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.