Apple, the star equity performer, fall for the fifth day in row when the US exchanges opened the week yesterday. Apple fall back 4,2 % 4,2 % to USD 580, and dragged the technology exchange Nasdaq down 0,8 %.

Chinese GDP grew 8,2 % last quarter. This is the slowest growth reported in China for the last three years. The numbers are in line with experts.

Expectations and far above the 7,5 % growth target set by Chinese authorities for 2012. The figures have been well received by the market. Both the Shanghai Composite and Hang Seng are up 1,6 %.

After a disastrous start of the week, global markets pushed back and corrected upwards yesterday and during to night’s Asian trading. Dow Jones added 0,70 % and the technology exchange, Nasdaq, increased 0,84 %. Alcoa, the aluminum producer, was the big winner up 6,7 % and set the tone for first positive day in the markets in 5 days. Also big banks as J. P.Morgan and the technology company Cisco, posted healthy gains. The positive US-trend continued in Asia where Hang Seng and Shanghai Composite both were up 0,4 % as the Asian composite stock exchange.

The unrest and nervousness in the financial markets continue. The US stock exchanges saw its worst day this year after steep falls in Europe and Asia. Dow Jones ended 1.7 % down to 12 715, far below the symbolic 13 000 limit which was passed in Monday afternoon’s session. Asia is down fourth day in row. Only the Shanghai composite was flat.

Dow Jones fell 1 % and below the critical 13 000 level when the US exchanges opened after the Easter holidays. Nasdaq was down 1.08 % to 3047. The downturn came after the worse than expected employment numbers last Friday. It was expected that the employment figures would have been in line with the three preceding months when an average of 210 000 new jobs were added. The result for March was a disappointing 121 000.

American employers added less jobs in March than in the preceding months, economic figures presented late Friday demonstrated. While more than 200 000 new jobs were added each month in December, January and February, March saw a disappointing 120 000 new jobs arising fears of a slowdown and not the robust economic recovery the impressing gains in the stock markets so far in 2012 seem to have indicated.

The United States added 6000 more jobs last week as US jobless claims came in line with analyst expectations, confirming a slow, but steady economic recovery. Dow Jones and Nasdaq reacted positively to the news before falling back before closure. Dow ended down 0.11 % with Nasdaq in positive territory; up 0,40 %. The telecommunication sector led by AT&T and Verizon dragged DOW down. Oil prices recovered on prospects for higher US growth.

So how do we spot a trend?

The indicators that can do so have already been identified as MACD and moving averages.

An oscillator is any object or data that moves back and forth between two points.

In other words, it's an item that is going to always fall somewhere between point A and point B. Think of when you hit the oscillating switch on your electric fan.

Think of our technical indicators as either being "on" or "off". More specifically, an oscillator will usually signal "buy" or "sell", with the only exception being instances when the oscillator is not clearly at either end of the buy/sell range.

Spain’s debt concern

causes global panic

The European debt crisis is back on the top of the agenda dragging global markets down and causing new worries on the prospect for an economic recovery. European exchanges plummeted 2,4 %. The United States saw its worst market day in one month. Asia likewise fall steeply. The only exception was the Shanghai composite increasing 1,37 % on news that China shall ease foreigners rights to held Chinese stocks. This shall probably lead to a bigger influx of foreign capital.

Bernanke again turns

markets upside down

The American and Asian exchanges fall strongly after the Federal Reserve (FED) on Tuesday night presented the protocol from their last meeting stating that further quantitative easing (QE) is not needed for the time being.

The US-markets reacted immediately down. Dow Jones fall with 0,5 %. The Japanese Nikkei was down 1.82 %The negative trend has continued in Europe.

Where Germany is down 1,74 % with steep falls in France, England and Scandinavia as well. The Russian market (RTS) is for the moment falling with 2,17 %.

Relative Strength Index, or RSI, is similar to the stochastic in that it identifies overbought and oversold conditions in the market. It is also scaled from 0 to 100. Typically, readings below 30 indicate oversold, while readings over 70 indicate overbought.

One indicator that can help us determine where a trend might be ending is the Parabolic SAR (Stop And Reversal). A Parabolic SAR places dots, or points, on a chart that indicate potential reversals in price movement.

From the image above, you can see that the dots shift from being below the candles during the uptrend to above the candles when the trend reverses into a downtrend.

The nice thing about the Parabolic SAR is that it is really simple to use. We mean REALLY simple.

Basically, when the dots are below the candles, it is a buy signal; and when the dots are above the candles, it is a sell signal.

Simple?

Yes, we thought so.

This is probably the easiest indicator to interpret because it assumes that the price is either going up or down. With that said, this tool is best used in markets that are trending, and that have long rallies and downturns.

You DON'T want to use this tool in a choppy market where the price movement is sideways.

You can also use Parabolic SAR to help you determine whether you should close your trade or not.

Check out how the Parabolic SAR worked as an exit signal in EUR/USD's daily chart above.

When EUR/USD started sliding down in late April, it seemed like it would just keep droppin' like it's hot. A trader who was able to short this pair has probably wondered how low it can go.

In early June, three dots formed at the bottom of the price, suggesting that the downtrend was over and that it was time to exit those shorts.

If you stubbornly decided to hold on to that trade thinking that EUR/USD would resume its drop, you would've probably erased all those winnings since the pair eventually climbed back near 1.3500.

MACD is an acronym for Moving Average Convergence Divergence. This tool is used to identify moving averages that are indicating a new trend, whether it's bullish or bearish. After all, our top priority in trading is being able to find a trend, because that is where the most money is made.

With an MACD chart, you will usually see three numbers that are used for its settings.

The first is the number of periods that is used to calculate the faster moving average.

The second is the number of periods that is used in the slower moving average.

And the third is the number of bars that is used to calculate the moving average of the difference between the faster and slower moving averages.

For example, if you were to see "12, 26, 9" as the MACD parameters (which is usually the default setting for most charting packages), this is how you would interpret it:

The 12 represents the previous 12 bars of the faster moving average.

The 26 represents the previous 26 bars of the slower moving average.

The 9 represents the previous 9 bars of the difference between the two moving averages. This is plotted by vertical lines called a histogram (the green lines in the chart above).

There is a common misconception when it comes to the lines of the MACD. The two lines that are drawn are NOT moving averages of the price. Instead, they are the moving averages of the DIFFERENCE between two moving averages.

In our example above, the faster moving average is the moving average of the difference between the 12 and 26-period moving averages. The slower moving average plots the average of the previous MACD line. Once again, from our example above, this would be a 9-period moving average. This means that we are taking the average of the last 9 periods of the faster MACD line and plotting it as our slower moving average. This smoothens out the original line even more, which gives us a more accurate line.

The histogram simply plots the difference between the fast and slow moving average. If you look at our original chart, you can see that, as the two moving averages separate, the histogram gets bigger.

This is called divergence because the faster moving average is "diverging" or moving away from the slower moving average.

As the moving averages get closer to each other, the histogram gets smaller. This is called convergence because the faster moving average is "converging" or getting closer to the slower moving average.

And that, my friend, is how you get the name, Moving Average Convergence Divergence! Whew, we need to crack our knuckles after that one!

Ok, so now you know what MACD does. Now we'll show you what MACD can do for YOU.

Because there are two moving averages with different "speeds", the faster one will obviously be quicker to react to price movement than the slower one.

When a new trend occurs, the fast line will react first and eventually cross the slower line. When this "crossover" occurs, and the fast line starts to "diverge" or move away from the slower line, it often indicates that a new trend has formed.

This is because the difference between the lines at the time of the cross is 0. As the downtrend begins and the fast line diverges away from the slow line, the histogram gets bigger, which is good indication of a strong trend.

Manufacturing data

trigger market rally

Better than expected US and Chinese manufacturing data gave European an US markets a welcome boost yesterday. Dow Jones reached 13 264 with the alloy producer Alcoa, Bank of America, Boeing and Chevron as winners. Nasdaq rose 0.91 % to 3119; Intel being the best high tech performer. Asian exchanges listed new gains with Nikkei as a winner due to a falling yen which is positive for the Japanese export industry. USD/JPY is down 0,38 % trading at 81,9225.

The Euro stays stabile versus USD trading at 1.3338 in spite of alarmingly weak unemployment figures from the Euro zone. Western Europe experienced its worst unemployment in 15 years. Spain and Greece have a registered unemployment on 23 % with the average EU-figures reaching double digits. The US-employment which is regarded weak, is in comparison below 9 %. These unemployment figures are for sure going to raise new questions regarding the weight the European Commission and member countries have been putting solely on austerity measures.

It is especially alarming for a future stabile democratic development in Europe that countries like Spain, Greece and Portugal which during its recent history have experienced military coups, civil wars and fascist dictatorships, are the ones most seriously hit. Economic growth stimuli has to a great degree been left out of the thinking of the European leading establishments.

The positive manufacturing data has pushed copper an oil prices higher. Copper, the best barometer on economic growth, is continuing to raise. After falling back in the end of last week and finding itself without a clear direction at the beginning of a new week, oil prices are again up; Nymex trading close to 105 and Brent at 125. Gold is up for the three day in row trading at 1678. Silver is trading at 32.08.

Stochastic lines cross — indicates trend change.
Stochastic exiting 80 level downwards — expect a correction down or beginning of a downtrend.

The main idea behind Stochastic indicator according to its developer, George Lane, lies in the fact that rising price tends to close near its previous highs, and falling price tends to close near its previous lows.

when %K line from above crosses %D line downwards traders open Sell orders.
when %K line from below crosses %D line upwards traders open Buy orders.
Stochastic lines crossovers that happen above 80% level and below 20% level are treated as strongest signals, compare to crossovers outside those levels.

Stochastic by default has 80% level, above which market is treated as overbought, and 20% level, below which market is considered oversold.
It is important to remember that while in sideways moving market a single Stochastic lines crossover that occur above 80% or below 20% will most of the time result in a fast predictable trend change, in trending market could mean just nothing. When price is trending well, Stochastic lines may easily remain in overbought/oversold zone for a long period of time while crossing there multiple times.
That’s why a method of trading overbought/oversold zones stands up. The rules here are to wait until Stochastic lines after being in overbought/oversold zone come out from it. E.g. When stochastic was trading for some time in overbought zone – above 80% level, traders wait for the lines to slide down and eventually cross 80% level downwards before considering to take Short positions. Opposite for Long positions: wait till Stochastic lines come into the oversold zone (below 20% level); wait further until Stochastic lines eventually cross 20% level upwards; initiate a buy order once Stochastic lines are firmly set, e.g. a trading bar is closed and Stochastic lines cross over 20% mark is fixed.

Traders are looking for a divergence between Stochastic and the price itself. At times when the price is making new lows while Stochastic produces higher lows creates dissonance in the picture. It is called divergence. Divergence between price and Stochastic readings suggest a forming weakness of a main trend and therefore its possible correction.