Friday, April 30, 2010

Profitting From Oil Going Up or Down

The talk of the Greek nth on and off bailout affects the Euro, which affects the USD, which in the end is what moves oil. Below are updated straddles, with UCO very close to $14.

Computed with StraddlesCalc Tool. The move required is around 9%, at most, in 3 weeks.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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The Predictable and Horrible UNG: Straddles +52.4%/+63.9%

UNG, what a horrible instrument, and what a predictable way to make money.

As of 12:40PM, UNG was trading at $6.87:

At 2:25PM, UNG was trading at $6.82, for +63.94% profit:

My has been sold, moving into HOD.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO). Computed with StraddlesCalc Tool

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The Euro Is In No Man's Land: Profit With Up or Down Moves

The Euro bounced back today on talk that the Greek bailout will be finalized this weekend. If it does not, the Euro will come crashing down again. Even if it does, its troubles are far from over. The currency can go anywhere, a perfect spot for straddles since FXE is trading between high volume strikes.

Here they are for May and June, computed with StraddlesCalc Tool.

Can FXE move 2.4% in 3 weeks? It has moved quite a bit lately.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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Live Performance of Leveraged ETFs Since January 2009: The Best and The Worse

Leveraged ETFs are interesting and dangerous instruments. Please take a look at the charts and tables of the leveraged ETFs live tracking site that we maintain.

This is as of 10:30AM today:

(please click to enlarge)

There are lots of ETFs there. We also have charts showing the daily performance as well as the performance since Jan 2009:

(please click to enlarge)

Who are the top performers sicne Jan 2009?

  • Best: TYH, +215%, (3X tech), BDD, +185% (Ultra Base Metals) and ROM, +170% (Ultra technology)
  • Worst: FAZ, -96%, (3X Bear Financials); EDZ, -94% (3X bear Emerg. markets)

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

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Thursday, April 29, 2010

How To Trade The Euro And Profit

INO just released a new video on the Euro. As you can see from the screen capture below, the score is -100, meaning a strong sell. The video explains how the signals are used and show the very good results.

Watch video.

Note that we have done backtesting of their technology and alerts using the much easier to use FXE ETF. These are the results:

  • Buy/Sell Monthly Alerts: +65.47%
  • Buy & Hold: +7.29%

You can try the tool yourself by using this link (risk-free trial, and 2 months free).

Here are the FXE buy/sell alerts, on which I added Fibonacci levels added (and already crossed):

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UNG Straddles Results: +42.4%, So far

As suspected, UNG took a big move after storage was reported. The straddles we posted yesterday are returning +42% as of 12PM:


Last week I also put a fair large position on HND, the Canadian 2x bear version. Return today is 16%, but only about 7% since last week. These things need two good days in a row to make a killing.

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The Unemployment Claims "Fall" Spin: Weekly Average is Up, Extended Benefits Up As Well

The media is all over the palce reporting a drop in unemployment claims. However, the devil is on the details. If you read the actual Department of Labor report, you will see that the 4-week average actually went up.

"The 4-week moving average was 462,500, an increase of 1,500 from the previous week's revised average of 461,000."

People on "extended Benefits" also rose by +55,632.

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Fitch Ratings Agency Says Portugal is Next to be Dowgraded

Brian Coulton, head of global economics at Fitch Ratings, was on BNN today commenting on Greece and the next countries to be downgraded.

He says they believes the bailout will be forthcoming but there are implementation risks, particularly beyond 2010. Greece is committed to strong fiscal austerity but have lost all credibility with the market. Whether they do it or not, we will only know by the end of this year.

On Spain: He says Spain's debt is quite low ("55% of GDP"), compared to that of Greece that is.

Asked who is next to be downgraded: Portugal, high growth risk.

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Feldstein: Greece is Insolvent and Will Default; Bailout May Work For A While Only

This is getting a little repetitive. Martin Feldstein, professor of economics at Harvard, and Chairman of President Ronald Reagan's Council of Economic Advisors and President of the National Bureau for Economic Research, has added to the chorus of bright people saying that Greece is insolvent.

In an article today at project-syndicate, Feldstein wrote that Greece will eventually have to default on its bonds because it will not be possible to cut its budget deficit below the European Union limits.

He says there simply is no way around the arithmetic implied by the scale of deficit reduction and the accompanying economic decline "Greece’s default on its debt is inevitable,”

He added that Greece could choose to service existing debt with new debt rather than pay cash or it could also allow restructuring of its debt.

The current European bailout plan may work for a while, but the euro region and Greek bondholders will have to accept that the country is insolvent and cannot service its existing debt.

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Must Split the Euro Into Two Classes - Europe at Tipping Point

Sudeep Singh in an interview with Bloomberg has a very good point. He is a hedge fund manager with extensive experience in trading currencies in emerging markets.

The issue is that European countries in trouble are severely limited because they cannot resort to the usual alternatives: use cheaper currencies (devalue the currency) or use high inflation to drop the value of debts.

Says Singh: "An alternative to the euro is needed to let Greece and other European nations devalue their way to financial health"


He adds that the Euro should be split into two classes. He proposes calling the new currency the “sestertii” (Roman coin once used across southern Europe).

“You have to view this crisis through an emerging-market prism, where we’ve seen this movie before,”

“In every other emerging-market crisis there’s been a currency devaluation, a debt restructuring and tighter new fiscal policy. Greece and the others can’t become competitive without a cheaper currency.”

“Ask yourself the Rip Van Winkle question of what you would want to own before you went to sleep for 20 years,”

“Would you rather have Brazilian 20-year bonds denominated in real or Portuguese 20-year bonds denominated in euro?”

High Odds

“There’s probably a 30 percent likelihood now, but that’s rising every minute,” “Europe is far closer to a tipping point than the world realizes.”

Please see our post on current straddles on the Euro, gold, oil and stocks.

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I.M.F Says We Should Not Believe Credit Rating Agencies

Agencia Estado reports that Dominique Strauss-Kahn, head of the International Monetary Fund (IMF), said that we can not believe much in the rating agencies. How convenient now that several European countries are near insolvency!

Should we believe in the I.M.F. too?

He also said he expected a conclusion "very fast" on the negotiations between the IMF and the government of Greece. The remarks were made shortly after the Standard & Poor's cut the sovereign rating of Spain.

He said it was difficult to say whether the rating agencies are reacting to the market or is the market is reacting to the agencies. "You should not really believe what they say, even if it's useful,"


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Brazil Raises Interest Rates by 0.75%; Brazilian Banks Have Solid Record Profits

Brazil raised is interest rates yesterday by 0.75%, and the Brazilian Real skyrocketed, as we discussed here a few weeks ago. In the meantime, its banks are reporting very solid profits and growth.

Bradesco, which trades in new York as ticker BBD, just had its highest profit in history among private banks traded in Brazil. The bank's profit of R$2.1B in the first quarter of 2010 is just below only the profits of the Bank of Brazil in 2008 and 2006.

Its profit rose 9.8% in the first quarter. Bradesco has less bad debt in 12 months.

The bank also occupies the fourth position in the ranking of the biggest profits in history. The only other banks in the list of top 10 is Itau/Unibanco, which also trades in new York under symbol ITUB.

Santander (BSBR) of Spain, and the 2nd largest bank in Europe (after HSBC), also reported a growth in profits of 6%, to USD 2.94B. The biggest increase? Its Brazilian operations, with growth of 38%.

Disclaimer: The author is long ITUB.

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Cross-Listing of ETFS: The New Wave in Globalization ETFs, and Increasing Volume

WisdomTree is joining iShares, State Street Global Advisors, Vanguard and ProShares had more than 190 cross-listed ETFs trading in Mexico.

WisdonTree cross-listed nine of its most popular ETFs on the principal Mexican securities exchange, the Bolsa Mexicana de Valores (BMV).

Nine of its funds—three WisdomTree Dreyfus currency ETFs and six equity-based ETFs—began trading today in the Sistema Internacional de Cotizaciones (SIC), a special international section of the BMV where institutional investors can trade foreign securities in Mexico.

The largest is the WisdomTree India Earnings Fund (EPI), with $886M in assets.

Furthermore, the company plans to cross-list more of its funds on exchanges outside the U.S. but did not elaborate.

The remaining ETFs are

  • WisdomTree Japan SmallCap Dividend Fund (NYSEArca: DFJ)
  • WisdomTree Emerging Markets SmallCap Dividend Fund (NYSEArca: DGS)
  • WisdomTree Emerging Markets Equity Income Fund (NYSEArca: DEM)
  • WisdomTree SmallCap Earnings Fund (NYSEArca: EES)
  • WisdomTree LargeCap Dividend Fund (NYSEArca: DLN)
  • WisdomTree’s popular Dreyfus Chinese Yuan Fund (NYSEArca: CYB)
  • Dreyfus Emerging Currency Fund (NYSEArca: CEW)
  • Dreyfus Brazilian Real Fund (NYSEArca: BZF)

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Wednesday, April 28, 2010

Latest Roubini: Greece in Near Insolvency, Restructuring is Necessary, Massive Bank Losses and Contagion

Nouriel Roubini mirrored Park's comments earlier today on his latest interview, on CNBC.

Mr. Roubini says that the current European bailout plan for Greece is not going to work because Greece is nearly insolvent.

This is exactly the same that Danielle Park said earlier today! Please see her interview (it's a must see. Ms. Park tells it as it is).

Roubini added as well that "A restructuring of its debt is going to be necessary,"

Moreover, Roubini said that a collapse of the Greek economy could have domino effect among other weak eurozone countries including Portugal, Spain, Italy and Ireland.

“Suppose you have a disorderly collapse of Greece, two things will happen":

  • "Financial institutions holding Greek debt—mostly European—will have massive losses".
  • "a contagion from Greece to Portugal to Spain to Italy to Ireland will have a domino effect."

"Eventually, debt increases and risk aversion is going to drive down the asset prices globally, as it happened yesterday and today.”

Watch video:

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Naural Gas/UNG Play for Tomorrow: Storage Methodology To Be Changed

Natural gas inventories will be released tomorrow. There are rumours that the methodology used to determine the amount in storage will be changed. It is not known when exactly this change will occur. if it changes, we can expect a spike up. If not, a spike down of the numbers continue to be bad (and they should be based on mild weather). So anything can happen to the price of NG, a great scenario for straddles.

Below are straddles (strangles) for tomorrow on UNG (click to receive buy/sell alerts and TA).

Computed with StraddlesCalc Tool. Amove of around 10% is required by May expiration, still a long time away.

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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E-TARP, Europe Version: GS, JPM and RBS Say $794B Needed For Europe

Bloomberg reports that economists at Goldman Sachs Group Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc. now say that European policy makers may need to stump up as much as 600 billion euros ($794 billion) in aid or buy government bonds if they want to stamp out the region’s spreading fiscal crisis.

Imagine if all this money comes sloshing around, like it did in the U.S. causing stock markets to soar.

The Nuclear Option

Greek bonds are ineligible at money-market operations under current terms if Fitch Ratings and Moody’s Investors Service cut them to junk as well.

Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc., says that the
“nuclear option” of the ECB purchasing government bonds is also attracting attention among economists. The ECB is prohibited from buying assets from authorities, but it can do it on the secondary market.

“We need 300 billion euros of purchases and then the problem goes away overnight,” said James Nixon, co-chief European economist at Societe Generale SA.

‘Growing Risk of EuroZone Break-Up’

Jennifer McKeown, economist at Capital Economics Ltd. in London says there is even a “growing risk that the euro-zone breaks up” as indebted nations are forced to retrench and political tensions mount".

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Fed Meeting Notes Released Later Today: Profit From Oil, Gold, Euro, and Stock Moves

The Fed is releasing notes today at 2:30. With the current high volatility, expectations are that markets will move one way or the other. Below are straddles for stocks, gold, oil, the Euro, and Brazil, that allow to profit regardless of market direction, as long as the market moves.

We use ETFs for the commodities, the Euro and Brazil, and our favorite Yamana for gold.

Gold (AUY), Oil (UCO), Euro (FXE). Please click on each link to receive buy/sell alerts and TA on each.


Russel 2000 (IWM), Financials (XLF), Brazil (EWZ)

Computed with the free online StraddlesCalc Tool

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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OECD Says Greek Contagion Has Already Happened: Need Lost and Lots of Money For Bailout

No laughing matter

OECD's Secretary Geberal Angel Gurria was on Bloomberg TV today sounding exasperated and with an alarming message.

He says that contagion has already happened. This is like Ebola. "When you realize you have it you have to cut your leg off in order to survive." The Greek crisis is "contaminating all the spreads and distorting all the risk-assessment measures. It’s threatening the stability of the financial system." It is threatening the stability of the financial system

He says Europe and the IMF need to put lots and lots of money on the table.

What is the money going to come from? He should hear Danielle Park's interview!

He also stated that if countries do not react fast enough, then unfortunately it wll be necessary to restructure.

Excuses us Mr. Gurria, it seems that that will happen anyway.

Watch video

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Park: This May Be the Tipping Point, Bailing Out Greece is Throwing Good Money After Bad, CDOs Used to Lie

Danielle Park was on BNN earlier today. She was great. This is a must see.
Some of her points:
  • Truth is finally coming out
  • Greece has a solvency problem, not liquidity
  • Does not have a credible plan
  • Bailing out Greece is throwing good money after bad
  • From GS hearing: the point of CDOs was to lie, to help people, companies and countries to lie about their debt. People, companies and countries wanted the lie to continue, to pretend they wealthier than they are, they overspent, overborrowed, and overlent, at artificially low rates.
  • The Jack in the box is out of the box
  • GS and China breaking down
  • GS was never working for anyone's best interest, only their own;
  • What about the portfolio manager buying packages or garbage and putting them into pensions, What about their obligations - she forgot the rating agencies
  • This has been going on since Enron, 10 years ago
Finally, she says this may be the tipping point. There isn't enough money to bailout out the bad debts of the world. They have to go broke, there has to be a default, and start fresh with new rules that restrict derivatives, accounting measures.

Ms. Park is the author of the great book "Juggling Dynamite", reviewed and recommended here on April 7.

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AIG TARP Coverup Could Lead to Charges Against N.Y. Fed and Geithner

Neil Barofsky, head of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) says the secrecy that enveloped the AIG deal was unwarranted, and says that the probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.

As a side note, after Mr. Barofsky started investigating TARP, his office was moved to the basement three floors below U.S. Treasury Secretary offices, and was soon hit by the stench of flooded sewage.

Bloomberg reports that in a Senate Finance Committee testimony on April 20, Mr. Barofsky said SIGTARP would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the infamous instrument underwritten by GS. "Barofsky and Geithner’s offices have gone toe-to-toe over AIG, alleged lax oversight of TARP funds and even over the question of whom Barofsky reports to".

Mr. Barofsky has been in contact with the SEC and says that “We’re going to coordinate with them, but we’re going to lead the charge. We’re going to review these transactions.”

Barofsky says he’s also looking into possible insider trading connected to TARP. For example, he says his agency would want to know if bankers bought stock in their companies before it was made public that their institutions would get TARP money.

“There was a time when, if you got that word the stock price would go up, and if you were to trade on that information prior to the public announcement, that would be classic insider trading,”

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Tuesday, April 27, 2010

FXE Sinks: Straddles +16.50% - So Far

FXE is collapsing:

Update from FXE straddles April 21:

Click on FXE to receive alerts.

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Greece and Portugal Downgraded, but Spains Unemployment Soars to 20.05%

Portugal and Greece were downgraded today, but it is from Spain that come shocking leaked news:

  • Spain's unemployment rate in Q1 was 20.05%
  • 4.61M people unemployed
  • hihest since 1997
ABC newspaper says figures are the official data, to be published on Friday, but accidentally posted on the National Statistics Institute for a few minutes on Monday.

Forecast was 19.6%.

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The Goldman Sachs Testimony Circus: Live Now

You can watch the GS hearing live on Bloomberg, going on right now.

The Pragmatist Capitalist has Blankfein's testimony and excellent comments.

"Until recently, most Americans had never heard of Goldman Sachs or weren’t sure what it did. We don’t have banking branches. We provide very few mortgages and don’t issue credit cards or loans to consumers. Instead, we generally work with companies, governments, pension funds, mutual funds and other investing institutions. These clients usually come to Goldman Sachs for one or more of the following reasons: (1) they want financial advice; (2) they need financing; (3) they want to buy or sell a stock, bond or other financial instrument; or (4) they want help in managing and growing their financial assets".

"TPC Translation: We used to be this great little private partnership until we got greedy and went public. Now the entire US public knows that we provide very few necessary services for the economy and they don’t like it".

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This Time is Not Different: Defaults in Europe Are Far More Common: Spain, Germany, Russia, France, etc

The Wall Street Journal has a piece today about defaults by European nations. They are far more common that most people think.

The article says that for those hoping to prevent Greece from defaulting, "they should know that history isn’t on their side".

According to economists Carmen Reinhart and Kenneth Rogoff in their 2008 paper “This Time Is Different,” (followed by a book of the same title, please see link below):

  • Greece has defaulted or rescheduled its debt five times since 1829.
  • The leader of the pack however is Spain: 13 times since 1476
  • Germany and France have both done it 8 times
  • The U.K. has never done it since William the Conqueror invaded in 1066
  • Greece, has existed in a “perpetual state of default” since its independence, the economists write, having spent 50.6% of those years in default or rescheduling.
  • Russia is next highest, with 39.1% of years spent as a bad debtor after defaulting or rescheduling five times.
  • Hungary has defaulted or rescheduled seven times since gaining independence in 1918.

Their conclusion is "concluding that that countries like Hungary and Greece will never default again because 'this time is different due to the European Union' may prove a very short-lived truism.”

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Finally a Physically-Backed, Bar-Listed, Currency-Hedged Gold ETF

Claymore has a very interesting way of investing in gold through a physically-backed ETF. It is not only physically backed, but it lists the bar numbers in its possession and is currency hedged.

The ETF seeks to "replicate the performance of the price of gold bullion, less its expenses and fees". It allows:

The gold Bullion is stored in the treasury vault facilities of ScotiaMocatta (a division of the Bank of Nova Scotia.)

The management fee is 0.50%, including all operating expenses, including custody fees.

Bar list:

The bars are listed on their site. This is the top of the list today:

Currency hedged.

While Americans that invested in gold had a nominal gain since January 2009, the same was not true for investors in other currencies such as Canadians, Australians and Brazilians.

From our live tracking site of gold in other currencies:

The above represents the performance since January 2009.

The chart below compares the gains for GLD priced in CAD dollars, spot gold nominal, and CGL since its launch on February 16 2010. The white and the light blue line are nominal GLD and CGL. The tracking is very good indeed. Had Canadians bought GLD, that would be purple line. Yellow is the CAD/USD (through the FXC ETF).

(please click to enlarge)

So those are very positive features of CGL. On any significant gold pullback this is worth considering for those interested in gold.

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Monday, April 26, 2010

Top 20 ETFs to Buy and To Sell - Out of 800 ETFs

Update for week of April 26. We computed the relative strength values of all ETFs that trade in the U.S. This indicator gives an excellent assessment of whether an ETF is overbought (in general, values over 70) or oversold (values below 30).

Here they are, sorted by our favorite, RSIA, which is an average of short, medium and long time frames:

Top 20 Most Oversold:

There are a number of extremely oversold ETFs: SBB, SCC, MYY, RWM, and several others (please click on each link to receive buy/sell alerts and analysis of each).

SBB is ultra short on small cap companies, SCC is ultra short consumer services, MYY is ultra short mid cap, and RWM is a short on the Russel 2000. All these are shorts, and they are oversold, meaning the market is deeply overbought.

Top 20 Most overbought:

There are also a several extremely overbought ETFs. The worst offenders are: UYG, URE, GLL, and PEJ. Notably, UYG, the ultra long financials ETF had all three timeframes above 90, quite amazing; URE is an ultra long on real-estate. GLL is ultra-short gold

For your convenience, here are the ETF names and their average daily volume:

(please click to enlarge)

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).Please do your own due diligence.

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Friday, April 23, 2010

Greek Tragedies and the New Euro Straddles

The great tragedies of Aeschylus, Sophocles, and Euripides (above), were
performed annually at the spring festival of Dionysus, god of wine, and
inspiration. Tragic drama developed in Athens in the 6th century B.C.,
probably arising from the choral cult songs of the Great Dionysia.

They began in 6th century BC, but the modern 2010 Greek tragedies continue to unfold with no end in sight. Today investors apparently thought that Greek's asking for the loan was good for the Euro. Chances are there is lots more trouble before any money changes hands.

Below are current straddles (strangles on FRE) for May and June.

If the Euro moves 2-3%, these can be rewarding. Computed with StraddlesCalc Tool

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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Industrial Countries Debt is Simply Unsustainable: Whey The World Shifts to Emerging Markets for Investments

The state of each country and global region's debt is hon on the table below, with projections for years 2010 and 2011. The report was compiled by the Bank of International Settlements with date from the IMF and OECD.

The current levels of debt explain why large investors are moving away from Western European bonds into emerging market bonds. The current level of debts are unsustainable and investors know that something will break sooner or later.

Please see the table below, and look at the columns on the right (general government debt):

(please click to enlarge)

There are several countries with total current or projected government debt above 100% of GDP:

  • Greece
  • Italy
  • Japan
  • United States
There are many more with projections very close to 100 %:
  • France
  • Germany
  • Ireland
  • Portugal
  • United Kingdom
If we look at the bottom 3 lines of the table we see that, in sharp contrast, the level of debt for emerging nations is much lower, around 40%:
  • The Big 4 in Latin America: Brazil, Chile, Argentina, Mexico
  • Asia: China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand
  • Central Europe: Czech Republic, Hungary and Poland.
The overall level of debt is shown by the red line in the chart below:

Note also that debt as percentage of tax revenue, (our report from March) the situation is not much different. The worst is Japan, at 601.1%, followed by Mexico at 339.2%, Greece at 244.3%. The U.S. is 6th at 144.7%. Best among industrialized nations is Australia at -39%. Chile has an outstanding performance at -47%.

It is easy to see why investors would shift to emerging nations.

We track all global ETFs live as well as global currency ETFs. These ETFs provide an easy way for common investors to diversify into emerging nations and regions.

The conclusion is that many countries face the prospect of large and rising future costs due to not only interest rates rising (it is not a matter of if, but when they will rise) but also due to the ageing of their populations. The BIS says that current path pursued by fiscal authorities in a number of industrial countries is unsustainable. "Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability".

The Bank of International Settlements paper.

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Thursday, April 22, 2010

David Letterman Goldman Sachs Top 10 Excuses

Number 9: You say fraud like it's a bad thing!

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Microsoft Earnings Play

Microsoft (MSFT) reports earnings later today. In January it disappointed. Below are straddles, for whichever direction the stock goes.

If you believe MSFT can move 6%, those can pay off. These are computed with StraddlesCalc Tool. As there are still plenty of days to expiration, the actual miove needed will be smaller at this point.

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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Europe Cannot Guarantee Greek Debt: Nobody Would Vuy German Lower-Yielding Bonds

This is an excellent point, from the Big Picture:

"Greece seems to be headed to a debt restructuring where haircuts are going to have to be taken as it seems the only way out for them as it’s impossible for their economy to grow out of their debt obligations. The Euro zone cannot guarantee Greek debt as who would buy a German bund yielding 3.05"

In the meantime, the Euro takes yet another beating, dropping almost 1% today. Our straddes from April 15 are as follows now, with an ROI of +9%:

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The Tale of Natural Gas Contracts, UNG, and, and Gas Producers

I am interested in buying natural gas for the Fall or winter of 2010. I checked UNG for the period April 20-3rd week of October last year. UNG went from about $14.50 (!) to $11, while natural gas contracts actually went up from $3.75 to $5 in the same period (!).

Current storage:


Current storage is 5.5% greater than last year, and 18.5% larger than the 5-year average. Storage this year is even worse than last year, so performance might be similar, until late Fall that is. UNG could well be trading around $5 in October. The Canadian version is and it suffers similarly.

Please take a look:

Natural Gas Contracts:


Amazingly, UNG and have negative correlation to the price of gas.

So, I am looking for natural gas producers that are mostly unhedged to the price of natural gas, i.e, that have not locked in at low prices.

Candidates mentioned are CHK and HGT in the U.S.

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Nokia: Dead and Obsolete and Headed for Bankruptcy, or Come Back?

Shares of Nokia (NOK) took a tumble today after the company reported earnings and guidance. The once mightful and darling of cellular telephony seems to be heading for a complete failure. Can it reinvent itself?

Below are straddles for May and January 2011.

Computed with StraddlesCalc Tool

You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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Wednesday, April 21, 2010

Apple Target Now is $320-$330

INO analyzed APPL (click to receive alerts) today, showing a target of $320 to $330 (video).

"It would seem that investors and traders cannot get enough of this stock. Yesterday it came as no surprise that Apple announced huge earnings, over three billion dollars, just about the same as Goldman Sachs. Now who could have predicted that just a few years ago?
So is this the beginning or the end Apple's record earnings?"

Watch video.

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U.S. Unveils New Harry Potter $100 Bill

The U.S. has printed a lot of money recently, whether it is worth much remains to be seen. Today Mr. Geithner and Mr. Bernanke unveiled a new $100 bill straight out of Harry Potter land. The bill does not feature either Geithner or Bernanke on it, at least yet:

Yahoo reports that when the bill is moved side to side, the image on the bill appears to move up and down, and when someone moves it up and down, the image appears to move side to side. This is an effort to avoid counterfeiting, a new "moving" microprint technology, as "something straight out of the Hogwarts School of Witchcraft and Wizardry."

"This note incorporates the best technology available to ensure we're staying ahead of counterfeiters," Geithner said.
Yahoo says that "While Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke were on hand for the occasion, there was thankfully no sign of Lord Voldemort."
One also wonders when the bill below will be worth the one above.

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Brazil to Expand Stock ETFs and Options, To Add BDRs (not ADRs!)

Bovespa. Sao Paulo's stock exchange and the world's third largest exchange operator, will be adding add more stock options and ETFs.

Bovespa is searching for money managers to structure an ETF that mimics the performance of a recently-launched index on Brazilian bank shares. In addition, Bovespa will seek to have more stock options traded on the exchange, beyond those negotiated on VALE and PBR.

By broadening the supply of financial products, the exchange is trying to attract more sophisticated investors abroad, while allowing local players to improve their portfolios from so-called plain vanilla investments. The options and the ETF should start trading by year-end.

Currently six of Brazil's seven listed ETFs are run by IShares, the world's biggest provider of the product, and one by Itau Unibanco (ITUB in the NYSE). The value of ETFs under management in Brazil is $1.7B, compared with $7.7B for the the 198 ETFs listed on Mexico's stock exchange.

Bovespa is also recruiting market makers for the options, which could include contracts on the benchmark Bovespa stock index. BVSP as well as the 10 main stocks of the index.

Brazil is the fourth-largest market in the world for stock options. Options on state-controlled oil company Petrobras and Vale, the world's biggest iron ore mining company, are the world's two most-heavily traded.

ADRs? No, BDRs!

Bovespa also plans to list depositary receipts of U.S. companies in Brazil, probably during the second half of 2010.

The BDRs, or Brazilian Depositary Receipts, will trade through financial institutions, with individuals able to invest indirectly by buying into funds that invest in the securities.

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Amazon Play for Earnings

Amazon reports earnings tomorrow. I am find of AMZN earnings because once I had a 10X return on its straddles. If there are major surprises the stock can move wildly.

Here are some for tomorrow. Moves required are around 10%. Amazon is so expensive, this seems only possible if there is a major disappointment. Kindle sales could be awful, but can their product sales do well?

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

Computed with StraddlesCalc Tool

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RIMM Going Back to Stone Ages: Clamshell CDMA Blackberry

RIMM will unveil a new... clamshell CDMA device! The device, "Blackberry 9670", was leaked at a blog, picture below.

We are not sure this is a joke or what. A clamshell CDMA Blackberry! Is this company going back to the stone age of cellular technology?

It is really a one-product company (a great product), but, as such, it is very dangerous.

Below are straddles for May and June, computed with StraddlesCalc Tool:

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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The State of the US Dollar, the Euro, and the Price of Gold: Profit Up or Down

The latest news from Greece is that the country will accept the E30B aid package (USD $40B or so). This will solve the country's problems this year, and the whole issue will come back in 2011 or 2012. Cutting the deficit they way they need to is simply not possible - without mayhem.

Given that other PIGS countries (Spain, Italy, Ireland, Portugal) are following right behind, pressures will surely continue mount on the Euro. This may force the US dollar higher, in turn bringing the price of gold lower. However, the only way out to pay for the US debt is high inflation. When inflation sets in, gold tends to rise.

What's a investor to do in such chaotic currency world we are in?

Below are straddles, which allow the investor to profit whether the underlying goes up or down, as long as it moves the necessary amount.

These straddles are computed with StraddlesCalc Tool free online tool.


This chart is from INO's tool, Note the buy and sell alerts. You may access the tool here (2 months free for our readers) for any symbol you wish.

Straddles for the USD can be through UUP. Alternatively, you may avoid options and simply buy both UUP and UDN, it is harder but it can work in a trending market (see our past post on this subject).


Buy sell alerts:


Buy and sell alerts:

For the Euro we use the FXE ETF:

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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