was at $71.24 a barrel, up 18 cents, on London’s ICE Futures Europe exchange at 2:43 p.m. Singapore time.

Last Updated: June 19, 2009 02:46 EDT
READ MORE - LATEST:-Crude Oil Trades Near $71, Snapping Four Weeks of Increases


The Live subscriber newswire has total focus on the precious metals markets and delivers a constant stream of accurate, knowledgeable and breaking market news to your attention.

For a free trial of TheBullionDesk service, please contact our sales team or call one of our sales offices:
UK: +44 (0)845 241 9949 Singapore: +656 242 7089

Visit our shop for pricing or to purchase a subscription Buy Now


About the London Stock Exchange

The London Stock Exchange is the most important exchange in Europe and one of the largest in the world. It lists over 3,000 companies and with 350 of the companies coming from 50 different countries, the LSE is the most international of all exchanges.

The London Stock Exchange is comprised of two different stock markets: the Main Market and the Alternative Investment Market (AIM). The Main Market is solely for established companies with high performance, and the listing requirements are strict. Approximately 1,800 of the LSE's company listings trade on the Main Market, and the total market capitalization is over 3,500 billion. The Alternative Investment Market on the other hand trades small-caps, or new enterprises with high growth potential. Over 1,060 companies list on this market, with a total capitalization of 37 billion.

The LSE is completely electronic, but different shares are traded on different systems. Highly liquid shares are traded using the SETS automated system on an order driven basis. This means that when a buy and sell price match, an order is automatically executed. For securities that trade less regularly, the London Stock Exchange implements the SEAQ system, where market makers keep the shares liquid. These market makers are required to hold shares of a specific company and set the bid and ask prices, ensuring that there is always a market for the stock.

The LSE also has a new and growing exchange for equity derivatives called EDX London, created in 2003. In 2004, EDX traded an average of 382,599 contracts per day. Its aim is to become the leading derivatives market in the world.
READ MORE - About the London Stock Exchange

What Is "Breaking the Buck?"

Money market funds are a form of mutual fund, which means they attempt to keep a net asset value (NAV) of $1 per share. $1,000 is equal to 1,000 shares, and vice versa. These funds are invested to produce a return for investors, but money market funds are required by law to invest in low-risk debts (no more than 13 months in duration), such as government bonds, which means they typically return less than equities. (For more insight, see Do Money Market Funds Pay?) What many people fail to understand about money market funds, however, is that low risk isn't the same as risk-free. Because these funds are still an investment, it is possible for shares to lose value and dip below $1 per share. In this case, the fund is said to have broken the buck, a crucial benchmark in the financial sector. While this is uncommon, it can and does happen, causing investors to lose money and fund managers lose their reputations. (See other risks of this investment in Are Money Market Funds Worth The Risk?) Money market funds have generally been thought to be as safe as cash. They work like mutual funds, yet can be dipped into like a savings account. Most come with no insurance and no guarantees but investors still flock to them as the ideal place to park their money. As of 2009, money market funds have "broken the buck" twice in their history, in 1994 and 2008, causing investors to lose part of their principal investments. So how does this happen? And are money market funds really that safe? Read on to find out. (For background reading, see Introduction to Money Market Mutual Funds.)
READ MORE - What Is "Breaking the Buck?"

How I Select Trades

Successful trading is about managing trades once you are in them, regardless of where they came from. I think a great trader could probably turn a profit taking random trades, as long as he manages them well. Now I do believe that finding quality chart patterns is essential, mostly because trading good setups in liquid stocks allows for the best risk/reward relationship on the front end. That is why I run my swing trading website – to highlight the best charts in the market for potential trades. My trade selection process is based on my ability to manage those trades, therefore I want to find only the best. Why not predetermine your stop in case you are wrong by taking the trades with a natural stop-loss nearby?

Having said that, let me touch on the last comment regarding stops. One of the first things I want to know before I take a trade is how much I am likely to lose in case I am wrong (and I will definitely be wrong some of the time). This helps me to determine two things: position sizing and profit expectation. If I am willing to lose $1000.00 on a trade and the natural stop is 1 point away, then a position size of 1000 shares will be obvious. Furthermore, if I want to keep my reward-to-risk relationship at 3 or 4 to 1, then I would look to pull at least 3 times my potential loss out of the trade on the profit side. This would be a 3 point profit for this example.

Now, how do I go about finding those trades? Each night I begin with all the stocks in the market and run some basic scans on them which filter out the low-dollar stocks and the low-volume stocks using TCNet, my charting software. Once I have the remaining list, which is typically about 1600 stocks, I sort that list by their close relative to that day’s range. This simply means the stocks at the top of the list finished the day near their highs, and the stocks at the bottom of the list finished near their lows. Sorting by this helps me to first find my likely long candidates and then move on to the short candidates, as I typically like continuation plays. Once the list is sorted, I use the spacebar to screen each stock in pretty rapid succession. Going through the list takes me about an hour. Simply scrolling through so many stocks each night also helps keep tabs on the overall market health.

As I move through the list, I keep a finger on the “F” key and “flag” the stocks which are good enough for a closer look. After screening the big list, I am left with about 50 flagged stocks which I look closer at to determine my trade candidates which will be in the swing trading newsletter. It is at this point that I separate the good from the great. I want stocks which are able to move. A stock like MSFT which sees daily changes of only a few cents is just not a candidate. I want potential for a good, quick profit. I also want to find tight setups where my stop is nearby. A wide, sloppy chart will add slippage and make it more difficult to know when to exit. This is why I often overlook momentum stocks which have already broken out. Why make trading any more difficult than it already is?

Volume is the next thing I will really key in on, as it is the best true measure of activity and just what the “big boys” are doing. Does volume support the overall look of the chart? Has there been more activity lately than normal which may indicate a move is about to occur? If so, then that stock makes my list.

When looking for shorts, I want to see lower highs, downside volume and relative weakness to either the market or that particular stock’s sector. This indicates to me that pressure remains on the stock and the path of least resistance is still down. Any stock that is unable to participate in market strength gets my attention quickly.

The next morning, I set alerts in my CyberTrader Pro trading platform which will trigger when the stocks from the newsletter meet their breakout prices. Most of the time, I set these alerts to actually get me into the trades automatically for at least a partial position. I also set up my watch lists in Trade-Ideas Pro, which helps me to gauge momentum and relative volume. Their product is excellent, and is an essential part of my trading.

As the day progresses, I keep a close eye on market activity (or inactivity it has seemed to be lately). If buying is strong and the futures are holding up well, I will add to longs in expectation of strength (vice versa for shorts). If the futures are flat and choppy, then I cut way back on my activity and grab a good trading book. Watching the market action with this in mind helps me select which trades are worth adding to and which are not.

From there, it is all a matter of execution and sticking with a good, disciplined trading plan. Cutting losers and keeping winning trades on my screen is the only remaining part of my job once I have found the trades, which is also the most important part!
READ MORE - How I Select Trades

Fallen angels will all go back up, eventually.

Whatever the reason for this myth's appeal, nothing is more destructive to amateur investors than thinking that a stock trading near a 52-week low is a good buy. Think of this in terms of the old Wall Street adage, "Those who try to catch a falling knife only get hurt."

Suppose you are looking at two stocks:

* XYZ made an all time high last year around $50 but has since fallen to $10 per share.

* ABC is a smaller company but has recently gone from $5 to $10 per share.

Which stock would you buy? Believe it or not, all things being equal, a majority of investors choose the stock that has fallen from $50 because they believe that it will eventually make it back up to those levels again. Thinking this way is a cardinal sin in investing! Price is only one part of the investing equation (which is different from trading, whch uses technical analysis). The goal is to buy good companies at a reasonable price. Buying companies solely because their market price has fallen will get you nowhere. Make sure you don't confuse this practice with value investing, which is buying high-quality companies that are undervalued by the market.
READ MORE - Fallen angels will all go back up, eventually.

The stock market is an exclusive club

The stock market is an exclusive club in which only brokers and rich people make money.
Many market advisors claim to be able to call the markets' every turn. The fact is that almost every study done on this topic has proven that these claims are false. Most market prognosticators are notoriously inaccurate; furthermore, the advent of the internet has made the market much more open to the public than ever before. All the data and research tools previously available only to brokerages are now there for individuals to use.

Actually, individuals have an advantage over institutional investors because individuals can afford to be long-term oriented. The big money managers are under extreme pressure to get high returns every quarter. Their performance is often so scrutinized that they can't invest in opportunities that take some time to develop. Individuals have the ability to look beyond temporary downturns in favor of a long-term outlook.
READ MORE - The stock market is an exclusive club

Investing in stocks is just like gambling.

This reasoning causes many people to shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks. A share of common stock is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, investors think of shares as simply a trading vehicle, and they forget that stock represents the ownership of a company.

In the stock market, investors are constantly trying to assess the profit that will be left over for shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and so are the future earnings of a company.

Assessing the value of a company isn't an easy practice. There are so many variables involved that the short-term price movements appear to be random (academics call this the Random Walk Theory); however, over the long term, a company is only worth the present value of the profits it will make. In the short term a company can survive without profits because of the expectations of future earnings, but no company can fool investors forever - eventually a company's stock price can be expected to show the true value of the firm. Gambling, on the contrary, is a zero-sum game. It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the overall wealth of an economy. As companies compete, they increase productivity and develop products that can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.
READ MORE - Investing in stocks is just like gambling.


I made my very first investment in the stock market when I was ten years old. Ever since then I have been hooked! Now I check out hundreds of trades each year with the same excitement andenthusiasm, and each time try to find that one market at the right time that could dramatically create wealth.

If you would’ve been fortunate enough to invest $1,000 in Microsoft when it first came public, that initial investment would be worth close to $300,000 today. In the last 10 years America Online has been up 12,000% and it has come creashing lower as well! Although statistics like this are advocated regularly by journalists and brokers the majority of investors have a very difficult time staying in an investment for that long of a period of time even though they know they are in a good company The financial markets are a never ending source of temptation trying to lure you into a new position with each passing second. The belief that the grass is always greener in another market is a distraction that every investor eventually has to contend with. Even if you are a MUTUAL FUND investor the fact is that you are always looking for the BEST return available.

Years ago when I worked as a broker I was confronted with this dilemma. One of my clients told me that he knew the BIG MONEY was made in holding on for the LONG TERM but that he liked trading the short term swings. He asked my advice and I had to think long and hard for several days before I could respond.


The capital markets consist of the primary market and the secondary market. The primary markets are where new stock and bonds issues are sold (underwriting) to investors. The secondary markets are where existing securities are sold and bought from one investor or speculator to another, usually on an exchange (e.g. the New York Stock Exchange).