Tag Archives: Cause

Trading Cause Of Relationship

Significant awareness has been placed to the fluctuation in forex prices during seasons and weekdays. The hope is that by discovering patterns, you can exploit the trading opportunities they present. Unraveling new ways to understand market dynamics with the use of day of the week patterns is a good thing, but then the costs of transaction may limit returns. But such tendencies are not magic, and correctly analyzing their performance as part of a comprehensive trading plan requires a good understanding of statistics and often a working knowledge of calculus. Additionally, these calculations require capable software and computing power which are hard to come by. The good thing is; you don’t have to be a rocket engineer just to pick up innovative market information from such patterns. With less complicated methods using basic spreadsheets, we figured out that currency pairs cloak exploitable price patterns of weekend effects, which are definitely worth getting into. We could improve predictability of the next price movements by going further and trying to discover the cause of the relationship. One theory states that news and information’s alternate processing has something to do with price movements.

Among the effects are the anticipation of and failure to respond to information because it is processed non-contiguously, which further extends to affecting an investor’s psychology, making his trading decisions bias. Releasing news on weekdays have the tendency to make people react immediately, which makes it good, while news on weekends have a low response from people, which makes it bad. Another theory is that because people receives news more often during the week, forex rates have the tendency to go up, but otherwise during the weekends.

Racking it up as an economic anomaly because neither of the theories mentioned could explain the weekend effect, traders can only use data mining and statistical techniques to take advantage of it. To study this effect, certain data such as the daily forex prices are inferred with the daily returns coming from each market.

A standard reporting system exists for downloading top ten currencies. To study the weekend effect correctly, one would need a full one-year data about the market. An exhaustive study would require several years of data, but our intent here is to demonstrate the current state of the known weekend effect and not to prove or disprove this phenomenon.

It’s a good idea to examine any study in a moving window of time to measure whether it’s increasing or decreasing in persistence, often a factor of whether the investment community is paying more or less attention to a certain approach. The ability to recognize a recurring trend is a very distinct advantage that most hard working traders have. This is not about confirming data that is already present in the market; rather, the weight is on finding new patterns through data mining so as to exploit the weekend phenomenon as quickly as possible.

The day-to-day variations in the closing prices, denoted as percentages, is clearly shown in the saying, ‘here today, gone tomorrow,’ on top of the historical viability of trading over the past year. During the examined time period, it became evident that there is something worth exploring about the returns on all but Hong Kong dollars versus US dollars. This phenomenon is not only known globally, but is one of the most debated topics, and as a result people have come up with countless explanations about it. Just by using standard spreadsheet and employing common knowledge, you can effortlessly watch over and take advantage of these tendencies in forex.

Semiconductor Inventories Rise But Don’t Cause Alarm Yet

Chip suppliers are reporting rising inventory, however, due to an expected increase in demand during the coming months but the swelling stockpiles do not represent a cause for concern in the industry at present with demand, the swelling stockpiles do not represent a cause for concern in the industry at present. Experienced semiconductor industry analysts from iSuppli Corp. confirm this increase in demand.

Midway through the second-quarter reporting period, total chip inventory among the approximately 35 semiconductor component manufacturers tracked by iSuppli climbed to $9.6 billion, up a strong 9 percent from $8.9 billion in the first quarter. This was way better than the seasonal average of 3.2 percent.

Likewise, average Days of Inventory (DOI) grew, increasing by about four days during the period to 73.2 days, up 6 percent from 69.3 days. This is slower than the historical DOI seasonal increase of 9.6 percent, or 6 days.

All said, the numbers suggest a common theme for the semiconductor industry in the second quarter of record revenues, profits and gross margins. Such indicators, along with positive revenue guidance for the third quarter, are instilling confidence in managers to increase inventories for the second half of the year.

“Across the semiconductor market, management comments in earnings announcements have been extremely positive, citing strong results in various end applications and geographies,” said Sharon Stiefel, Researcher (Semiconductor Inventory & Manufacturing) at iSuppli. “The solid second-quarter results—based on higher-than-usual seasonal revenues, favorable Average Selling Prices (ASP) and innovative new products—are allowing companies to finally relax their vice grip on inventories.”

Given the drastic rise in demand, however, semiconductor suppliers are finding it difficult to restock to pre-recessionary levels. iSuppli’s market research analysis has determined that products being shipped are intended to meet current orders and not for placement into inventory.

Consequentially, the current backlog is driving many semiconductor suppliers to increase capacity, although conservative capital spending appears to be the norm. Instead of being committed to long-term capital investments for new facilities, suppliers often are investing with a lot of caution in equipment to relieve constriction points in production. The exceptions to the rule are the large corporations like Intel Corp. and Samsung Electronics Co. Ltd. who have enough cash to invest, the economic downturn notwithstanding.

Overall, however, the increase in inventory reflects a justifiable build, and iSuppli is not concerned over an inventory bubble. And with the market now less volatile, iSuppli believes that semiconductor companies will gradually return to more normal operating conditions and inventory levels over the next few quarters.