Trading Strategy

In 2 days, on September's 19th, you will be able to buy the shares of the huge Chinese company - Alibaba. Should you do it? Although Alibaba seems like it's going to be a major success, here are 5 things you should know before buying:

1. Ownership. Alibaba is mostly controlled by it's board of directors. Regular share holders will have almost no influence, which is unusual and might be a problem later on.
   
   
2. Fake Merchandise. Unlike Amazon, Alibaba doesn't own it's merchandise, it just connect between buyers and sellers. This caused some people to sell fake merchandise and it doesn't seem like Alibaba can find all of them to take them down.
   
   
3. Conflict of Interest. Alibaba relies on a lot of different companies in order to make it work. For example, Alipay, the company that's in charge of Alibaba's payment system, isn't owned by Alibaba. That can be a real problem at some point if a conflict of interest will occour. 
   
   
   
   
4. Unwise Purchases. Alibaba has made some very questionable purchases in the past, spending a lot of money buying companies that the investors don't like.
   
   
5. You don't really buy Alibaba shares. To bypass some Chinese rules, Alibaba has made an arrangement with another company, which means that you don't buy share of Alibaba, but of the other company instead. The Chinese courts didn't approve this yet and it might become a problem in the future.
   
   

Look out for Yahoo, who owns %24 of Alibaba, which may see their share rise on September's 19th - the date of Alibaba's IPO (Initial public offering).

While most major currencies went down on Wednesday, the dollar actually climbed. The reason is The Fed's Open Market Committee (FOMC) that will conclude its regular two-day policy meeting later in the session.

The dollar came under pressure late on Tuesday after the Wall Street Journal's statement about the U.S. central bank actions.

"There has been some scaling back of expectations, but we are still bullish about the dollar going into the FOMC," said Yujiro Goto, currency strategist at Nomura. "We expect the Fed to start raising rates from next year onwards and there will be changes to outlook to growth, inflation the dots for interest rate changes."

Gold, silver and precious metals stocks take a dump

Gold (GLD) dropped another 2.98% this week as it breaks major support with increasing volume. This is not a good sign.

Silver (SLV) lost some 3.12% for the week. Silver is keep getting lower and lower for a while now and it doesn't seem like it's going to change soon.

Platinum (PPLT) was smashed, falling every day this past week to end down 2.9% on balance. This white metal has no chance at all with gold and silver so weak.

Palladium (PALL) was hit very hard and lost 5.87% for the week. Like Platinum, Palladium really has no chance of moving higher with the other metals so weak.

Enjoy your trading 

On Thursday, Scotland will vote whether to break off from the United Kingdom. This vote can have a big impact on the market.

Over the past two weeks, the pound has taken a big fall against the U.S dollar. Scotland produce a lot of oil and one of the major concerns is how the U.K will divide its energy resources if they do break up.

Two of the biggest banks in Scotland, the Royal Bank of Scotland and Lloyds, said that if Scotland will gain independence they will move to England. Their shares have been under a lot of pressure recently.

In addition, it's still unclear whether Scotland's currency will stay the same or change. 

How does this affect the market?

There's a chance that the press is making a big deal and not much will change. 

However, some say that it's recommended to short the pound through Tuesday evening or Wednesday morning and then closing the shorts and placing buy orders a bit above where the pound is trading.

This will allow to capitalize on the pound's upward momentum if the "no" vote wins, and avoid being exposed to any drop in the unlikely scenario of a "yes" vote.

September 11 effects on the economy

13 years ago a terrorist act destroyed the world trade center in New York, the attacks killed almost 3000 people and the damages cost approximately 10 billion. Today, after 13 years we wish to talk and explain the economic effect of such a dreadful event.

Let us go back to the events of that day and see the effects minute by minute

After the first plane crashed into the World Trade Center's North Tower, The opening of the New York Stock Exchange (NYSE) was immediately delayed, after the second plane crashed into the south tower the trading for the day was canceled. NASDAQ canceled trading as well.

Following those events the New York stock exchange was fully evacuated and nearly all the banks in the close area and other financial institutions, not only in New York but also in other cities across the USA.

London stock Exchange and many other stocks exchanges worldwide closed down and evacuated worried from more similar terrorist attacks. NYSE remained closed until the following Monday, the United States bond market also stopped and could not be trade, The New York Mercantile Exchange was also closed for a week after the attacks.

Federal Reserve kept open in order to meet liquidity needs, followed by adding $100 Billion in liquidity per day for a time period of 3 days after the attack, to help prevent a financial crisis.

Currencies and Commodities effects

Gold: the price spiked up from $215.50 to $287 (when the USD is weak the Gold goes up)

Oil: spiked up

Gas: prices in the United States also briefly shot up, though the spike in prices lasted only about one week.

Currencies: United States dollar falling sharply against the Euro (EUR/USD up), British pound (GBP/USD up), and Japanese yen (USD/JPY down).

World markets aftermath

The next day, European stock markets fell sharply, including declines of 4.6% in Spain, 8.5% in Germany,[2] and 5.7% on the London Stock Exchange.[7] Stocks in the Latin American markets also plunged, with a 9.2% drop in Brazil, 5.2% drop in Argentina, and 5.6% decline in Mexico, before trading was halted.[2]

Stocks and other effects

The private sector was also affected and very hard, companies that couldn’t work lost money and public companies also dropped in their share price. We can see major losses in the insurance industry, Airlines and Aviation, Tourism income, and Security firms (following the attacks the US government, among other sectors in the US, diverted a big percent of budget and money flow to strengthen security).

In New York City, approximately 430,000 jobs were lost and there were $2.8 billion in lost wages over the three months following the 9/11 attacks. The economic effects were mainly focused on the city's export economy sectors.

The 9/11 attacks have paved the road to the Afghanistan war witch cost surpassed $5 trillion.

Signals Binary staff

May we all live in peace.

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