12-31-2007: March Euro Currency: America's Sub-Prime Lending and Housing Crisis an "Embarrassment"
There was a time among developed nations when the U.S. Dollar was considered a "safe haven" among foreign currencies. Not any more! The Euro has achieved front-runner status, as policies of America's banks, its dubya government, politicized Federal Reserve policies of the recent past, have brought the Dollar to its knees. The U.S. is forced to cut interest rates to stave off a recession while much of the rest of the world including Europe is increasing theirs to stave off inflation. But inflation is much more a problem in the U.S. than there, as foreign visitors flock in to the U.S. for "cheap vacations" and "cheap real estate" as if we were a poor third world country! Thank you George Bush, and all of your cronies, for this dismal situation brought on partially by unlimited federal government borrowing and national indebtedness ruining the future for generations to come, who must pay for all your "sacrifices."
Man, how this country needs a third party! Even Hillary can't unscramble the mess left by the Republicans after they inherited a once balanced-budget, and no self-respecting Democrat sees any way out other than to increase taxes to pay for the mess. Meanwhile, spendthrift Congress considers measures to underpin and support the spendthrift borrowers who took out adjustable rate mortgages and deserve no more support than the banks that made the bad loans. Any help should be "voluntary," and coming from the banks themselves, faced with the alternative of foreclosures and forced sales of properties which will hurt them even worse than voluntary measures. But the U.S. government seems determined to step in and increase the mess. A non-voluntary conversion to fixed-rate for five years on adjustable rates is being considered... incrredibly bad idea for the U.S. Dollar! Most analysts agree we are "nowhere near" the bottom yet, so the Euro has nowhere to go but up against it.
March Euro Currency:
March Euro Currency:
Soybean futures closed in the latest trading session at a 34-year high on expectations of robust exports next year and continued strong demand from China. U.S. exporters have sold almost three quarters of the soybeans the USDA predicted for the entire year, which ends in June, 2008. An ethanol boom led farmers to plant corn instead of soybeans and soybean acreage needs to be increased. Soybean exports so far this year are running at 735 million bushels. Last year, farmland dedicated to soybeans was reduced 15%. Canola and barley prices have been rising along with soybeans and soybean oil. A $286 billion farm bill proposed by the Senate keeps overcompensating big corporate farms instead of family farms. More than half the aid goes to large commercial agribusinesses. It amounts to a corporate welfare program for the rich, even though it got its depression-era start to preserve the nation's breadbasket of small farms. The House version of the same bill provides subsidies to millionaires, but at least it adds caps, which the Senate version does not. In recent days the soybean markets advances have exceeded even those of corn, palm, cotton and canola. Weather is a potential concern in Argentina where hot, dry weather has not been helping crops. La Nina is expected to continue the trend in weather in South America. The assassination of Pakistan's Benazir Bhutto is considered negative for the soybean complex. Spiking hog prices in China are considered a plus for soybean meal. Soymeal is a major component of hog feed. The Chinese Government sponsors increased hog production to satisfy public complaints about inflation there and rising food prices. Relatively thin holiday volume drove soymeal futures lower at the most recent close, exacerbating a sharp disparity between the prices of soybean and soymeal futures. A new price record for Malaysian palm oil was set in the last trading session. Export sales for soymeal reached a marketing-low year last week, 43% under the previous 4-week average. Sales were at 73,300 tons with trade expectations reaching as high as 150,000 tons. In other world exchanges, soy products have been lower in European exchanges and higher in Asian ones.
170.0I T 12/28
I CME - Mar-08 Euro Currency (125,000eu c/eu) Cm.=0.01 Lim.= 0.1
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11 1
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The above point-and-figure chart is giving a conventional buy signal.
We are headed toward a cyclical high with no obvious seasonal trend.
Our best-performing internal program is " Pattern." It is giving a buy signal.
Results of "Pattern" for Euro Currency (blue lines = successful trades, red, unsuccessful): (Always in the market.)
Our third system has triggered a sell signal. (Note, disregard the year date on the chart. Our regular readers know this is not a Y2K-compliant system, but it still works.)
The point value is $1,250 if the contract values are measured in cents per Euro. Initial margin on a single contract is $2,025. Use of options is advised.
Although scale trading has little significance for currencies because there is no "cost of production," still we believe scale trade sellers may be entering the market for the long-term.
In the chart below, the yellow line is the futures price, read on the right axis. All other colors are read on the left axis. Red is small speculators. Green is large speculators. Blue is commercials. Large speculators with the best track record are getting increasingly-short.
The average volatility shown below suggests that the last major change in direction to up at a volatility low point remains intact.
Our option trade recommendation is to Sell the Euro Currency June 147 Put @ 3.19 (31.90 on the chart, below) or better.
Here's an intraday chart for the previous day ( 12/29 ).
Risk Versus Opportunity Report
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ECH8 March Euro Currency
High Price: 152.2
Current Price: 147.3
Low Price: 144.8
Risk: 0.034
Opportunity: 0.066
(O/R) Ratio = 1.960
Level Table:
| Factors | Weighted Points |
|---|---|
| Parabolic Chart | + 1 |
| Nirvana Chart | + 1 |
| News | + 1 |
| Point & Figure | + 1 |
| Cyclicals | + 1 |
| Seasonals | 0 |
| Internal System 1 | + 1 |
| Internal System 2 | 0 |
| Third System | - 1 |
| Commitment of Traders | - 1 |
| Historic Range | - 1 |
| Range/Volatility | + 1 |
| Level Table | - 1 |
| Other Factors | + 1 |
| Total | + 4 |
Place 7 March Euro Currency FX on a Buy Watch with stoploss @ -1.2300 below the get-in point (where decimal is set for Euros per U.S. Dollar.)________________________________________________________________________________________________________C.T.
