Monday, August 16, 2010

Hot Stocks To Watch On Monday August 16: Alcoa, Applied Materials, Omnicare, Gartner, Nevsun Resources,

Alcoa (AA: 10.64 0.00 0.00%) - Both MA(50) and MA(20) right above as overhead resistances. A good entry would be on another rejection at MA(50) or on a break of Thursday’s lows.
Applied Materials (AMAT: 11.17 0.00 0.00%) - Nice bearish volume pattern. The move upwards on Friday was on really low volume.
Omnicare (OCR: 20.25 0.00 0.00%) - A short at the resistance level marked.
And here are some long setups.
Gartner (IT: 27.50 0.00 0.00%) - Consolidating nicely after the breakout. Stop should be placed below the level marked.
Nevsun Resources (NSU: 4.00 0.00 0.00%) - Consolidating nicely around the 4 level. Has breakout potential. (PCLN: 297.19 0.00 0.00%) - A textbook breakaway gap. Can be entered with a stop below the gap.

As U.S. Stocks Slide, Emerging Stock Markets Thrive

As the U.S. stock markets struggle in the midst of slowing economic growth, emerging stock markets are thriving as their surging economies provide cover for savvy investors.
Stocks tripped over the past week after a weak jobless claims report and a lukewarm revenue outlook from Cisco Systems Inc. (CSCO: 21.36 0.00 0.00%)on Thursday put an exclamation point on worries about a muddled Federal Reserve Bank policy. U.S. markets lost more than 4% in one of their weakest five-day spans of the year, including a 90% Downside Day on Wednesday that featured a rare event: All 30 stocks in the Dow Jones Industrials Average closed lower.
Small stocks had their throat slit, as the Russell 2000 plummeted below its 50-day and 200-day averages. It was the largest one-week loss for the index since early June when a Hungarian official compared his nation’s debt woes to those of Greece. The index is back to early July, wiping out a month of gains. I’m not one to say “I told you so” but let me just note that we have strenuously recommended avoidance of the smalls in an effort to de-risk your portfolios.
Yet there were surprising bright spots: The emerging markets that I have been recommending were positively buoyant, with Thailand, Chile and India markets recording gains for the week, copper retaining its uptrend, and even in the United States underlying demand was not as weak under the surface as it appeared in the headline indexes.
It’s weeks like this — where the U.S. markets are down and Asian emerging markets are up — that create the relative strength record we keep showing you. There’s a great big world of economic growth out there that is manifesting itself in share prices much more buoyant than is being recorded in the United States.
To be sure, investors have had plenty to worry about. The Fed downgraded its outlook for the economy earlier in the week and felt the situation was vulnerable enough to embark on another round of long-term bond purchases — affectionately dubbed “quantitative easing” or more simply, money printing. And on Thursday, initial weekly jobless claims increased to the highest levels since February. The job market absolutely refuses to heal despite the fact economic output has been improving for more than a year.
There’s also been plenty of bad news from Asia. In Japan, machine orders grew less than expected as a strong yen dampens the fortunes of the export-led economy there. Over in China, last month saw a slowdown in the growth rates of industrial production, fixed asset investment, retail sales, new bank loans, and money supply growth.
As a result, economists are recalibrating their expectations of economic growth in coming quarters. . Here in the United States, Deutsche Bank AG (DB: 67.130.00 0.00%) economists now expect a sharp downward revision to Q2 GDP growth from 2.4% to just 1.1% as a result of reduced construction, inventories, and net exports. That’s a huge change. They are also marking down their second half growth forecast as well: Q3 GDP grown declines to 3% from 4.6% and Q4 falls to 3.3% from 3.8%.
What’s worse is that all of this comes after the Commerce Department downwardly revised economic growth data going back to 2007 — showing that the recession was deeper than previously believed. So not only has the future dimmed, but we’re in a deeper hole than previously thought. No wonder investors are acting as if they are confused: pushing stocks up by 200 Dow points one day, and down by 200 points the next day.
But not all hope is lost. Deutsche Bank analyst Joseph LaVorgna, who we think is on the ball, reported this week that his team believes the second half will put up stronger growth than the first half, and that the momentum will carry over to 2011. Key positives, in his mind: lower interest rates and a weaker dollar. In short: The Fed is on investors’ side.
Eventually, this situation could very well push stocks higher, assuming the still vulnerable economy does not tip back into a new recession. Although recent data points have weakened, they are really telling us what the economy was doing back in June and July. A more real-time outlook is provided by leading indicators such as the ECRI’s weekly leading index, or WLI. And as you can see in the chart above, it’s starting, ever so slowly, to stabilize and inch higher again. This is a very sensitive measure, however, and could tip back over.
Remember that an ultra-low interest rate/slow growth environment is the best of all worlds for institutional investors. The economy is strong enough for companies to earn great profits, raise cash in the bond market, and return wealth to shareholders via M&A activity, share buybacks, or dividend hikes. But a lack of job creation and general weakness keeps central banks on hold, ensuring that investable capital is plentiful and available at low cost.
Now of course that is just the United States, where we don’t have a ton of exposure. Most of the equity guidance in my Strategic Advantage advisory service is toward emerging markets, and they have not been sitting around waiting for a green light from Wall Street. Banco Santander - Chile (SAN: 84.36 0.00 0.00%), shown in the chart above, has been one of the top bank stocks in the world for the past year, and it has kept up its leadership in the recent downturn.
In the top panel you can see how the Chilean bank’s price has traded since mid-May; in the bottom two panels you can see it has posted a 35% gain during a time when the U.S. banks in the Financial Select Sector SPDR (XLF: 14.070.00 0.00%) are down 7.6%. Santiago is not expensive, either, with a forward price/earnings multiple of 11, vs. 15% annual growth. That’s value leadership, not pure momentum.
In short, for your risk capital the overseas markets are still the place to invest. The U.S. story may not be as horrible as the bears make it out to be, but it’s still not the powerhouse that the emerging markets have a chance to be over the rest of the decade.
If you are looking for one positive in the data this week, here’s one: The disparity between declining issues and advancing issues pushed the venerable 
Arms Indexon Wednesday to levels typically associated with short-term bottoms. Also, the percentage of stocks above their 10-day moving average has fallen under 9%, which is super low.
The last time the Arms Index closed at these levels was back on June 4. Stocks posted another day of losses before reversing and slinging into the mid-June high. A similar scenario could well play out next week, since Wednesday was followed by two days of milder losses.
The bottom line though is that every day that clicks by we are more than likely getting closer to the end of the summer rally. So while the evidence suggests that bulls can have one last hurrah, my expectation is that they will get exactly one before it’s time to blow out the candles on this party.
The Fed, in its statement on Tuesday, noted that the “pace of recovery in output and employment has slowed in recent months” but still expects the economy to grow in the months to come at a “more modest” rate than previously anticipated. This really wasn’t news to anyone. We’ve seen a pullback in various leading indicators, from the new orders component of the Institute for Supply Management’s indexes to the Conference Board’s Leading Economic Index.
The Fed’s move was politically expedient, as suggested on Monday, and largely meaningless. Failing to acknowledge the recent weakening of the economy would’ve weakened the central bank’s credibility. Acknowledging the problem without loosening policy would’ve been seen as irresponsible. This was a middle ground that saved face and bought another month of deliberation.
In reality, nothing much changed. The repurchases will only amount to around $100 billion a year compared to the Fed’s $2.3 trillion balance sheet. Thus, Paul Ashworth of Capital Economics in London dubbed the move a “largely symbolic gesture, designed to reassure the markets rather than boost the economy.”
Let’s keep it simple: The U.S. central bank remains on the side of investors, providing low interest rates and tons of liquidity and is prepared to provide more. What the economy does with that is dependent on a lot of other factors, but the main takeaway is that the Fed is on the case.
I continue to think that if necessary the Fed will whip out all the tactics that it tried during 2008-2009, and if those don’t work it will try some new ones. The central bank has had virtually unlimited power for decades, but after the financial reform bill recently passed by Congress it has even more power. Call the Fed evil, misguided or inept if you will, but never, ever underestimate its creativity, resolve and stubbornness.
Developed market investors were shaken this week by new evidence of a banking crisis in Ireland, second thoughts about the Fed’s handwringing over the U.S. economy and a worrisome outlook from the Bank of England. But mainly the focus was on Asia.
Japanese machine orders rose less than expected in June — 1.6% off of the 9.1% drop seen in May. Economists were expecting a 5.4% gain. Producer prices also posted an unexpected drop — reviving worries over deflation in the land of the rising sun. Despite signs of a slowdown, on the pressures of a still climbing yen, the Bank of Japan has yet to take action.
Over in China, there was a litany of bad news to add to Tuesday’s disappointing report on imports. Growth rates for industrial production, fixed asset investment, and retail sales slowed last month. In addition, new bank loans and money supply growth also slowed.
To be fair, the magnitudes of the changes were small: Industrial output fell from 13.7% in June to 13.4% in July, for instance. But it was enough to give a shock to sentiment since Chinese authorities are actively trying to pull back on the reigns of an economy that was beginning to overheat.
Here in the United States, there wasn’t much to be happy about either. The trade gapped worsened more than expected as export fell 1.3% — likely due to the reduced competitiveness of American goods due to a strong dollar and weak euro during the month of June. Unfortunately, according to Action Economics, the increase in the trade deficit could result in a significant downgrade to the government’s initial Q2 GDP growth estimate of 2.4% to as low as 1%.
The good news is that the dollar has slipped significantly against both the euro and the yen since June — which will provide a boost to U.S. competitiveness and help increase exports for July and August. The dollar is down nearly 18% against the euro from its June high and is down 15% against the yen — a move that will provide a big boost to Q3 GDP growth.
The bottom line is that the global economy is slogging through a soft patch as the reverberations from the spring’s European debt crisis and the withdrawal of fiscal stimulus slows things down. But a slowdown is not the same as a contraction. That may come later, but until evidence grows more undeniable the markets are going to trade in this herky-jerky, “I love you, I hate you, I love you,” style. Get used to it.
Week in review
Monday: No major economic releases.
Tuesday: In Japan, the Bank of Japan decided to not take action to quell the recent rise in the yen — threatening the profitability of Japanese exporters. Over in China, there was a larger than expected drop in imports, which led to questions about the vitality of Chinese shoppers.
But then the Federal Reserve, after downgrading its outlook for the economy, announced that it would reinvest the proceeds from its mortgage holdings into Treasury bonds. Effectively, this will stem the withdrawal of money from the capital markets we’ve seen lately, which will help keep interest rates low.
Wednesday: The U.S. trade balance worsened more than expected as export fell 1.3% — likely due to the reduced competitiveness of American goods due to a strong dollar and weak euro during the month of June. Unfortunately, according to Action Economics, the increase in the trade deficit could result in a significant downgrade to the government’s initial Q2 GDP growth estimate of 2.4% to as low as 1%.
Thursday: Initial weekly jobless claims increased to the highest levels since February — increasing to 484,000 from 479,000 the previous week. This was well over expectations of 460,000. The job market absolutely refuses to heal despite the fact economic output has been improving for more than a year.
There’s also been plenty of bad news from Asia. In Japan, machine orders grew less than expected as a strong yen dampens the fortunes of the export-led economy there. Over in China last month saw a slowdown in the growth rates of industrial production, fixed asset investment, retail sales, new bank loans, and money supply growth.
Friday: The latest read on the U.S. economy came this morning in the retail sales for July. On the surface, it was good: a little rebound after three down months. But the rebound was so small, at 0.4% month-over-month, that it’s almost inconsequential.
And if you look deeper, you’ll find that if you take out the 1.6% month-over-month gain in motor vehicle sales goosed by low interest rates and huge incentives, the number looks a lot worse: Furniture and clothing sales contracted for the fourth straight month; building materials sales fell for the third straight month; and food sales have fallen five straight months. And if you strip out the 0.3% increase in consumer prices in July, real sales only rose by 0.1%. So really, this was not a great report so early in a recovery.
The week ahead
Monday: The Empire State Manufacturing Survey will provide an update on factory output in the state of New York.
Tuesday: A read on inflation from the Producer Price Index and an update on industrial production.
Wednesday: The Energy Information Administration will provide an update on crude oil inventories.
Thursday: The Conference Board releases its Leading Economic Index for the month of July.
Friday: No major economic releases.

Wall Street Set For Weak Start On Economic Concerns

U.S. stock futures point to a lower opening Monday morning as traders fret over the possibility of double dip recession on mixed economic data. Slowdown in global economic growth following weaker than expected GDP data in Japan promoting China as the second largest economy in the world might also impact market sentiment. Economic data related to housing prices and manufacturing survey might be in traders’ focus.
As at 6.15 a.m ET, the Dow futures were down 14.00 points, the S&P 500 futures were down 1.90 points, and the tech-heavy Nasdaq 100 futures were down 2.00 points.
On the economic front, traders will focus on the results of the New York Federal Reserve’s empire state manufacturing survey for August, slated for release at 8:30 a.m.ET. Economists expect the headline general business conditions index to rise to 7.5 in August from 5.08 reported in July.
At 9.00 a.m. ET, the Treasury Department will release its report on net long-term flow of financial instruments for May.
At 10.00 a.m. ET, the National Association of Homebuilders will release the results of its survey on homebuilders’ confidence for August. Economists predict that the index remain at 14 for August, unchanged from the previous month.
Traders will be looking for more economic cues from the housing market, producer price index and industrial production during the course of the week for more clarity on the economic health.
In other global economic news, Japan has been dethroned as the second largest economy in the world by China, after Cabinet Office in Japan reported that its economy grew 0.4% annually in the second quarter, sharply lower than 2.3% growth expected by economists, and 4.4% annualized growth reported in the previous quarter.
In corporate news, Vedanta Resources Plc (VED.L), an India-focused natural resources company, said that it has agreed to acquire 51% to 60% of Cairn India Limited, a unit of Cairn Energy plc (CNE.L), for a total of about US$8.5 billion to US$9.6 billion in cash. The transaction, which would be a reverse takeover, is expected to close by the first quarter of 2011.
Before the market opens for trading, home improvement retailer Lowe’s Companies (LOW) will report its quarterly results.
Specialty retailer Urban Outfitters Inc (URBN) will report its quarterly earnings after the market close the trading session.
Oil Light sweet crude oil for September delivery is presently quoted at $75.67 a barrel, up $0.28 a barrel from its previous close of $75.39 a barrel in New York on Friday
Dollar The US dollar is trading weaker against the yen, but showing choppy trading against the euro and the pound.
World Markets Mixed trading was witnessed among the major markets in Asia. The markets in Australia, Japan, India, Singapore and South Korea ended in negative territory while the markets in China, Hongkong, and Taiwan ended in positive territory. The Cabinet Office in Japan revealed that the Japanese economy grew 0.4% annually in the second quarter, compared to 4.4% annualized growth in the first quarter. Analysts expected the economy to grow 2.3% in the second quarter. Following weak GDP numbers, Japan has been dethroned as the second largest economy in the world and China took that coveted position. Concerns about double-dip recession in the world’s largest economy following mixed economic reports in the past few months kept traders at the sidelines awaiting more decisive cues. The European markets pared much of the early gains and are presently trading in negative territory, dragged down by financials.

Hot Stocks For Monday 16 August: Google, AIG, Bank of America, BP, SAP, Shell, Lloyds

UK Retailers - The number of retailers showing signs of stress was up 3% in July compared with the same period last year. This is the first time in five months Begbies Traynor has recorded a rise in the number of struggling companies. (Sunday Times)
BP (BP: 38.93 0.00 0.00%) - Co. will get the go-ahead to finish a relief well to finally seal its blown-out oil well but is doing a last batch of testing and planning first, the top government official overseeing the Gulf of Mexico oil spill said on Saturday. (RTRS) - Alabama filed a lawsuit against co. and the other companies involved in the Gulf of Mexico oil spill, voicing doubt that they would “do right ” by the victims of the spill, making it the first state to take direct action against the energy giants involved. (FT)
- Co. has failed to update its oil spill emergency plan in the Gulf of Mexico more than three months after the Deepwater Horizon rig exploded in apparent violation of federal regulations. The company spokesman denied that the co. needed to file a revised plan, saying “an incident does not trigger automatic re-submittal of an oil spill response plan”. (Observer)
Shell (RDS: 0.00 N/A N/A) - Co. said that sabotage of its crude oil pipelines in Nigeria’s southern Niger Delta had increased in recent weeks, but was silent on whether there has been an impact on output. (RTRS)
Lloyds (LYG: 4.40 0.00 0.00%) - Co. may close its business banking unit in Ireland. (The Sunday Tribune) In other news, co. and unions have called in industrial mediation service ACAS in a bid to end their pay and pensions dispute. (The Independent)
Xstrata (XTA.L: 1004.00 +8.40 +0.84%) - Co. says global energy demand will continue to rise, adding that China and India are helping to underpin demand. (Sources)
RSA - Co. has secured banking form three major banks for at least GBP 5bln in equity if the British insurer can pursue its bid for Aviva’s non-life unit in the UK, Canada and Ireland. (FT)
Aviva - Co. received a conditional proposal from RSA to acquire co.’s general insurance businesses, with offer for cash consideration of GBP 5bln. Co. decided unanimously that RSA’s proposal was unacceptable, and has rejected the proposal. (RTRS)
British Airways (BAY: 79.44 0.00 0.00%) - Strikes by members of the Unite union at BAA airports could cost co. up to GBP 15mln a day in lost revenue, according to a leading industry observer. (Sunday Express)
International Power - GDF Suez will not increase its stake in co. above 70% before 2013 as part of its reverse takeover. (The Independent)
Cairn - Vedanta will acquire 51% to 60% of Cairn India Limited with a consideration of approximately USD 8.5bln - USD 9.6bln in cash. (RTRS)
Balfour Beatty - Co. will proceed for phase one of Eagle P3 commuter rail project contract in Denver, United States. Co.’s share for Phase one is valued at GBP 560mln. (RTRS)
BAA - Co. and unions will meet the conciliation service Acas today in a bid to avert crippling strike that could close airports and disrupt the travel plans of millions of passengers. (FT)
Equities finished in negative territory following a mix bag of data which did little to boost risk appetite. Consumer services and technology were the worst performing sectors in the S&P 500 whilst utilities outperformed. There was a slow down in terms of fresh news flow in the latter half of the session and stocks lacked any real direction as volumes were light. At the closing bell DJIA closed down 0.16% at 10303, the S&P 500 closed down 0.40% at 1079 and the NASDAQ 100 closed down 0.73% at 1818.
Google (GOOG: 486.35 0.00 0.00%) /Coca-Cola (KO: 55.73 0.00 0.00%) /Walt Disney (DIS: 33.68 0.00 0.00%) - Cos are among the favourite holdings of Morris Mark, President of Mark Asset Management. (Barron’s)
AIG (AIG: 36.67 0.00 0.00%) - Co. A consortium of leading Chinese companies including Industrial and Commercial Bank of China Ltd, China Life Insurance Co. Ltd, plans to bid for 30% stake in American Insurance Group’s Asia life insurance business. (21st Century Business Herald)
Bank of America (BAC: 13.23 0.00 0.00%) - Co. is considering whether to reduce its stake in asset manager BlackRock Inc, which is viewed as a non-core asset, a source familiar with the situation said. (RTRS)
General Motors - Co. is expected to confirm plans for a USD 15bln float this week. Proceeds from the sale of shares will help pay back the USD 50bln in loans that were granted by Washington. (Sunday Times)
stock vector : European union flag texture on ball. Design element. Isolated on white. Vector illustration.Europe
SAP (SAP: 44.43 0.00 0.00%) - Co. isn’t ruling out further acquisitions, though purchases would be smaller than the recent takeover of Sybase. (WirtschaftWoche)
Adidas - Co. may rise to EUR 50 in the next year as its Reebok brand boosts sales and profits in the US, without citing anyone. (Barron’s)
Sanofi-Aventis - Co. has been told by a court in Nanterre that it must restart the procedure under which it aims to cut jobs in France. (Les Echos)
GDF Suez - Co. will not increase its stake in International Power above 70% before 2013 as part of its reverse takeover. (The Independent)
EADS - Thai Airways International, is in talks with Airbus SAS to buy as many as 30 next-generation A350 jets and an additional six A380 aircraft. (Bangkok Post)
Unicredit - Co. has received a significant number of manifestations of interest for Pioneer asset management. (Il Sole 24 Ore)
Nestle - Co. is considering long-term options for its 30% stake in L’Oreal. (Salzburger Nachrichten)

Wednesday, August 11, 2010

LONDON Wednesday tips round-up: TUI Travel, DSG International, Pendragon...

Date: Wednesday 11 Aug 2010
stock vector : modern bonus sign
While the short-term looks a little gloomy, tour operator TUI Travel is adamant it is well-placed for medium-term prosperity.

Meanwhile, the collapse of Goldtrail Travel has cut capacity and highlighted the benefits of fully protected package holidays. The 10% fall in the shares — down 22½p to 203.1p — could also prompt TUI, the German shipping group that owns 54% of the shares, to pounce on the rest. Hold says the Times.
DSG International expected sales of TVs to slow down after the World Cup's final whistle, but the owner of Currys and PC World will be concerned by the British Retail Consortium's declaration yesterday that electricals are weak across the board. Computer sales, it said, were "promotion-led", ie cheap.The company has declined to provide a timeframe for reinstating its dividend. Despite its recent momentum and progress, the next year will be a tough one for electricals chains, so the cash may not be forthcoming immediately. Hold says the Independent.

Strong results from 
Pendragon look like good news for the recession-whipped car industry. The automotive retail group saw revenues up by 16% to £1.8bn and underlying pre-tax profit booming by 48% to £15.7m in the first half of the year. But the combination of the end of scrappage and worries about a double dip in the economy  threaten to drag consumer confidence back down. If investors must test drive the automotive sector, Pendragon's respectable valuation makes it is as good a stock as any. But it is still a punt on a highly uncertain future. Hold says the Independent.

Market researcher 
YouGov has been particularly visible in the UK this year as it provided reams of polling data around the general election, yet the group is currently looking across the Atlantic for its expansion plans. YouGov shares have been languishing under 40p for the past two months, the result of a nasty first-half loss. The company may be premature to claim it has "turned the corner", but its ambitious plans make it worth investing for the medium term, the Independent reports.

Analysts are divided over whether 
Interserve’s lowly rating of 5.6 times 2010 forecasts and its 8.6% yield merited a buying opportunity — especially as the company needs to find a new finance director. Yet with shares trading at almost exactly half the 2006 peak of 420p, a re-rating looks overdue. Buy says the Times. 
stock photo : Crayon
Telecoms equipment specialist BATM Advanced Communications is a throwback to the days of the tech boom. The group slid to a loss in the first half of the year amid problems with a large customer, thought to be Nokia Siemens Networks. BATM looks risky at this level so hold on for more clarity says the Times. 

Currencies Round up: Fed eases slightly, while sterling awaits BoE inflation report

Date: Wednesday 11 Aug 2010
stock photo : Yen, dollar, euro. Signs. 3d
The US dollar’s recent gains throughout the course of yesterday were rather sharply pared back after the Fed’s statement last night.

As expected, the Fed downgraded its outlook for the US 
 calling investment in commercial property "weak" and making note that employers "remain reluctant to add to payrolls".

The lone dissenter remained President of the Kansas City Fed, Thomas Hoenig who insists that the economy needs no further help while it is still growing.
In an attempt to reinvigorate the US economy’s faltering recovery the Fed said it plans to buy long-dated US Treasuries in an attempt to boost growth in the US economy and in the process maintain the vast amounts of money it has pumped into the US economy during the financial crisis, by using the proceeds from its first tranche of stimulus. This decision to reinvest the proceeds of previous stimulus is probably the least it could have done, but it also leaves the door open for them to go further if necessary.

The US dollar slid back as a result, however these losses were short lived as data out of China showed that the Chinese economy continued to slow with industrial output easing in July to its lowest level in 11 months, while inflation rose to its highest level in 21 months to 3.3%. Retail sales also slipped back during July rising by 17.9% instead of the 18.5% expected, declining from a rise of 18.3% the previous month. These fears of a continued slowdown in China could weigh on risk appetite in the short term and see the dollar continue to rebound.

In data out today the US trade balance for June is expected to show a deficit of $42.1bn.

In the UK the pound could well come under pressure as the Bank of England unveils its quarterly inflation review, where it is likely that the Bank will have to raise its inflation forecasts, and cut its growth forecasts for 2011 and 2012.
Furthermore, Bank of England Governor Mervyn King, when he speaks on matters of the economy, has recently had a tendency to talk the pound lower, which could provoke further weakness.

At the same time the unemployment data for July is also expected to be announced with claimant count unemployment expected to fall by 17,000 in July, which would bring the number of unemployed down to a 17-month low of 1.44m. The ILO unemployment rate is expected to stay steady at 7.8%.
EURUSD – yesterday’s break of trend line support and fall below the 1.3125, 38.2% level Fibonacci level, and previous breakout level saw a sharp slide to 1.3075. However the Fed statement stopped the euro decline in its tracks and sent the single currency back above 1.3125 again. While the single currency is able to close above 1.3125 the likelihood of a rise towards 1.3510, the 50% retracement area of the 1.5145 to 1.1880 down move, remains on the cards.
A sustained move below 1.3125 is needed to see further unwinding of stops towards support around the 1.2950 level, a break of which would open a test towards the 1.2840/50 level.
GBPUSD – the pound continues to look a little wobbly despite the late rally after yesterday’s Fed meeting. The 1.6000 level remains the key barrier for sterling bulls despite three attempts to break above it.
Yesterday’s weakness saw the pound break below the 1.5810/20 level and touch 1.5710 before rebounding sharply above 1.5900. The pound needs to close back above the 1.5870 area to diminish the risk of further declines otherwise the risk remains for a deeper correction towards the 1.5520/50 area.
A break above the 1.6000 level is still possible but it needs to get back above the 1.5870 level pretty quickly.
Long term rising trend line support levels, remain around the 1.5490/00 area, from the June lows at 1.4350.
EURGBP – the cross continued to trade yesterday in the narrow upward channel identified yesterday from the 0.8255 lows of last week with support around the 0.8300/05 level and resistance around 0.8355/60, however this morning it broke to the downside, even though it briefly tried to trade above it.
The key target remains 0.8245 61.8% retracement level of the up move from 0.8065 to the 0.8520 double top, while below the 0.8410 level. 
stock photo : YES from signs yen, dollar and euro. 3d
USDJPY – the yen continues to ping around within the confines of the range identified yesterday pushing back from the 86.25 break level which remains a key resistance, and the recent lows near 85.00 and the key support around 84.80.
The key support remains around last years lows at 84.80, a break of which would then look to target the 1995 lows below 80.00.
A break above 86.25 targets resistance at 87.00 the May flash crash low.

Asia: Nikkei at 3-month low on weak data, strong yen

Date: Wednesday 11 Aug 2010
stock photo : detail of chinese lucky coins
The Nikkei tumbled 2.7% on Wednesday as investors took fright at the Federal Reserve’s gloomy take on the US economic recovery. 

Losses were seen across the board in Tokyo but exporters such as Honda and Canon were amongst the hardest hit. 
Honda dragged 3.45% while Canon lost 3.25%.

Industrial robot maker 
Fanuc slumped 4.4% to 9,670 yen after weaker than expected June machinery orders.

Chip related firms came under pressure on concern about the demand outlook. for
Advantest fell 2.8% while Tokyo Electron lost 3.3% in Tokyo.

The benchmark Nikkei 225 index closed down 258 points at 9,293.

The Hang Seng lost its grip on earlier gains as traders offloaded banks and property developers.

The market also pondered a string of Chinese data pointing to a cooling economy.

China’s industrial output rose at the slowest rate in almost a year, data showed. Meanwhile retail sales rose at a rate of 17.9% in July compared to an 18.3% gain the previous month. Economists pencilled in an 18.5% increase.

China's consumer price index rose 3.3% in July from the same time a year earlier, up from June’s 2.9% but still below expectations of a 3.4% rise. 
stock vector : fuji
Bank of Communications fell 2.2%, China Construction Bank lost 1.8% while Bank of China skidded 1.2% in Hong Kong.
China Overseas Land & Investment fell 0.4%.

The Hang Seng index declined 181 points at 21,292 in Hong Kong.