Olympic highlights: Michael Phelps wins his 17th gold medal in the 100 Butterfly

Michael Phelps wins his 17th and penultimate gold medal in the 100 Butterfly:

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6gmZly0IEvUOq7pZPBuHNX3AMoSroNjiV7v-PLcfROenLJa6l-28YpPfKjouD9JN2–vDyWQb3YYnThQJ7mj_j4w7-1t6YRWHsNybtvSU-hx-bZOlERCgbzP2KSlMqOkqIfJ-Tb7QfyJqXDTsqM9zDPjsEnFmuVFYpoTuVDD5n_dpBQSmrmKwAathYvrdacDyn4fU8LY1QPjIP1y_K9-AsjEL4hwPxpv4u60ZUVlIN847dQlXXDNFLvxnwcv0LXgK8teaUbZ4X_ulLQ8s47dpMXNYn36YEfHZgCYe_EFdNb4S8CJxAl_Bsc7E6zKuaun0cA_jvatfzTWI0n3T8ArFMJqV2khyguxP7aSHNoUVtr76Q2zfHowS6LSOGZo1VlLFviVmKvlpef6WRY8S5oSu0VS_uEe8WbmcEBQEs6Y6Sw**%26docUrl%3Dhttp%253A%2F%2Fwww.businessinsider.com%2Fmichael-phelps-wins-gold-in-100m-butterfly-at-olympics-video-2012-8%26loadStartTime%3D1344116260554]

Phelps ends his Olympic career with 22 medals, 18 of them gold.

Electronic Trading Glitches Shake Market Confidence

Stock markets are impacted by distortions arising from high-frequency trading algorithms as this article by SUZANNE MCGEE discusses. We really need to consider the benefits versus the costs of HFT. Benefits of HFT liquidity are vastly overstated: what use is an umbrella if withdrawn at the first sign of rain? The costs are far more than the additional +/- $2.5 billion — profits from HFT trading — that institutional and private investors pay for stocks each year. By far the greatest cost is the damage done to market efficiency and to investor trust. An efficient market requires accurate communication of pricing information to market participants. My belief is that HFT distorts this function. And the only reason it is encouraged by exchanges is the huge profits they make from it.

Even if Knight’s [Knight Capital] losses are as large as $300 million, that’s a drop in the bucket when set beside the $862 billion that was temporarily wiped off the value of the U.S. stock market in 2010. High-frequency trading systems and the algorithms they use, these advocates argue, add liquidity to the market, which is a Good Thing.

Well, not really. Not it results in a major crisis of the kind we saw two years ago and a slew of smaller trading anomalies, day after day, week after week, month after month on top of that. Less than two weeks ago for instance, traders reported seeing a bizarre “sawtooth” pattern of trading in a handful of large-cap stocks, including Coca-Cola KO and Apple AAPL. Their prices swung higher and lower with an uncanny degree of synchronicity, zooming higher every hour on the half-hour, and lower once more thirty minutes later. More algorithms, traders muttered gloomily to one another.

via Electronic Trading Glitches Shake Market Confidence.

Forex: Euro, Pound Sterling, Canadian Loonie, Australian Dollar, South African Rand and Japanese Yen

The Euro retreated from resistance at $1.24 to test support at $1.22. Downward breakout would test the 2010 low of $1.19. Declining 63-day Twiggs Momentum continues to indicate a strong down-trend.

Euro/USD

* Target calculation: 1.23 – ( 1.27 – 1.23 ) = 1.19

Pound Sterling broke short-term support at €1.27 against the Euro, warning of a correction to €1.25. Respect of support at €1.25, however, would suggest a healthy up-trend.

Pound Sterling/Euro

Canada’s Loonie is testing parity against the greenback. Breakout would advance to $1.02. Recovery of 63-day Twiggs Momentum above zero would indicate a primary up-trend, while a break above $1.02 would confirm.

Canadian Loonie/Aussie Dollar

The Aussie Dollar retreated from resistance at $1.05*. Reversal below $1.045 would test the rising trendline but penetration below $1.03 is unlikely. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend.

Aussie Dollar/USD

* Target calculation: 1.05 + ( 1.05 – 1.02 ) = 1.08

The Aussie Dollar respected support at R8.50 South African Rand before rallying to R8.75. Breakout is likely and would offer a target of R9.00*.

Aussie Dollar/South African Rand

* Target calculation: 8.75 + ( 8.75 – 8.50 ) = 9.00

The Australian Dollar is consolidating mid-range (between ¥72 and ¥90) against the Japanese Yen.  Breakout above ¥82.50 is likely and would test the upper range border, while reversal below ¥79.50 would test primary support. Recovery of 63-Day Twiggs Momentum above zero would strengthen the bull signal.

Aussie Dollar/Japanese Yen

Poles Apart – NYTimes.com

I enjoyed this comment on the NYtimes website by A Man from Poland in response to Paul Krugman’s criticism of Mitt Romney lavishing praise on the Polish economy. Especially because Krugman concludes: “Doesn’t anyone tell Romney to do his homework?”

Mr Krugman,

I see that you don’t know too much about situation in Poland.

Of course I agree that currency depreciation was one of main reasons of Poland’s relative resilience in the crisis.

But there were second very important reason – income tax cuts in 2008.

In 2008, the first time from 10 years we had income tax cut in Poland.

Till 2007 we had 19%, 30% and 40% progressive income tax rates. In 2008 19% tax rate was decreased to 18%, 30% was decreased to 18% and 40% tax rate (for the richest taxpayers) was reduced to 32%. So, we changed 19%-30%-40% progressive system into less progressive, lower income tax system 18%-32%.

In 2008 there was also social security tax reduction which additionally decreased labour cost in Poland.

So, thanks to income tax cuts and social security tax cuts we have maintained (roughly) employment rate and consumption level in Poland and it was second important reason of quite good situation in Poland.

via Poles Apart – NYTimes.com.

Australia: ASX 200

The ASX 200 is rallying for another test of resistance at 4450. The hourly chart shows brief consolidation below 4300; breakout would signal an advance to 4450. Lackluster performance from the US overnight may inhibit short-term gains and reversal below 4250 would indicate a test of the rising trendline and medium-term support at 4120.

ASX 200 Index

Spain Capital Outflows Reach Record Levels in Euro Crisis – SPIEGEL ONLINE

In the first five months of 2012, a total of €163 billion left the country, the figures [from the country’s central bank] indicate. During the same period a year earlier, Spain recorded a net inflow of €14.6 billion.

The outflow has resulted from domestic banks sending money abroad, foreign lenders pulling out cash and mostly non-resident investors dumping Spanish assets.

via Spain Capital Outflows Reach Record Levels in Euro Crisis – SPIEGEL ONLINE.

Asia: China, Japan bearish

There are conflicting reports about whether China is head for a hard or soft landing. China has the reserves and the capacity to implement further infrastructure programs if the economy cools too rapidly. And while its long-term goal is to deflate the speculative real estate bubble, the PBOC has shown itself prepared to kick that can down the road until export markets recover from the euro-zone crisis. The downside to manufacturing a soft landing, as we have already discovered post-GFC, is that the recovery takes longer. So a sharp recovery of Chinese markets is also unlikely.

China’s Shanghai Composite Index broke its 2011 low at 2150 on the weekly chart, indicating a decline to 1800*. Reversal of 13-week Twiggs Money Flow below zero warns of rising selling pressure. Recovery above 2250 remains unlikely, but would suggest another attempt at 2500.

Shanghai Composite Index

* Target calculation: 2150 – ( 2500 – 2150 ) = 1800

The Shenzhen Composite Index broke support at 880 to confirm the Shanghai signal. The peak below zero on 63-Day Twiggs Momentum also indicates a primary down-trend.

Shenzhen Composite Index

Hong Kong’s Hang Seng Index is more resilient, testing resistance at 20000 on the weekly chart. Breakout would indicate an advance to 22000* — strengthened if 63-Day Twiggs Momentum recovers above zero. Reversal below 19000 is less likely but would warn of a decline to 16000 — confirmed if support at 18000 is broken.

Hang Seng Index

* Target calculation: 20 + ( 20 – 18 ) = 22

Japan’s Nikkei 225 index is headed for another test of resistance at 9000 on the weekly chart, but a peak below zero on 13-week Twiggs Money Flow warns of strong selling pressure. Failure of support would signal another test of the 2008/2009 lows at 7000, while breakout above 9000 would signal an advance to 10000.

Nikkei 225 Index

India’s Sensex found support around 17000 on the weekly chart and is headed for another attempt at 17500. Breakout is likely and would indicate an advance to 18500. A 13-week Twiggs Money Flow trough above zero would strengthen the recovery signal.

Sensex Index

Singapore’s Straits Times Index continues to test resistance at 3040. Recovery of 63-day Twiggs Momentum above zero suggests that the primary up-trend is intact, and breakout would signal an advance to 3300*. Narrow oscillation around zero, however would warn of a ranging market.

Singapore Straits Times Index

* Target calculation: 3000 + ( 3000 – 2700 ) = 3300

Canada: TSX60 rising wedge

The TSX 60 is in a rising broadening wedge consolidation rather than a trend channel. Downward breakout would threaten primary support at 640 and another decline, while penetration of the descending trendline would suggest that a bottom is forming. Rising 63-day Twiggs Money Flow also indicates that a bottom is forming — especially if we see recovery above zero.

TSX 60 Index