Monday, December 27, 2010

Brazil incredible boom is seen everywhere: EWZ

Brazil is booming, and it is evident anywhere you look in the country. Massive highways, massive new high-rises, huge number of new cars on the roads.

Sao Paulo´s coast:

New ring road highway around Sao Paulo:

Here are straddles for the EWZ for January and June 2011. January:

And straddles for June 2011:

These are screen captures from the free online StraddlesCalc tool.

This is not advice. Please do your own due diligence. options may cause 100% loss.

Thursday, December 23, 2010

Two commodity ETFs to soar in 2011: China to massively buy them

China announced yesterday that it will be implementing a program to buy commodities in 2011 to replenish its reserves. These are massive state reserves. Chinese reserves were severely depleted in 2011 when the government sold its stocks to combat inflation and shortages.

There are many commodity ETFs on the market, and we track them all live here.

Chen Deming, Chinese minister,. said that in particular, the Chinese said they will be buying sugar and meat. The sugar ETF is SGG (+139% since 2009).

Corn, Cotton and sugar are the reserves in worst shape in China. BAL (ETN) tracks cotton (+169% since 2009).

Of course, the price of commodities depends on the price of the US dollar as well.

Tuesday, December 21, 2010

Natural gas: Great UNG opportunities for January

A quick look at the natural gas ETF reveals interesting possibilities. UNG is trading at $5.71. These are the January 6 straddles:

Stock:UNGCurrent price:$5.71
Call Strike:$6Call Premium:$0.16
Put Strike:$6Put Premium:$0.44
Number of calls:63Number of puts:23
Call$ invested:$1008.00Put$ invested:$1012.00
Straddle Cost:$0.60Dollar Cost:$2020.00
Max move req. to upside:10.69%Max move req. to downside:-10.30%

So a move of about 10% will make the position profitable.

Computed with StraddlesCalc.

This is not advice, please do your own due diligence.

Monday, December 13, 2010

The top 20 ETFs for 2001, to buy and to sell

This is a little early, and these ETFs will change until the end of the year, but not that much a since we look at long term indicators.

This selection is based strictly on relative strength index. We computed the RSI values of all ETFs on the market, and then sorted them by the monthly value, which is a long term indicator.

Here they are.

Top 20 most oversold:

The most oversold are: FAZ, MLN, PSQ, SZK. FAZ is  a 3X, so we ignore it. MLN is a muni bond ETF (please see our bond ETF tracker live site). PSQ is short QQQQ, and SZK is a short consumer goods.

Top 20 most overbought:

Here the worst offenders are FDN, PNQI, AGQ, and SLV. FDN is an internet index, PNQL is a QQQQ ETF, and AGC/SLV are silver ETFs. Buyer beware!

Keep in mind that there is always a reason why things are overbought or oversold, but in the long term, everything reverts to more 'mean' values.

Wednesday, December 8, 2010

Natural Gas Keeps Rocketing Higher; UNG To Benefit At Rollover Next Week

January contracts of natural gas moved higher today. Remember that UNG will be rolling over contracts next week. The difference is that this time there is no contango. UNG will actually own more contracts after rollover.

Contango is dead until June 2011. UNG is free of it until mid 2011:

Today UNG is up +3.2%. HNU s up by 7.20%.

Tuesday, December 7, 2010

XLF (Financials) straddles returning +61% in 3 days

The "Ben Bernank"'s interview on 60 Minutes or the extension of the tax cuts are doing wonders for our financial straddles posted here November 30. As of 10:30AM:

Monday, December 6, 2010

Spectacular natural gas today, contango still dead, UNG to benefit

Natural gas is performing spectacularly today. UNG has risen over 4% and HNU over 7%.

As we reported a couple of weeks ago, there is no more contango up to the middle of 2011. This helps UNG tremendously. Of course is still depends on the price of the commodity itself, but it does no9t have to carry a 20%/month loss weigh.

This is the chart for HNU, the 2X ETF:

Here is the contango/backwardation" situation today:

There is backwardation until June. Looks good for UNG, which can act as a real ETF and even benefit a little from this.

Friday, December 3, 2010

New bullion-backed precious metals ETF launched - with a twist

A new precious metals ETFs was launched, but one with a twist: it's a white metals basket that includes bullion for:

- silver
- platinum
- palladium

Please note that we track all gold and PM ETFs live here.

The ticker is WITE:

The ETF is being launched by ETF Securities. "ETFS Physical White Metal Basket Shares (Ticker: WITE) will be the first US-based physically backed white precious metal basket ETP to hold silver, platinum and palladium in fixed weights. WITE complements the existing suite of products provided by ETF Securities; GLTR, SGOL, SIVR, PPLT & PALL. ETF Securities continues to offer the broadest range of physically backed precious metal ETPs in the US market".

The gross expense ratio is 0.60%/y.

Thursday, December 2, 2010

Natural gas: another drawdown in storage this week, no contango until June 2011

Here are the current numbers, just released a few minutes ago:

The amount in storage was 3,814 Bcf representing a net decline of 23 Bcf from the previous week. Stocks were 23 Bcf less than last year at this time and 347 Bcf above the 5-year average of 3,467 Bcf.

As for contango, it is still dead until June 2011:

UNG is still a real ETF!

Wednesday, December 1, 2010

Muni Bonds on the verge of imploding, Muni ETFs

The GEAB, Global Europe,  report just issued a warning on U.S. muni bonds:

The US municipal bond market (« Munis ») which supplies the finance for the local infrastructure for transport, health, education, sewage, is on the edge of imploding as a consequence of the growing inability of US local authorities to handle their indebtedness. It is originally a very « subprime » (or very « Greek ») case, because information on the actual financial health of US local authorities is largely defective and the credit rating agencies have rated these bonds in a completely arbitrary fashion, therefore well adapted to all the disappointments possible for those who own them"

We track all bond ETFs, including munis, live here.

Continues the report:

"The crisis is indeed in the course of ruining a number of these authorities who don’t have the means to raise taxes much (when they simply can despite the opposition of their fellow citizens). The end of Federal stimulus and exhaustion of financing facilities [...]  presages a very dangerous second half of 2010 for this particular financial market as a consequence of the relapse of the US economy (so, a worsening fiscal shortfall), the new international trend towards budgetary austerity and the fear of public over- indebtedness. For LEAP/E2020, there is no doubt that we will soon see the monoline insurers like Ambac which specializes in « Munis », in the financial media headlines again. Since November 2007, our team has been one of the first internationally (GEAB N°19 ) to flag Ambac’s, MBIA’s, and other monoline insurers’ upcoming problems which were also first in line over the « subprime crisis » (2). One can count on them being first in line at the next crisis of « Munis ». The size of this particular financial market implies that such a crisis would be as destructive at international level as the « subprime » one. That said, an insurer warned being worth two, as the proverb says, one must take note that the proportion of insured US municipal bonds has gone from an average of 60% for the last fifteen years to 8.5% in 2009, which speaks volumes on the state of the insurers and probably too on the degree of risk of the « Munis » themselves (3). In short, get awau from US municipal bond markets… and expect a new financial explosion particularly devastating for the US. It will drag along itself a large part of US banks and pension funds into the debacle."

Gold keeps rising in light of chaos in Europe, gold ETFs soar, but beaten by silver ETFs

Gold is soaring again today, approaching $1,400.00 this morning, and so is silver. There are many gold and precious metals ETFs on the market, which are tracked live here.

Some ETFs have performed spectacularly:

Number 1 on the list AQG at +323%, the silver ultra ETF, returning since Jan 2009, followed by USV, a silver ETN, and DBS, another silver ETF.The top gold ETF appears in 4th place at +126% since 2009.

Tuesday, November 30, 2010

Financials are in chaos: Profiting from banks and financials going up - or down

XLF is the popular financial ETFs in the U.S. It has gone nowhere in the last 6 months or so, however, the situation with financials is nearly chaotic, Europe, Bank of America, Portugal and so on, so, volatility is to be expected.

Below are straddles for XLF for both December and January 2011. These allow an investor to profit if the underlying (XLF) goes up or down, as longs as it mkoves the necessary amount.

That move required is about 5% in December and 8% in January. Computed with StraddlesCalc tool.

This is not advice at all, please do your own due diligence. Options can easily cause 100% loss.

Friday, November 26, 2010

Petrobras finds yet more light oil in the Amazon: Brazilian ETFs soar

Petrobras, PBR on the NYSE, has annonced that it has foudn yet more light sweet oil in the Amazon. A long duration test in the Amazon has confirmed the accumulation of light oil (46 API) and natural gas in well 1-ICB-1-AM (called "affluent Chibata No. 1") in Tefé (AM), 630 km from Manaus.
According to the company, the test data indicates a well production capacity of 2.5k barrels of oil per day, "which is considered an excellent result, in the case of this kind of watershed in Brazil,". Petrobras holds 100% of royalties and production of this well.
The test was started in September and is expected to last one year.

There are six direct Brazilian ETFs that trade in North America, you can track them live here. Brazilian ETFs have soared in recent weeks, this is the performance since July:

 Note: Some of these ETfs were not yet trading in July, hence, they do not show on the chart.

Thursday, November 25, 2010

Great news for UNG and HNU ETFs: natural gas now in backwardation

Please see the current situation in natural gas contracts as of 11AM this morning:

Not only contango is gone, but prices are now in backwardation until May 2011, with little difference till August 2011. This is great news for UNG and HNU holders, as ow backwardation may work in their favor. Prices of natural gas may still fall, but the ETF will benefit on contract rollovers, as opposed to lose money as before.

Wednesday, November 24, 2010

Natural gas keeps rocking, prices jump, UNG and HNU ETFs blast higher

Following the death (at least temporary) of contango for the first half of 2011, UNG and HNU (2X ETF) keep moving higher today.

HNU has moved 31% higher since November 15th, and UNG is higher by  15%.

Prices jumped at noon when inventories were reported, showing an unexpected drawdown of ng:

 ETF charts:

Both have broken their short term resistances.

Tuesday, November 23, 2010

Natural gas: contango still dead, profiting from UNG going up or down

Natural gas continues to shine after contango died . With no contango until July or so, the popular UNG is now almost a real ETF.

With UNG very close to a perfect $6 strike, these are the current straddles for December and January.

Investors would profit if UNG moves the indicated amount. Computed with the free StraddlesCalc online tool

Please do your due diligence. Options may cause 100% loss.

Monday, November 22, 2010

Coming soon to make investors lose more money: leveraged and reverse VIX ETFs

Actually they are ETNs.

When you thought they issuers of bizarre ETFs designed to make mom & pop investors lose their pants and shirts, then comes new financial inventions: leveraged VIX ETNs.

Please see all our posts on their VXX to see how dreadful it is.

It comes it all kinds of flavours, 1X, inverse, 2X.

Read the filing here.

"VIX Short-Term Futures™ Index due December 4, 2030 (the “Inverse VIX Short Term ETNs”), the VelocityShares Daily Inverse VIX Medium Term ETN linked to the S&P 500 VIX Mid-Term Futures™ Index due December 4, 2030 (the “Inverse VIX Medium Term ETNs” and collectively with the Inverse VIX Short Term ETNs, the “Inverse ETNs”), the VelocityShares VIX Short Term ETN linked to the S&P 500 VIX Short-Term Futures™ Index due December 4, 2030 (the “Long VIX Short Term ETNs”), the VelocityShares VIX Medium Term ETN linked to the S&P 500 VIX Mid-Term Futures™ Index due December 4, 2030 (the “Long VIX Medium Term ETNs” and collectively with the VIX Short Term ETNs, the “Long ETNs”), the VelocityShares Daily 2x VIX Short Term ETN linked to the S&P 500 VIX Short-Term Futures™ Index due December 4, 2030 (the “2x Long VIX Short Term ETNs”) and the VelocityShares Daily 2x VIX Medium Term ETN linked to the S&P 500 VIX Mid-Term Futures™ Index due December 4, 2030 (the “2x Long VIX Medium Term ETNs” and collectively with the Leveraged Short Term ETNs, the “2x Long ETNs”)."

We still await leverage potash ETFs, inflation ETF,  interest rate ETFs, bailout ETFs.

Friday, November 19, 2010

Natural gas today: contango is still dead, UNG up again

Another day, and still no contango for the early months of 2011 in natural gas contracts. As of 12PM:

We disregard December as UNG contracts have already rolled over. Prices only start climbing about June 2011.

With this weight off its back, UNG continues to respond quite kindly, up about 8% for the week.

Thursday, November 18, 2010

UNG and HNU jump on the end of natural gas contango for early 2011

As we reported this morning, contango is no more for natural gas for the early months of 2011.

This morning, both UNG and HNU were down after inventiory reports. The situation has sharply reversed and both jumped higher. UNG moved higher 4.5% (intra-day) and HNU (2X ETF) 9%.


Contango/Backwardation as of 3PM:

Natural gas curve flattens: contango ends, UNG becomes a real ETF

Natural gas storage inventories were released today, showing a slight injection of 3Bcf, bringing the amount in storage to 3.843Tcf. This is just0.3% higher than last year. What is more important is the derivative (or slope) of the curve is near zero. In other words, the injections are flattening.

This is critical, because any slightly larger injection can create rumors of overflowing of the storage capacities, causing the prices to drop further, and any draw down, could make prices spike

These effects are mainly psychological. UNG reacted today with a slight drop of about 2% by 10:50AM

Contango no more

All the more important is that there is no more significant contango on futures contracts, so UNG will not suffer from its usual degradation. As of 10:55AM:

There is a 4.6% between December 2010 and Jan 2011 contracts, but UNG has already rolled over this month (see rollover dates). between Jan and Feb the difference is almost nil, and between February and March there is backwardation of 0.5%.

UNG has become a real ETF, for the time being. Stay tuned.

Wednesday, November 17, 2010

Rubin: U.S. Bond Market Could Implode

Former Treasury Secretary Robert Rubin, warned today about the risk of an "implosion" in the bond market, citing the soaring federal budget deficit and the Fed's QE programs are putting the U.S. in "terribly dangerous territory."

He says that QE2 "has a lot of risk," adding that the international reaction "horrendous."

The Trigger

Rubin, had previously issued a similar warning about the bond market in October. He further says (see Yahoo) that  "Congress' vote on raising the deficit ceiling next spring could be the trigger for a rout in the Treasury market".

He says that China will not dump U.S. treassuries, because that would be "a financial version of the Cold War concept of Mutual Assured Destruction" "But he is worried about selling by the government's of Singapore, Hong Kong and Malaysia. "They could say ‘the Chinese are stuck but we're not,'"

There are many long and short bond ETFs on the market. For a list that we track live, please visit here.

Oil tumbles: profitting from oil going up or down through the UCO ETF

 Oil took a big hit this morning following the inventories report. With the UCO ETF being very near a 10 strike price, below are straddles for both November and December.

These allow an investor to profit whether oil goes up or down, as long as it moves the amount indicated. November's are of curse only 2 days away, so they are extremely dangerous.

Computed with StraddlesCalc.

Options are dangerous and may cause 100% loss. Please do your own due diligence.

Tuesday, November 16, 2010

CYB, the Yuan ETF, has very cheap April 2011 options

These are the April 24 CYB calls today:

Since CYB is trading at $25.32, the 24s are in the money, and trading at $1.40 or $1.45. The added premium over intrinsic value is just $0.08 to $0.13. Those options will be profitable if CYB goes up by 0.03% to 0.051%.

Note that options may also cause a 100% loss, shall CYB drop below $24. That would mean the Yuan dropping (!) 5.2% until May 2011. Please do your own due diligence.

This is the Yuan since the Chiense government has allowed its appreciation:

What you see is in the inverse, i.e, the Yuan priced in U.S.Dollars. Enjoy!

Bond ETFs Are Crashing

Muni bonds amd muni bond ETFs are collapsing today. It was about time, and expected.

Please take a look at MUB:

We track all bond ETFs live here.

Monday, November 15, 2010

Investing in bond ETFs: tracking live all bond ETFs

Investors have been flocking to bonds in the last year or so to seek income (yield), and for safety. There are now tens of BOND ETFs on the market.

We created  a new site to track them live: Bonds Live.

The top performers in 2010:

TYD, the 3X Bull ETF for the 10-y treasury. Since this is leverage ETF, and leveraged ETFs are terrible performers in the long run, it is a indication that something is a miss in bond land. Some may call it a bond bubble.

Note also the bad performance of muni ETFs since July.

Image captures:

Friday, November 12, 2010

Sugar plunges, drops the most in 22 years; SGG ETF down over 10%

This was definitely not a sweet day. Raw sugar futures in New York fell the most in 22 years and refined-sugar prices also dropped by a record in London.

Raw materials tumbled on concern that demand for crops will ease in China as it it set to increase interest rates. To compound matters, the  ICE Futures U.S. raised margins on contracts by 65%. Europe also announced plans to increase sugar exports.

Biggest drop ever

Refined-sugar futures for March delivery fell $91.50 per metric ton, -12%, the biggest drop ever
Raw-sugar futures fell 3.45 cents, also 12% to settle at 26.21 cents on ICE. The single-day drop and this week’s drop of 17% were the most since July 1988.

SGG, the sugar ETF which had had a very sweet performance this year, dropped 10.2% today:

We track all commodity ETFs live here.

G20: Brazil insists on replacing the weak U.S. Dollar by a basket of currencies as reserve currency

Guido Mantega, the Brazilian finance minister, reiterated on Friday his call replace the dollar with a basket of currencies as reference-currency. He says it is a moment of weakness for the U.S. currency, and holding dollar reserves "loses money."
"The natural tendency is that as other economies
emerge, a new system of currencies should appear. But it's not an easy or quick thing to do. But keeping in reserves in dollars loses money".
"The diversification of currencies is possible. But it is not easy because global trade is used to the dollar. The general trend of multilateralism," Mantega defended.
"Once the rulers in the world economy were two or three countries, but today there is a change. It is not so now" he added.

The easiest way to trade currencies is through the ETFs. The Brazilian real is the currency that has appreciated the most out of the G20 (ETF: BXF). You can track them all here.

Gold is dropping like a brick today: the top gold and silver ETFs

Spot gold, which was trading over $1,420 earlier this week, has taken a big tumble and now trades at $1,380:

Gold ETFs will react accordingly today. We track them live here.

Loom at the amazing perforkance of AGQ, the ultra silver ETF: +317% since 2009.

Given that, as expected, the G20 agree not to agree on anything and interest rates will not rise any time soon, this might be a very good opportunity to get back into gold for the medium term.

Thursday, November 11, 2010

Natural gas storage injection was +19Bcf, slightly below expectations of +24Bcf

While the amount injected was +19Bcf, slightly below the expected 24Bcf, natural gas storage still remains significantly higher than average, and actually outside (above) the 5-year average channel.

The current amount in storage is 3.84Tcf.

Will UNG rise or drop now? Well,  contango is still there. Jan 2011 prices are $4.24, while the current December contracts are priced at $4.06. That's a 4.4% differential.

Here are the current straddles. Current UNG price is non optimal, but it's doable since there's plenty of volume in UNG options (in the thousands).

If UNG moves 6.7%, those will become profitable. That means UNG above $6.20 or below $5.44. That's  a tough one.

Computed with StraddlesCalc.