This could be the start of the next leg down in financials and the S&P officially became a bear market yesterday as it has dropped 20% from its highs. The contamination in the banking industry is far from cured as no transparency exists and so they will not lend to each other. We need to get to a state where they are forced to value this toxic waste and move on. The trouble is many will be sent to the wall and even the regulators fear this. For this reason the problem will continue and credit will remain very tight. This will impact businesses across a broad spectrum and especially all of those running on leverage or debt.

Equities do not stand a chance in this environment and have further to drop. The fact that markets are pricing in rate hikes the US and UK seems to me to be total madness or at least a great opportunity. There is a real danger that this equity drop sends a major institution close to failure in the banking world but the chance of a second tier or Landesbank going under is very large.

UK data continues to threaten and I fully expect a consumer revolt and a shock in the data soon as the man in the street is now aware that he cannot afford his energy and grocery bills any more. The MPC should cut rates this week but probably will wait. This potential hike that is priced should disappear very very soon. GBP will remain a target and EURGBP is still a bargain down here on a multi-week basis.

US pending home sales will be closely monitored again today after a jump in April as the housing market continues to weigh on the hearts and minds of the US investor and consumer communities. The Dollar should slide again in this scenario and the rally of yesterday held well at the important support on the EUR at 1.5605. We now have a defined range of 1.5605-1.5935. I expect these to hold for now as we get to hear both BB and Paulson talking this afternoon on regulation and lending criteria.

AUD and Kiwi are beginning to suffer a little and I remain bearish on both. The June business conditions survey, which printed at a 7-year low also placed some downside pressure on the AUD. AUD/JPY was pulled lower, but the AUD fared well on the cross rates. However there are substantial cracks appearing in the domestic data and although AUD is widely expected to do well because of its terms of trade advantage, there is a real danger of a shift in rate expectations soon.

With vols where they are, it is a safer trade in options although I seem to be in a minority of one at present with this view. June jobs data could be the straw that breaks the camels back. New Zealand business confidence held at a 33-year low of -64% in Q2 as firms’ own outlook deteriorated, adding to evidence the economy was in recession in H1 of 2008. The NZIER said a net 64% of firms saw general business conditions to worsen in the next 6 months, unchanged from Q1, which was the worst reading since Dec 1974. We have not seen the big move lower in Kiwi yet but it should be played against a basket and not just the Dollar.

G8 leaders meet this week and it is evident that they are very aware of the correlation between oil and the Dollar at present and this was reconfirmed by the OPEC president suggesting that a 1% move in the Dollar equals $4 in oil. Thus, it appears that the Dollar may be discussed. Generally the heads of state meeting is not expected to produce anything concrete but there is a feeling that the stakes are now just too high and action is needed. Quite what they can do is unclear but a clear set of proposals is now expected.

All assets are linked here and as soon as the Dollar rallied we saw gold fall and equities rally. Oil did join in but the sell-off so far has been negligible and this is the key. Talk will not last long and something concrete needs to be done but international agreement is never easy. I fear that the agreement to continue discussions might be the best we get, which could be a big disappointment for the market. For the next few days however, I see a chance of further Dollar strength and short-term traders should consider buying dips.

However, the global macro picture is not so clear as we still face a tough earnings week ahead, consumer confidence is collapsing and employment remains weak in many centres. The banking industry remains clogged up with major problems that will produce further write-downs and analysts calling for a major rally in the S&P into year-end look delusional. Housing both here in the UK and the US continues its relentless fall and many parts or Europe are feeling the pinch. With credit in the state it is and lending restricted, it is hard to see what has changed and the resolve of these central bankers and heads of state may still be tested to extreme at some point.

This is no time for complacency and looking at charts to pick a base, it is a time for action on an international scale and I am not sure they can find that unity just yet so fear may just continue to dictate the direction of equities.

While this is a very basic topic, it’s crucial to understanding how to make money trading stocks. Since 90% of traders are known losers, it’s obvious that elementary lessons like this are essential nonetheless.

When you enter an order to trade a stock, your broker gives you the option of either buying, selling, selling short or buying to cover using a market order, meaning an order that will be executed at the current market price, or a limit order, which is an order that will be executed only at a price at or better than the price you specify.

In a decade of incredibly active trading, I’ve never used a market order - not even once - preferring instead to use limit orders. Because I’ve never wanted to buy or short sell a stock badly enough to be willing to throw my money into the ring without carefully considering the price I’d pay for that stock.

Don’t get me wrong, I’ve made plenty of bone-headed trades on stocks I had no business trading in the first place. But even then, I never questioned using limit orders.

It comes down to trade management

Forget about wild price swings of several dollars per share, often times the difference between success and failure on a trade comes down to execution - meaning how close your actual entry and exit points are to your expected price points.

Since it costs the same to use a market or limit order (forget about adding or removing liquidity from a market, that’s a topic for another time), why even risk your execution getting away from those price points when you use a market order? After all, that is what you’re risking when you choose a market order over a limit order and the only people I know who follow that dangerous route are those whose trading is influenced by their emotions.

If a trade is based on hype or greed, you want to get in or out of a stock immediately- no ifs, ands, or buts. No matter how perfect a chart setup, a company’s fundamentals, or breaking news is that you must be wary of getting bad fills at all cost. Traders must learn to ignore these emotions and focus on getting the best prices possible in order to give yourself the best chances at profiting.

Now I know what many of you are thinking - you never worry about this because you’re trading the world’s most actively traded companies, stocks like Intel (INTC | Quote | Chart | News | PowerRating) and Citigroup (C | Quote | Chart | News | PowerRating), where the spread (the difference in price between the bid and ask) seems permanently fixed at only a penny or two per share. Well, as improbable as it may seem, sometimes important company, industry or market news is released the very second you place your order, greatly influencing a stock price in either direction, and if you use a market order you may find yourself with a very poor execution.

And while the chances of that happening are slim, it’s even more common for brokers and market makers to take advantage of your desperation for a trade execution and fill your order at a slightly worse price; costing you anywhere from hundreds to thousands or even tens of thousands of dollars depending on the size of your order.

For me, when I buy or sell short a stock, it isn’t about what I think the company is truly worth - my opinion is meaningless. What matters is what others think and what price they’re willing to pay based on that thinking.

By using limit orders, I ensure a satisfactory execution. And, if none or only some of my order executes - as often times stocks run too hard and too fast, blowing past my limit price - then it’s probably for the best because experience has taught me not to chase stocks. Obviously buying to cover into a short squeeze is an altogether different animal - on those you need to get out as soon as possible - so I just place my limit far above the current price, still cautious not to wildly overpay or open myself up to getting taken advantage of by many of Wall Street’s nefarious players.

And, of course many people don’t trade the most active stocks. Instead they look for an “edge” or better odds in less popular names. Maybe they focus on stocks like True Religion Apparel (TRLG | Quote | Chart | News | PowerRating) or Third Wave Technologies Inc. (TWTI | Quote | Chart | News | PowerRating), since both are currently breaking out to new 52-week highs, and in these cases it’s even more important to use limit orders because the price spread can range anywhere from $0.03 to $0.40 per share.

No matter how small or large your order is, the difference between a good and poor execution is no longer just an afterthought: now we’re talking 1, 2 and 3% price swings.

Perhaps most importantly are the two key advantages to using limit orders, good-till-canceled (GTC) orders, and using the greed/impatience of others to receive better fill prices.

GTC orders

Since you’ve designated a certain price for your order, you have this option to keep your order open for 30-90 days, depending on the brokerage firm. In essence, you’re letting the price come to you so you’re not forced to limit your timeframe to just one trading day, as those who place market orders do.

And even better, since many specialists, market makers and other traders have the mindset of raking in steady profits and commissions, if you display some added patience and place your limit order aggressively, meaning your order price is not close to the current market price, the chances of it executing are slim. But you might just catch one or more of these market players asleep or in a bind.

Stop losses can get taken out and push the price to your limit, or other traders may wind up needing to use their capital elsewhere, or they may just want the commission from the trade execution. Either way, you get executed at your aggressively priced limit. And that execution price is truly ideal because you weren’t rushed as so many others in this industry are. Achieving ideal entry and exit points dramatically increases your odds of trading successfully.

So, demand more from yourself whenever you place a trade. Be disciplined, be cautious, and be wary. Thinking this way will surely cost you a few missed opportunities, but the money saved over time from minimizing poor executions and emotionally charged trades will make it well worth your while.

The market, which was created four years ago, has been mainly used by olive growers to protect themselves against price swings. Olive oil prices are exceptionally volatile, so both growers and producers have an incentive to use futures in order to hedge against price fluctuations. However, MFAO wants to go further, and it is now planning to attract speculative investment by major financial institutions.

MFAO already counts with two important members trading from their screens: Banco Popular and savings bank La Caixa. Besides, they are in talks with “giants” such as Banco Santander, BBVA and JPMorgan, as well as the London desks of commodities traders.

But whether the big financial players are ready to start trading olive oil futures is still uncertain. Financial institutions demand liquidity, so volume needs to increase dramatically if the market wants to avoid the way of the Spanish citrus fruits futures market, which was abandoned not long after being set up back in 1995.

Spain is the world’s biggest olive oil producer, accounting for 40% of the 2.5 million tonnes produced worldwide every year. Yet, there is little MFAO will be able to do if strong competitors, such as Chicago’s Board of Trade, decide to emulate their initiative before it manages to establish their market.

Link: http://www.mfao.es (the site has an English version).

Former Chairman Luis Portillo transferred 149.7 million shares, which account for 9.2 percent of the company, to Banco Popular, according to a regulatory filing released today. He also gave up 88.8 million shares (5.4 percent of the total) to La Caixa, 54.8 million shares to Caja de Ahorros de Galicia, 45.3 million to Bancaja and 7.5 million shares to Bankinter.

Colonial was suspended from trading in Madrid today, something which has already occurred eight times in 2008. The company has lost 75% of its market value in just six months as sales swindled and banks called in loans to Portillo, who left the company in December. Colonial owes 8 billion euros ($12 billion) to banks including Goldman Sachs, Royal Bank of Scotland and Credit Agricole.

The stock last traded at 88 cents, giving Barcelona-based Colonial a market value of 1.4 billion euros. The drop in the company’s value attracted takeover interest from Investment Corp. of Dubai and General Electric Co., but in the end there was no agreement between them on the value of the company.

At present time, Spanish house prices are falling in real terms, something that have not been experienced for more than a decade. The average price of houses and apartments rose 4 percent in the first quarter from a year earlier, less than March’s 4.6 percent rate for consumer price inflation, according to a Housing Ministry’s statement released on April 18.

Repsol rose as much as 3.25 euros, or 14 percent, to 26.75euros, the biggest increase since the company sold shares to the public in January 1990. It closed the day at 25.68 euros, a 9.277% increase that erases all Repsol’s stock losses for 2008.

Petrobras, the Brazilian oil giant who owns 45% of the project, said yesterday that more investments are required to drill new wells, and conclusive data on the discovery’s potential will only be known after the other phases involved in the assessment process have been completed. Petrobras shares soared more than 8% in yesterday’s New York trading.

The remaining 30 percent of the project, is hold by BG Group Plc, the U.K.’s third-largest natural-gas producer, BG shares gained as much as 103 pence, or 8.4 percent, to record 1,325 pence in London trading. It closed 5.810 up to 1293 pence.

The shares added as much as 3.85 euros to 36.49 euros, their biggest one-day percentage increase in 5 years. The stock was up 7.23 percent at 35.00 euros at closing (5:35 p.m. local time).

Further increases can be expected if more cases are detected in the future, as scared people shift away from meat consumption to its most obvious substitute. However, it is important to bear in mind that even though previous similar news have also had a positive impact on the price of the stock, as it ocurred with bird-flu occurrances, they have never actually had a significant impact on the comnpany’s earnings results.

Here is the full list of the Top 10 Stock Exchanges by market capitalization:
(Figures in trillions of U.S. dollars)

1. NYSE - $21.79
2. Nasdaq Stock Market - $11.81
3. London Stock Exchange - $7.57
4. Tokyo Stock Exchange - $5.82
5. Euronext - $3.85
6. Deutsche Boerse (Germany) - $2.74
7. BME Spanish Exchanges - $1.93
8. Borsa Italiana - $1.59
9. Swiss Exchange - $1.40
10. Korea Stock Exchange $1.34

Source: Reuters and World Federation of Exchanges Web site

It is interesting to note that exchanges in emerging countries such as China, Russia or Brazil are still not on the Top 10. However, recent stock exchange mergers and the growth of these and other stock markets will result in a significant variation on this Top 10 in a few years.

The main Spanish stock exchange (known as Bolsa de Madrid) was officially founded in 1831. It now consists of 41 major financial institutions and 12 established securities dealers, and about 1500 domestic and foreign companies had their equity securities listed on it.

Trading hours are from 9 to 17:30 GMT+01:00.