Zenith Trading & Holding Corporation

12-31-2007: March Euro Currency: America's Sub-Prime Lending and Housing Crisis an "Embarrassment"

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Introduction

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.


Parabolic Chart

March Euro Currency:

Parabolic Chart


Nirvana Chart

March Euro Currency:

Initial Chart


News Analysis

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.


Point & Figure Chart

170.0I                                                                  T 12/28
     I CME - Mar-08 Euro Currency (125,000eu c/eu) Cm.=0.01  Lim.= 0.1
     I
     I
     I
165.0I_________________________________________________________________________
     I
     I
     I
     I
160.0I_________________________________________________________________________
     I
     I
     I
     I
155.0I_________________________________________________________________________
     I
     I
     I
     I
150.0I_________________________________________________________________________
     I
     I                      X
     I                      XO
     I                      XO
145.0I______________________XO_________________________________________________
     I                      XO
     I                      X
     I      X               X
     I      XO              X
140.0I______XOX_____________X__________________________________________________
     I      XOXO            X
     I      XOXO          X X
     I      XOXO          X X
     I      XOXO          X X
135.0I______XOXO__________XO___________________________________________________
     I      XO O        X X
     I      X  O        XOX
     I      X  O        XOX
     I      X  O    X X XO
130.0I______X__O____XOXOX______________________________________________________
     I    X X  OX   XOXOX
     IX   XOX  OXO  XO OX
     IXO  XOX  OXO  X  O
     IXOX XO   OXOX X
125.0I_OXOX____OXOXOX__________________________________________________________
     I OXOX    O OXOX
     I O O       OXO
     I           OX
     I           O
120.0I_________________________________________________________________________
     I
     I
     I
     I
115.0I_________________________________________________________________________
     I
     I
     I
     I
110.0I----I----I----I----I----I----I----I----I----I----I----I----I----I----I---
                       11    1
      345557912389124680113892
      100122302202011220212111
      155377042233409316201624
The above point-and-figure chart is giving a conventional buy signal.


Cyclical and Seasonal Factors

We are headed toward a cyclical high with no obvious seasonal trend.

Cyclicals Cyclicals Seasonals
Seasonals


Internal Program

Our best-performing internal program is " Pattern." It is giving a buy signal.

Internal Printout 1 Internal Printout 2

Results of "Pattern" for Euro Currency (blue lines = successful trades, red, unsuccessful): (Always in the market.)

Results


Third System Confirmation

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.)

Third System


Margin

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.


Historic Range

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.

Historical Chart


Commitment of Traders

Commitment 1

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.

Commitment 2


Volatility / Probable Range

FB 1 FB 2

The average volatility shown below suggests that the last major change in direction to up at a volatility low point remains intact.

Range/Volatilitiy Chart


Possible Future Prices

Random Chart


Option Recommendation

Our option trade recommendation is to Sell the Euro Currency June 147 Put @ 3.19 (31.90 on the chart, below) or better.


Other Factors

Multiple Chart Indicators Summary
Multiple Chart Indicators Summary


Here's an intraday chart for the previous day ( 12/29 ).

Intraday Chart


              Risk Versus Opportunity Report
             ________________________________

                  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:
Level Table
The path of least resistance is down.


Overall Recommendation

Decision Weighting Factors
FactorsWeighted 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.