Sean Seshadri Stock Trading Guide and Tips

U.S. stocks closed slightly lower on Monday after a Federal Reserve official hinted that the stimulus measures may begin tapering off soon.

Stimulus measures, such as the Fed’s monthly USD85 billion bond-buying program, weaken the dollar by flooding the economy full of liquidity to keep interest rates low and encourage investing and hiring, which sends stocks rising as a side effect.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.12%, the S&P 500 index ended down 0.07%, while the Nasdaq Composite index also fell 0.07%.

Federal Reserve Bank of Chicago President Charles Evans said earlier that bond-buying will continue until substantial improvements become evident in the labor market, though he later downplayed those comments and left markets interpreting that a scale back may begin in the coming months.

Other Federal Reserve officials suggested last week that the U.S. central bank may begin to unwind stimulus programs this summer and possibly end such policies by year end.

Fed Chairman Ben Bernanke is due to appear in Congress on Wednesday, though on Monday, many investors began to bet that the country’s top central banker may hint at a need to wind down stimulus programs or make no new mention of it, which allowed stocks to decline slightly.

Leading Dow Jones Industrial Average performers included Alcoa, up 1.86%, American Express, up 1.50%, and Chevron, up 1.11%.

The Dow Jones Industrial Average’s worst performers included Merck, down 1.70%, Coca-Cola, down 1.35%, and Cisco Systems, down 1.20%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.23%, France’s CAC 40 rose 0.54%, while Germany’s DAX 30 finished up 0.69%. Meanwhile, in the U.K. the FTSE 100 finished up 0.48%.

Gold futures were lower during the Asian session on Monday.

On the Comex division of the New York Mercantile Exchange, Gold futures for June delivery traded at USD1341.65 a troy ounce at time of writing falling 1.19%.

It earlier traded at a session low USD1340.95 a troy ounce. Gold was likely to find support at USD1340.95 and resistance at USD1444.15.

US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.03% to trade at USD84.31.

Elsewhere on the Comex, Silver for July delivery fell 6.03% to trade at USD20.853 a troy ounce while Copper for July delivery fell 1.06% to trade at USD3.281 a pound.

A string of disappointing economic indicators in the U.S. and Europe sent the dollar rising against most major currencies on Wednesday as investors sought safety in the liquid greenback.

In U.S. trading on Wednesday, EUR/USD was down 0.33% at 1.2877.

Government data released earlier revealed that U.S. industrial production fell more than expected in April, contracting 0.5% after expanding a revised 0.3% in March.

Analysts were expecting industrial production, which gauges output at the country’s factories, mines and utilities, to contract by 0.2% last month.

Prices at the wholesale level in the U.S. disappointed as well.

The U.S. Department of Labor said the country’s producer price index fell 0.7% in April, outpacing analysts calls for a 0.6% fall and beyond the 0.6% decline during the previous month.

Core producer price inflation, which excludes food and energy, rose 0.1% last month, in line with expectations after a 0.2% increase the previous month.

A regional manufacturing barometer in the U.S. disappointed as well.

The Federal Reserve Bank of New York’s Empire State manufacturing index slid to -1.4 in May, from a reading of 3.1 last month, disappointing expectations for a rise to 4.0.

Weak data in Europe also bolstered the greenback’s appeal.

Preliminary data showed that eurozone’s gross domestic product contracted 0.2% in the first quarter, more than market calls for a 0.1% contraction though an improvement from a 0.6% decline in the previous quarter.

Germany’s GDP rose less than expected in the first quarter, expanding 0.1% after a 0.7% decline in the previous quarter.

Still, analysts had expected the largest European economy to rise 0.3% in the first quarter.

Year-on-year, the German economy contracted by 1.7%, outpacing expectations for a 0.2% a rise after an increase of 0.1% in the fourth quarter.

Disappointing data often fuels bets that the Federal Reserve won’t rush to phase out stimulus measures that weaken the greenback to spur recovery, especially a USD85 billion monthly asset-purchasing program known as quantitative easing.

The euro, however, fared worse on sentiments that the European Central Bank has room to cut rates further while in the U.S., the Fed can merely keep policy loose for longer but has no real room for further accommodation, which bolstered the dollar’s global appeal as a safe harbor.

The greenback, meanwhile, was down against the pound, with GBP/USDtrading up 0.06% at 1.5219.

The Bank of England predicted earlier that U.K. economic growth may speed up to 0.5% in the second quarter from 0.3% in the first three months of the year, which gave the pound support.

Furthermore, official data showed that the number of unemployed people in the U.K. declined more than expected in April, dropping by 7,300 after a 9,900 decline the previous month.

Analysts were expecting a decline of 3,000.

Separately, the U.K. unemployment rate ticked down to 7.8% in March from 7.9% in February.

Analysts were expecting the unemployment rate to remain unchanged.

The dollar was down against the yen, with USD/JPY down 0.06% at 102.36, and down against the Swiss franc, with USD/CHF trading down 0.13% at 0.9658.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.05% at 1.0174, AUD/USD down 0.11% at 0.9880 and NZD/USD trading up 0.30% at 0.8222.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.29% at 83.94.

On Thursday, U.S. will unveil official data on building permits and housing starts. The U.S. is also to release official data on consumer inflation, initial jobless claims and the Philly Fed manufacturing index.

Gold prices crept up in Asian trading on Wednesday after investors looked past mixed data out of Europe, which bolstered the U.S. dollar earlier.

Gold and the dollar tend to trade inversely from one another.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were up 0.06% at USD1,425.35 a troy ounce in Asian trading on Wednesday, up from a session low of USD1,423.55 and down from a high of USD1,429.35 a troy ounce.

Gold futures were likely to test support USD1,419.95 a troy ounce, Tuesday’s low, and resistance at USD1,444.15, Tuesday’s high.

In Europe on Tuesday, the ZEW index of German economic sentiment rose to 36.4 in May from 36.3 in April, well below expectations for a reading of 38.3, which put pressure on the single currency and sparked demand for the dollar, often a recipe for falling gold prices.

The index of current conditions fell to 8.9 from 9.2 in April, which markets interpreted as a sign that the German economy could face headwinds in its quest to rebound from a 0.5% contraction in the fourth quarter.

Inflation in Germany, meanwhile, came in line with market consensus.

The country’s consumer price index contracted 0.5 % in April from March and rose 1.2% from April of last year, both figures in line with expectations.

Elsewhere, Eurostat, the European Union’s statistics office, reported that industrial production in the euro area rose by 1% in March from February, more than double expectations for a 0.4% increase.

Spain saw borrowing costs fall to the lowest level since 2010 at an auction of 12-month government bonds.

Conflicting data out of Europe prompted investors to seek safe harbor on the liquid greenback, though by early Asian trading, rising Japanese stock prices enticed investors out of the dollar, which brought gold prices up with them.

Loose monetary policies at the Bank of Japan have prompted investors to chase yield in Asian stocks and European bonds, among other venues.

Elsewhere on the Comex, silver for July delivery was down 0.32% at USD23.305 a troy ounce, while copper for July delivery was up 0.03% and trading at USD3.292 a pound.

Gold futures traded modestly lower in the early part of Tuesday’s Asian session as traders speculated that physical demand for bullion may be waning.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery inched lower by 0.04% to USD1,433.75 per troy ounce in Asian trading Tuesday after settling down 0.21% at USD1,433.65 a troy ounce in U.S. trading on Monday.

Gold futures were likely to test support USD1,418.65 a troy ounce, Friday’s low, and resistance at USD1,475.55, Wednesday’s high.

Despite a lethargic day for U.S. equities, gold came under pressure following a decent April retail sales report. In U.S. economic news, U.S retail sales rose 0.1% in April following a decline in March. The increase was helped by 1% rise in auto sales. Excluding auto sales, U.S. retail sales fell 0.1% in April. That data was published by the U.S. Commerce Department.

April’s retail sales report prompted speculation that the Federal Reserve may be closer to scaling back stimulus programs, especially its USD85 billion monthly bond-buying program, which weaken the dollar to spur recovery.

Meanwhile, holdings of physical gold at the world’s major gold exchange traded funds fell 0.3% after rising on Friday for the first time in nearly two months. The SPDR Gold Shares, the world’s largest ETF backed by physical gold, was home to 1,051.65 tons of gold on Friday, a four-year low for the ETF.

Data from the U.S. Commodity Futures Trading Commission indicate hedge funds and other market participants have scaled back their long bets on gold due in part to the ETF outflows.

Elsewhere, Comex silver for July delivery fell 0.26% to USD23.635 per ounce while copper for July delivery rose 0.26% to USD3.365 per ounce.

Gold futures traded modestly higherr during Monday’s Asian session following a dismal performance to finish last week in Friday’s U.S. session.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery inched up by 0.09% to USD1,437.95 per troy ounce in Asian trading Monday after tumbling 1.5% to settle the week at USD1,446.65 a troy ounce last Friday in the U.S.

Gold prices were likely to find support at USD1,418.65 a troy ounce, Friday’s low and near-term resistance at USD1,469.45, the high from May 7.

Last week, gold slipped 1% in what was the yellow metal’s first weekly decline in three weeks. A strong U.S. dollar weighed on bullion and other commodities. The U.S. Dollar Index, which tracks the performance of the greenback against a basket of six other major currencies, rose 0.5% on Friday to settle the week at 83.18, the strongest level since April 4.

Speculation that the Federal Reserve is mulling winding down or bringing an end to its quantitative easing program is seen as putting a lid on gold prices. The Fed is currently running a USD85 billion monthly asset-purchasing program, which weakens the greenback to bolster recovery in the world’s largest economy.

A strengthening U.S. jobs market could give the Fed room to consider an end to quantitative easing. Last Thursday, the U.S. Labor Department said initial claims for jobless benefits fell by 18,000 last week to a five-year low of 324,000. Analysts expected a reading of 345,000 claims.

Separately, the Commerce Department said the U.S. trade deficit narrowed to $38.8 billion in the first quarter.

Meanwhile, Comex silver for July delivery gained 0.30% to USD23.728 per ounce while copper for July delivery tumbled 1.07% to USD3.349 per ounce.

Gold futures fell in the early part of Friday’s Asian session as traders digested some strong data out of the U.S. while embracing the U.S. dollar.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery fell 0.90% to USD1,455.35 per troy ounce in Asian trading Friday after down 0.33% at USD1,468.85 a troy ounce in U.S. trading on Thursday.

Gold futures were likely to test support USD1,440.55 a troy ounce, Tuesday’s low, and resistance at USD1,475.55, Wednesday’s high.

In U.S. economic news, the U.S. Labor Department said initial claims for jobless benefits fell by 18,000 last week to a five-year low of 324,000. Analysts expected a reading of 345,000 claims.

Separately, the Commerce Department said the U.S. trade deficit narrowed to $38.8 billion in the first quarter.

The buoyant jobless claims number comes on the heels of last Friday’s stronger-than-expected April jobs report out of the world’s largest economy. With the U.S. labor market apparently improving, traders speculated that the Federal Reserve may begin winding down its quantitative easing program.

Last week, the Bureau of Labor Statistics reported that U.S. economy added 165,000 nonfarm payrolls in April, up from 138,000 in March, whose figure was revised up from 88,000. April’s figures far outpaced analysts’ forecasts for a 145,000 figure.

The Fed has pledged to keep interest rates low until the unemployment drops another 1%.

Analysts are also pointing to increased physical demand out of Hong Kong and China as catalysts that could be supportive of gold in the coming months.

Elsewhere, Comex silver for July delivery dropped 1.23% to USD23.618 while copper for July delivery fell 0.14% to USD3.328.

Gold futures traded lower in the early part of Thursday’s Asian session on what appeared to be some profit-taking following a solid performance by the yellow metal in Wednesday’s U.S. session.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery fell 0.27% to USD1,469.65 per troy ounce in Asian trading Thursday after settling up 1.76% at USD1,474.25 a troy ounce in U.S. trading on Wednesday.

Gold futures were likely to test support USD1,440.55 a troy ounce, Tuesday’s low, and resistance at USD1,487.15, Friday’s high.

Gold got a lift Wednesday from some decent data points from global economic powers.

Germany’s industrial output, which includes manufacturing, mining, electricity and gas concerns, shot up 1.2% in March, the largest increase in a year and defying expectations for a 0.1% decline. February’s figure was revised up 0.6% from 0.5%.

Official data released on Tuesday revealed that German factory orders climbed 2.2% in March, defying expectations for a 0.5% decline. Germany is the euro zone’s largest economy.

In U.S. economic news, the Mortgage Bankers Association said the number of mortgage applications filed in the U.S. last week rose 7% while the refinancing index increased 8%.

Gold was also bolstered by reports that imports of the yellow metal in Hong Kong and China hit all-time highs in March. Physical demand is also seen as robust in India, another of the world’s largest gold consumers.

Meanwhile, Comex silver for July delivery fell 0.31% to USD23.853 per ounce while copper for July delivery rose 0.32% to USD3.371 per ounce

Gold futures inched lower in the early part of Tuesday’s Asian session on a bit of profit-taking following a modest gain in the U.S. Monday.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery eased lower by 0.03% to USD1,467.55 per troy ounce in Asian trading Tuesday after settling up 0.22% at USD1,467.35 a troy ounce in U.S. trading on Monday.

Gold futures were likely to test support USD1,439.75 a troy ounce, Wednesday’s low, and resistance at USD1,487.15, Friday’s high.

Gold got some support Monday after the World Gold Council sounded a bullish tone on the yellow metal. Marcus Grubb, managing director of investment at the WGC, said he feels gold’s bull market is still in tact.

Following bullion’s recent sell-off that took it below its 200-day moving average and 20% below its previous high, many traders and technical analysts said gold had entered a new bear market. Through last year, gold had been in an unprecedented 12-year bull market.

The WGC, which does not give official price targets on gold, said fundamental factors are still in place to drive gold higher, though the group acknowledged gold has not always acted as a safe-haven during recent negative macroeconomic events.

Elsewhere, the State Bank of Vietnam announced Monday it imported gold, though the central did not specify how much. A growing number of central banks have recently upped their purchases of bullion.

Meanwhile, Comex silver for July delivery inched lower by 0.03% to USD23.947 per ounce while copper for July delivery fell 0.24% to 3.288 an ounce.

The U.S. dollar was little changed against the Canadian dollar in quiet trade on Monday, despite data showing that Canadian building permits rose more-than-expected in March.

USD/CAD hit 1.0096 during early U.S. trade, the session high; the pair subsequently consolidated at 1.0085, inching up 0.04%.

The pair was likely to find support at 1.0058, the low of May 2 and resistance at 1.0108, the high of May 2.

Statistics Canada said building permits rose 8.6% in March, beating expectations for a 1% gain. February’s figure was revised to a 1.5% gain from a previously reported increase of 1.7%.

Canada was to release data on the Ivey PMI later in the day.

The greenback remained broadly supported after data on Friday showed that the U.S. economy added 165,000 jobs in April, above expectations for an increase of 145,000, while the unemployment rate unexpectedly fell to a four-year low of 7.5%.

The loonie, as the Canadian dollar is also known, was fractionally higher against the euro, with EUR/CAD dipping 0.07% to 1.3216.

Retail sales in the euro zone fell 0.1% in April, official data on Monday showed, declining for the second consecutive month after a 0.2% drop in March.

Another report showed that the final reading of the euro zone services PMI ticked up to 47.0 in April from 46.4 in March and higher than a preliminary reading of 46.6, but remained well below the 50 level which separates growth from contraction.