S&P500 Most Overbought and Most Oversold Report, June 17

Today we only have 3 companies with RSI7 over 70, and 89 with RSI7 under 30! Conditions have changed significantly.

Most overbought:

90.72 MSFT
72.45 RX
70.66 SRE
69.29 SO
69.23 CLX
68.99 S
67.04 JAVA
65.24 LH
65.15 SLM
64.93 WAT



Most oversold:

29.97 HD
29.86 KLAC
29.81 HRS
29.79 TAP
29.76 TXT
29.75 SVU
29.64 DPS
29.55 LLY
29.46 SLE
29.39 PH
29.39 UNH
29.23 KBH
29.20 GCI
29.17 WMT
29.05 CBE
29.02 CA
28.97 CHRW
28.84 AMD
28.72 GPS
28.45 EMN
28.32 JBL
28.28 AFL
28.12 CBS
28.12 DNB
28.01 NEM
27.99 CPWR
27.89 MI
27.87 GE
27.86 HIG
27.76 PRU
27.63 KR
27.60 ORLY
27.45 LEN
27.43 C
27.41 MAR
27.40 DE
27.20 KIM
27.08 WPO
26.92 ADP
26.82 DD
26.75 LXK
26.75 SGP
26.61 MDP
26.51 FO
26.45 TMK
26.32 JWN
26.23 HSY
26.22 DIS
26.00 AMP
25.69 PTV
25.62 FDO
25.40 UPS
25.33 LNC
25.27 PG
25.21 NWL
24.91 HUM
24.89 MAS
24.85 WY
24.84 SNA
24.79 FTR
24.78 AVY
24.53 FDX
24.44 PFG
24.34 KFT
24.25 EL
24.19 BIG
24.17 ALL
23.95 CCL
23.88 ZMH
23.75 PGR
23.43 TSO
23.43 MRK
23.40 MO
23.16 LUV
23.02 CTAS
22.45 PCL
22.36 SUN
22.08 ERTS
21.35 MBI
21.29 WPI
20.65 MCO
20.62 PBI
20.29 TIF
19.71 RAI
19.06 VLO
18.95 SEE
17.57 VRSN
15.66 GENZ
14.47 BDK
5.84 ABC

Some others that I track:

60.84 UNG
35.03 SPY
34.62 IWM
39.73 XLF
35.00 DIA
61.93 USO
68.35 ^VIX

S&P500 Top Overbought and Oversold Companies Report June 16

What a difference a day makes. Here is the updated report, prices and RSIs computed at EOD yesterday.

Top Overbought Companies:




Top Oversold Companies:

(click to enlarge please)

Brazil's Bovespa and Hong Kong Exchanges Now Bigger than NYSE, Nasdaq and LSE

Sign of the times: The Financial Time of London reports today that Hong Kong Exchanges and Clearing (HKEx) and Brazil’s BM&F Bovespa have vaulted ahead of NYSE Euronext, Nasdaq OMX and the London Stock Exchange in the value of shares in the exchange companies themselves.

The current ranking is:

1. CME (Chigago)
2. HKEx (Hong Kong)
3. DB (Germany)
4. Bovespa (Sao Paulo)

Says the FT:

"BM&F Bovespa has been closing down its trading pits and expanding into electronic trading to make it easier for overseas traders to access the exchange. Next month, the Brazilian bourse opens a London office. Trading volume on HKEx has surged in recent months on the back of strong inflows from investors shifting to equities as they seek higher returns. HKEx shares have risen nearly 70 per cent since the start of the year. "

Top 20 Stocks to Short in the S&P500, Update June 15

On June 4 we posted a list of the top 20 stocks to short in the S&P500. Here is an update with the price then and the price at the end of the day June 15:




The average ROI of this strategy was +2.58%. In comparison, the SPY (S&P500 ETF) dropped 1.75% in the same period.

The list of top stocks to buy and short is updated here regularly.

Markets Rally and Decline With Low Volumes - Update June 15

In May we posted an article on the current rally having no volume. We showed that SPY was trading with volumes 31% lower than average, and DIA with volumes 54% lower than average:

Today we have a good drop in prices. The question is whether the volume is higher or lower when the market drops. At first glance, it appears that we are haivng higher than average volume today. As of 1:50PM, SPY had traded 142M shares vs the 30-day daily average of 292M shares. DIA has traded 8.5M shares vs the daily average of 11.9M shares. With over 2 hours to go, the volumes are on their way to still being lower the average totals, but definitely higher than when there are rallies, percentage-wise. We will update at the end of the day.

However the above figures are misleading. This is because the daily volume averages are coming down hard. Let us take a look at what has happened with the daily average volumes since May 5. As of 2:30PM:

(click to enlarge) June 15 vol. as of 2PM (incomplete)

What we are noticing is that the volume averages have considerably come down from early May. For instance, SPY 90-day average is down 21.5% compared to what it was in May. For DIA, the drop is 38.6%.

To say that volume is higher (today) when the market drops is misleading. The data above shows that volumes are still anemic.

UPDATE 4PM

Here is the updated table with volumes as of EOD:



Note that only DIA had higher volume today than on May 5 (2nd last column). However, all these ETFs that we tracked still have significantly lower volume than the 90-day average volume (last column). This confirms that we have lower volumes with the markets going up or down.

Capital One and American Express Straddles for July

The current crisis and unemployment rate will cause bad loans. Some companies that have done well recently, too well, are prime targets for these bad loans. The chart below shows options strangles to Capital One (COF), and American Express (AXP) for July expiration.




It is very noteworthy that Capital One has just registered a charge-off rate of 9.41%, and a real one of 9.91%, a company record, see the footnote in their SEC filing:

"A change in bankruptcy processing resulted in an improvement in the U.S. Card charge-off rate that is reflected in the May results. The impact was approximately 50 basis points. While our internal guidelines require bankrupt accounts to be charged off within 30 days, our practice had been to charge off customer accounts within 2 to 3 days of receiving notification of bankruptcy. Due in part to an increase in the volume of bankruptcies, we have extended our processing window to improve the efficiency and accuracy of bankruptcy-related charge-off recognition. The new process remains within Capital One’s internal guidelines, as well as FFIEC guidelines that bankrupt accounts must be charged-off within 60 days of notification."

Who are they kidding? Was this change simply to avoid an official record or is it part of the financials pumping for stock issuing and capital raising? Straddles on this company are looking very good.

Price and RSI chart:

SPY, IWM Straddles: ROI of +11% in 1 Day

We posted these strangles on June 12. Here are the current prices as of 11AM. The ROI in one day is +11/+12%. This is the beauty of straddles, it does not matter the direction the markets goes, and the bigger the surprise, the better the results.

IWM is trading at $50.94, -3.49%, and SPY at $92.74, -2.46%.

S&P500 Top Oversold and Overbought Companies, June 15

Here are the most overbought and the very few oversold companies in the entire S&P500, sorted by RSI7.

Top Oversold companies:


VLO 21.77

AMP 22.21

UNH 23.09

AET 23.59

VRSN 23.59

SUN 27.15

CVH 27.18

LEN 28.18

HIG 28.90

BDK 28.93

NEM 29.16

TIF 29.51

TSO 30.34


Interesting to see the refiners in this group, TSO, VLO, SUN



Top Overbought (i.e, top 20 t short):


CVX 80.43

RX 80.90

SLM 81.42

STZ 81.43

CTXS 81.56

CSC 81.71

HAR 81.86

PNW 81.97

JAVA 82.09

TSS 82.26

ITW 82.40

SO 82.89

DELL 83.19

GAS 83.46

ETFC 83.46

CLX 84.00

EIX 84.56

BAC 84.70

FISV 86.37

MSFT 90.06



There are 20 companies with RSI7 over 80. MSFT is in unbelievable nose-bleed high RSi7 of 90.06.

The following charts show the SPY, price, volume, and RSIs. RSI is at 67.4. Note how it has been pretty much over 50 since March 2009.




(please click to enlarge)

SPY and IWM Straddles For Next Week Require 3% Move to be Profitable

Computed with our StraddlesCalc too.

1. Here are fresh IWM and SPY straddles for next week's expiration. Note the maximum move required of around 3%.




Prices as of 1:50PM

2. Here are the SPY and IWM strangles for July expiration.

The USO Rollover Trade is Dead

We have posted several analysis of USO rollover in past months. The initial months had a clear correlation between the 4-day USO rollover periods and USO prices. For the last two months, however, May and June, this has not happened.

The tables below shows what happened before, during, and after rollover. June shows prices as of 10:20AM today.



From a trading perspective, the USO Rollover trade is dead.


Speaking of oil, INO has a nice video on crude oil "Is Crude Oil the New World Currency?", including a Fibonnaci tool.




Click to watch.

Audit The Fed Bill Has Enough Sponsors, Fort Knox Next?

Announced today, bill now has 222 sponsors, please see annoucement below. Now, if they would only audit Fort Knox!

"Audit the Fed Bill Reaches Crucial Benchmark

Washington, D.C. - Federal Reserve Transparency Act, HR 1207, has reached and surpassed the level of 218 cosponsors in the House of Representatives, which means it is now cosponsored by a majority of the members.

The 218th cosponsor was Dennis Kucinich (OH-10), and the bill has since received its 222nd cosponsor.

“The tremendous grass-roots and bipartisan support in Congress for HR 1207 is an indicator of how mainstream America is fed up with Fed secrecy,” said Congressman Paul. “I look forward to this issue receiving greater public exposure.”

Hearings on Federal Reserve transparency are expected within the next month, as part of the Financial Services Committee's series of hearings on regulatory reform."

Novartis Sucessful 1st Batch of H1N1 Flu Vaccine

Switzerland's Novartis said today it expects to have full production of H1N1 flu vaccine ready by September or October after successfully developing a 1st batch of the vaccine weeks ahead of schedule. Clinical trials will commence next month.

Novartis trades as an ADR, symbol NVS.

The company said it expects to be producing millions of dossages on a weekly basis.

Petrobras Opens First Electric Vehicle Recharging Station in Rio

Petrobras inaugurated yesterday the first electric vehicle recharging station in the southern hemisphere. The unit is located in Rio and uses sunlight to generate energy. It has a capacity of up to 100 kilowatts.

Petrobras admits that the initiative has more appeal as an "environmentally conscious" initiative rather than financial. A kilowatt-hour is expensive, costs R$2.60 (USD$ 1.40). If a driver uses the electricity at home, he or she pay six times less: R$0.40 (USD $0.19).

"But when recharging your vehicle at the station, users know that you they are using clean energy, while the energy received at home can come from a thermal power plant, for example."

PBR's focus is the large number of electric bikes in the neighborhood where the recharging station was installed in the Barra da Tijuca sector of Rio. "Here we have the largest concentration of such bikes in the country," says Machado, a Director.

The station also sells gasoline, ethanol and natural gas. In case of little sunlight or demand greater than supply, the station can use the external power network.

A full charge for car or bike takes about four hours. PBR offers an extra battery for the driver to continue using his bike.

30-year Treasury Notes Results: Yields Jump to 4.72%

30-year Treasury note auctions results have been announced. The yields have jumped to 4.72%, an increase of 10.3% over last month. Indirect bidders picked up 49% of the total (tbc). Last auction, this was 33%. Indirect bidders include other central banks, and the Fed? I.e, the Fed printing money?

Compare the yields this year:


Individual auction results this year:

Cristiano Ronaldo Sold for US$132M, Worth More than GM and Chrysler?

Real Madrid finally takes him from Manchester United.

Golden boot yes, but is this deal really worth 80M pounds or about USD$132M? Are any sports or artists personalities worth this much money?

And we thought there was a recession in Spain.

Well, some would say he is definitely better value and more fun to watch than GM and Chrysler.

UPDATE 12:20PM.

Reuters now reports widespread anger in Spain:

"Coming just days after Real president Florentino Perez paid around 67 million euros ($94.02 million) for Brazilian Kaka, the move for Ronaldo prompted widespread anger in a country with an unemployment rate of 18.1 percent, the highest in the European Union.
"In Spain there are four million jobless. That's four million family dramas," Juancarlosm wrote on the website of daily El Mundo.
"Spending this shameful amount of money is immoral. I am embarrassed to be a Madrid fan."

Natural Gas Inventories Report: Storage Overflow in 11 Weeks

North American Natural gas inventories were released few minutes ago. Last week there was an increase of 106Bcf, bringing the total stored to 2,443. This is 30.2% higher than last year.

Storage charts comparing 2008 and 2009:


(click to view)

Note the further breach of the top of the 5-year average range.

At the current rate, there will be an overflow of capacity, and no where to store the commodity, within 11 to 12 weeks. Analysts interviewed by BNN stated that there is no industrial demand and no end consumer demand as the weather has been cold. In addition, for similar reasons outside of NA, there is an oversupply of LNG (liquified natural gas) that is making its way here.

The only reason that natural gas prices have not completely collapsed is that oil prices are higher, due to speculation or the low USD.

We remain short until mid/late July.

WHO Declares Flu/H1N1 Pandemic, Will Affect Markets, Map of Infections

In a move that is likely to affect markets, WHO, the World Health Organization has told its member nations it is declaring a swine flu pandemic, the first global flu epidemic in 41 years.

Here is a map showing confirmed cases:



(please click to enlarge)



Infections climbed in the United States, Europe, Australia, South America and elsewhere. WHO says there are 27,737 cases in 74 countries, with 141 deaths since the end of April. Here in Ottawa, there are 29 elementary schools with confirmed cases, but schools are open as normal, and business is normal. In Canada, we now have 3,000 cases. Southern hemosphere countries such as Australia and Chile are being hit hard, as expected since it is almost winter there. The number of cases in Canada may perhaps be affected by the very cold spring and rainy weather that we had had since early May. It has been indeed a miserable spring. As for flu, the worth may yet to occur in the fall and winter if a vaccine is not developed in the summer.

In the statement sent to member countries, WHO says it decided to raise the pandemic alert level from 5 to 6, meaning that a global outbreak of swine flu has begun.

The Pandemic will cause further travel reductions and reduce global trade at a time when we desperately needed it to increase. The cold weather here is also affecting crops. Canola, for example, is very significantly delayed. This will also cause an increase in prices at some point in time later this year.

It is important to know that normal flu kills many people every year and there is no need for panic.

65 Most Overbought Companies in the S&P500

We regularly update the list of most overbought companies in the S&P500. Here are all the companies with RSI7 over 70, computed with prices as of EOD yesterday. There are 65 of them! Note that very familiar names in the list.


86.15 FISV
84.48 MSFT
83.72 AKS
81.75 FIS
80.94 BEN
80.67 TMO
80.56 XL
80.08 TSS
79.39 ITW
79.04 JDSU
78.80 ADI
78.39 DELL
78.38 BA
78.36 BRCM
78.22 JAVA
77.23 NVDA
77.23 GAS
76.93 TXN
76.81 SLM
76.69 MMC
76.55 HAR
76.24 CTXS
76.18 AA
75.93 X
75.85 QCOM
75.78 LM
75.46 SE
75.31 NBL
75.17 FLR
75.02 CPB
74.90 CSC
74.75 LSI
74.69 GIS
74.68 STZ
74.61 DO
74.52 SHLD
74.47 RDC
74.20 MU
73.78 AN
73.64 INTU
73.57 XOM
73.25 FLS
73.21 TWX
73.15 DOV
73.03 ORCL
72.84 TIE
72.61 FCX
72.37 CTL
72.27 IP
72.26 MCHP
72.13 IVZ
71.88 CL
71.81 XLNX
71.39 EQ
71.31 FHN
71.18 ITT
71.08 GLW
71.04 CBG
70.69 GR
70.20 TDC
70.14 SYMC
70.07 EIX
70.04 ADBE
70.03 CSX
70.00 OXY

An Inflation/Deflation Indicator

INO today has a video showing an inflation/deflation indicator. It is based on the Reuters/Jeffreys CRB Index:

Watch Video

Treasury 10-year Note Auctions Yield Chart for 2009: Mortgage Rates to Increase

10-year note auction happened today. The results were a jump of 28% in yield from May: 3.99% vs. 3.125%. Yields needs to be raised to attract buyers. In turn, this causes increases in mortgage rates.

Here is the chart of yields in 2009:




Results since January:


Released on 1/8/2009 1:00:00 PM For 1/8/2009 1:00:00 PM
Auction Results
Bid/Cover 2.59
Coupon Rate 3.750%
Total Amount $16 B
Yield Awarded 2.419%

Released on 2/11/2009 1:00:00 PM For 2/11/2009 1:00:00 PM
Auction Results
Bid/Cover 2.21
Coupon Rate 2.750%
Total Amount $21 B
Yield Awarded 2.818%

Released on 3/11/2009 1:00:00 PM For 3/11/2009 1:00:00 PM
Auction Results
Bid/Cover 2.14
Coupon Rate 2.750%
Total Amount $18 B
Yield Awarded 3.043%

Released on 4/9/2009 11:30:00 AM For 4/9/2009 11:30:00 AM
Auction Results
Bid/Cover 2.49
Coupon Rate 2.750%
Total Amount $28 B
Yield Awarded 2.950%

Released on 5/6/2009 1:00:00 PM For 5/6/2009 1:00:00 PM
Auction Results
Bid/Cover 2.47
Coupon Rate 3.125%
Total Amount $22 B
Yield Awarded 3.190%

Released on 6/10/2009 1:00:00 PM For 6/10/2009 1:00:00 PM
Auction Results
Bid/Cover 2.62
Coupon Rate 3.125%
Total Amount $19 B
Yield Awarded 3.990%