20.08.09 Overview of the U.S. market

Shares rose on growth in volume, but the market remains in correction (Review by 20 August) Shares moved up in the second day in a row, showing modest growth, but this time at a higher level on Wednesday. Nasdaq, Dow, S & P 500 index and the NYSE are gaining 0.7%. Indexes, overcame the loss of about 0.5% as shown in the opening. The volume grew by approximately 12% for Nasdaq, and less than 1% for the NYSE. IBD 100 has changed slightly - by 0.2% from behind the broad indices, as many leaders of growth remained under selling pressure. Despite the growth in the past two days, the market remains in a state of correction. This means that purchases of shares sluet avoided until at least one of the major indexes did not give a signal to the "date of termination korektsii. The signal at the "End correction" implies a significant increase (more than 1%) on the growth of the index. To complete the formation of the signal at the start of the new growth will need to confirm who may not come until the fourth day or later to try to increase. The countdown begins with attempts to increase the first day of growth after the market is a correction. Bill continues, yet the index does not probet last minimum. Past two days of growth, therefore, constitute the beginning of attempts to increase. While no one knows how long the correction will last, or if an attempt to rally succeed, it is better to pre-compile a list of candidates for purchase. Thus, you will not be left without ideas, observing a new trend to increase the market. History shows that the day of completion of correction is sometimes very quickly. In 2003, the rally began in March after a long Bear Market. The market then went to the correction in August. But a new "day of the completion of correction gave the signal for a new rally the entire eight sessions later. This is not a prediction, but just a reminder that you need to be prepared. How to behave investor now depends to some extent on what shares you purchased during the previous growth trend. You could decide to support a strong leader if he does not give a clear signal to sell. But more likely it is that you took the cash, recorded profits and stop losses. Two of these rigid investment rules, however, did not give any options in the two cases of freedom: Sell any stock that falls by 7% - 8% below your buy point, and do not buy shares until the market is in correction. In addition, use this time to update your lists of candidates for purchase. If this correction will last for many weeks, perhaps, that many shares will form a strong new foundation. Significant news in the environment related to oil. The government reported a sudden decrease of reserves of crude oil, which increased oil prices. Of the 197 industry groups IBD succeeded tires, oil. Meanwhile, the Shanghai index of Chinese shares fell another 4%. The index - now about 20% of its maximum. Shanghai index does not always move in sync with U.S. markets, but in fact it reached a peak before the Nasdaq did so in 2007. He also began to rise before the U.S. indices. But the Shanghai index has been falling more and more severe cuts than the Nasdaq during the recent rally.

The initial reaction of the pound / dollar for the data for the UK has been an increase to $ 1.6610, but then a couple has adjusted and is now trading near $ 1.6544, where the 61.8% correction of $ 1.6503/1.6610. The next area of support will make $ 1.6530/20 in the case of a breakthrough by a pair of natknetsya at a strong support at $ 1.6500. Resistance is now at around $ 1.6610, a foot above the level of focus - if they work, the couple turned to $ 1.6630/35, then to the field of $ 1.6660/70.

The main impact on the forex market still continues to provide sensitivity of investors to risk.

Yesterday, the main influence on the forex market dynamics have oil prices that have risen sharply in response to the unexpectedly sharp decline in oil reserves in the United States. This news has led to an increase in the propensity to take risks (investors perceive the decline in oil reserves, thus increasing the consumption, indicating a growth of the economy) that have a negative impact on the positions of the Japanese yen and U.S. dollar. Prior to the announcement of oil reserves in the United States in the financial markets dominated by pessimistic feelings associated with the situation in China. Investors are concerned that China, a decline of incentives (in particular, bank lending), which could undermine the strong recovery of world economy. In addition to strengthening U.S. dollar and Japanese yen against European currencies has contributed to the publication of the protocol the Bank of England, which demonstrated that at the August meeting, the Bank discussed a significant expansion of quantitative mitigation. However, in the end, all these negative feelings are reverse data on oil reserves in the United States. Thus, in the U.S. session against the backdrop of a sharp increase in the propensity to risk-currency asylum (Japanese yen and U.S. dollar) has fallen across the spectrum of forex market, the sample, while a number of local technical levels. Nevertheless, analysts are not inclined to expect the sustainable continuation of this trend, because concerns about the prospects of the Chinese economy has not happened, and if they get developed in the form of negative macroeconomic statistics, in general, may lead to a sharp correction of the main stock index, which rose strongly last month. In turn, the correction of the stock market directly affect the FOREX market as a strengthening currency havens. Thus, the local currency market prospects remain uncertain and largely dependent dynamics of the stock market and the receptivity of investors to take risks. Today, there are little important macroeconomic publications. There are, perhaps, the only data on retail sales in the UK, which could trigger a short movement in the market of forex in cross a pound.

Replaced talk of a recession were thinking about rebuilding (the UK, continental Europe, the USA, Japan)

Everybody is interested in another question nowadays. Previously, it sounded like: "When the recession is over?" And now: "How the recovery will look like?" This applies to the UK, continental Europe, the USA, Japan, and the entire developed world. The answer to the first question, we know. As recently became known in France and Germany, the recession ended in the second quarter, while the Eurozone economy as a whole continues to decline slightly. Economic growth in Britain and the United States continue to slow, but in this quarter may increase. (Prbably ,the dark hole was reached in May or June). Japan also demonstrates a willingness to grow. Among the laggards Italy and Spain, but by the end of the year, their cases will go up the hill, as in all other countries. New data on the GDP in the second quarter for France, Germany and Italy provide food for thought. Certainly, two of the three largest continental economies have shown excellent results and, apparently, ahead of Britain. Lightly argue over which country will be the first of a recession and which will fall further, and so all While we do not know all of the data, and in any event in the coming months they will be more than once reviewed. Therefore, simply relax and rejoice at growth that has returned at last, and no matter which country will be the first.Unfortunately, the beginning of the restoration does not say anything about its potential power, and there are a number of reasons to be particularly careful. First of all here is the weakness of the global banking system, high levels of personal debt, especially among U.S. consumers, the pressure on consumption due to the ever growing unemployment, the need to implement various support measures governments around the world. The conventional wisdom that the recovery will be slower and longer than all previous ones, not only in Britain but throughout the world. The growth will resume, but will not be so strong and certainly will not help to improve overall mood. I share the widespread view that the recovery will be modest. To be sure that next year's budget for the UK will be limited, the reduction of VAT will be uncontrolled, the program to promote sales of used cars (which also helped to improve the situation) will come to an end, etc. What's worse, all this will last for years. Taxes will remain high and government spending will continue to decline in coming years that it is necessary to return control of the country's finances. Yet Britain's economy is in much better condition than generally assumed. The starting point is a new report on inflation, the Bank of England. Judging by the headlines, now the Bank is much stronger than three months ago. A recession was deeper than anticipated, the manager warned of the risks and so decrease Central banks should be cautious, because they pay for it. But, looking at the fan charts Bank, I caught myself thinking that they are not so bad. The Bank of England expects that growth will begin in a few months earlier than initial projections. In addition, he was optimistic with regard to rehabilitation in the next year than it was three months ago. Indeed, the Bank refused to expectations of growth less than 0.5% in favor of rate close to 2%. Of course, this is only a withdrawal from the Bank of reflection, I have summarized his forecasts, focusing on key indicators, while the Bank stresses that describes only the possible developments. And yet, in my opinion, the Bank made dramatic mood changes. When the report was published May, the Bank has been set too dark for the restoration. It seems that now its spirit has grown. So, how differs this downturn from the previous? If the forecast of the Bank would be true, the recession will not be so serious as in the early 80's. But deeper than the recession in the early 90's. Of course, before the Depression, 30-ies. it is still far. And that's not all. What form will have a recovery? Trend growth in the UK is approximately 2.5%. However, production fell nearly 6%. Therefore, if simply to return to trend growth, the production will be lost forever. The Ministry of Finance says, at least as far as can be judged by its forecasts for the time of the report on the budget. Suppose that the growth will revert to the mean, as after previous recessions. In other words, instead of 2.5%, which were observed during the recovery from past recessions, this time, growth should be above that mark for several years. If in the next few years, growth will exceed 3% of all the terrible figures associated with the fiscal deficit, are beginning to look not so frightening. I am not trying to diminish the magnitude of fiscal disaster, caused by the fault of the government. As rightly observed by Alistair Darling, would require a change of the two parliaments in order to return control of the financial situation of the country. I mean, that lost production can be returned and, if appropriate policies, six or seven years the situation has to develop. These are only assumptions. Projected line growth looks smoother than the true path: the road to recovery awaits us is not small obstacles. Whatever one may say, this is a very serious recession. We suffered heavy losses and, sadly, people have to savory. But, most importantly, there is every reason to believe that this decline does not go beyond the post-war recession, and to some extent this can be termed "normal." But that is not easy.