Congress Rejection For Bailout Has Shaken Wall Street And The Entire World Economy

After a great rumor about the Treasury’s $700bn package approval, Congress decided to stay put and reject help the rescue. This decision came after a great dispute inside Republican Party at Congress. The key factor in the decision seems to lay on rival opinions and the current presidential campaign which had affected Republicans agreement.

However, not only government and big banks where shock with this decision. S&P 500 fell 8.8 per cent in the previous session, its worst performance since 1987, the Dow Jones Industrial Average fell 777.7 points, its biggest one-day points fall in history. All of it after Congress failed to approve the bailout. Despite the fact that the real economy hasn’t been touch yet, everything point toward the longest recession in a quarter century the U.S. may face.

As a matter of fact, some analysts claim that Congress decision might turn a long and moderate recession into a long and steep decline as credit freezes up and stock prices continue to nosedive. However, no matter what action Congress takes we have to be ready for a big hit. This is a consequence that was growing since a long time ago. Many people announce this would happen and that we will have to pay for the giants’ mistakes.

This Week

The market is emotion (Charles Gregor).
It pushes all your buttons of fear and greed. It searches out all your weaknesses. The emotional part is what I had to control. I found out I was not too temperamentally suited to be a star trader. I have to overcome that. I have to find mechanicals entry and exit patterns.
I shouldn't feel like a hero after one winning trade and I shouldn't feel like a bum after a losing trade.
Just hang in there and keep trading.

Trading Times

The best time to trade is when New York and European markets are open. That’s about 3am to 8am. Volatility makes this market uncontrollable -a big fish can move a little pond.
The European session becomes active around 3 am EST and remains active in conjunction with the US banking hours until around 12 pm EST. Most breakouts and breakdowns occur during these banking hours. These trading hours should be used as a general guideline when considering a new position.

Asian Session (7PM-4 AM)
European Session (2AM-12PM)
US Session (8AM-5 PM)
Europe (3AM-12PM)
US Europe Overlap (8AM-12PM)
Europe-Asian Overlap (2AM-4 AM)

If I see the EUR/USD trade to new highs or new lows during the off-peak hours, I look for signs this break in the range will not last.
On the other hand, the EUR/USD and USD/CHF have one of the strongest correlations between any two-currency pairs. As the CHF moves very closely with the price of Gold, the EUR has acted as the “anti-dollar” in recent times, which places these two pairs almost exactly opposite to each other. This can be a very useful tool to use by traders on a long as well as short-term basis.

USD Fundamentals List

Banco Federal De La Reserva
www.newyorkfed.org
 New York Manufacturing Index. Monthly.
 Capacity Utilization Rate. Monthly.
 Industrial Production. Monthly.
 Federal Open Market Committee (FOMC). Interest Rate Statement, Fed Funds Rate, Monetary Policy Statement.

Bureau Of Labor Statistic
www.bls.gov
 CPI Ex Food and Energy, Underlying CPI; Consumer Price Index (CPI). Monthly.

Department of Treasure
www.treas.gov
 TIC Net Long-Term Transactions.
 US Treasury Secretary Henry Paulson Speeches.

US Census Bureau
www.census.gov
 Residential Building Permits. Monthly data.
 Housing Starts. Nuevas construcciones.

US Department of Commerce
www.bea.gov
 Balance de cuenta corriente. Trimestral.

Energy Information Administration
www.eia.doe.gov
 Crude Stocks, Crude Levels. Weekly.

Department of Labor
www.dol.gov
 Jobless Claims, Initial Claims. Weekly.

Forex News Release

Financial stocks are leading the way lower once again, as traders continue to express concerns about the outlook for the sector following recent turmoil. AIG (AIG) is seeing substantial weakness as the insurer continues to look for a cash infusion. While traders wait for the Federal Reserve's decision on interest rates later in the day, continued weakness in the financial sector is likely to keep the broader markets under pressure. AIG (AIG) will remain in the spotlight, as the insurer continues to look for a cash injection. Meanwhile, the New York branch of the U.S. central bank announced actions to help improve market liquidity on Tuesday, reacting to the financial turmoil that sent stocks tumbling the day before.

Markets were shocked on Monday when venerable Lehman Brothers declared bankruptcy, Merrill was taken over by Bank of America for $50 billion, and insurer AIG scrambled to secure a cash infusion. Stocks turned in a dismal performance, with the Dow ending the session with a more than 500-point decline. The demise of venerable Wall Street institution Lehman Brothers changed that landscape for financials, while resource stocks were pummeled as commodity prices plunged on concerns about global demand.

Also today, the Department of Labor will also release its consumer price index, which is a key indicator of inflation at the consumer level. After rising by 0.8 percent in July, economists expect the consumer price index to fall by 0.1 percent in August. Tuesday afternoon, the Fed is expected keep its benchmark rate steady at 2 percent. However, with stocks plunging, the labor market in distress, liquidity tight, and the housing market showing few signs of snapping back, some are looking to policymakers to slash short-term interest rates in an attempt to stimulate the economy.

USD

The Dollar weakened on Friday as PPI numbers fell short of market expectations. The same traders flocking to the dollar a mere 24h before (Thursday’s 1.3882 in EURUSD a 1 year low) were offloading their dollar trades amid fears of an ensuing financial collapse in wall street. The dollar’s recent strength on the back of risk aversion subsided as news of Lehman Brothers in urgent talks for a takeover by Barclays or Bank of America hit the news wires. The Dollar has recently been impervious to bad news and negative market sentiment; one wonders if this is finally a kink in the dollar’s armor and an end to an impressive bull market these past 2 months.

How to Identify a Break Out Of Consolidation

Some people say it’s the easiest trade you can get to make your pips in the day. You can trade with a bunch of pairs of currencies and you might be doing 130 pips on the day. But I would like get a compilation of strategies and techniques that can make you easer to identify and most important to make you manageable a break out of consolidation in the market. So you can show off a little bit and challenge someone skills to make a great list of what you think it’s the best way to identify and handle a break out of consolidation.