Tuesday, May 31, 2011

Germany Signs Death Sentence For Uranium And Nuclear Stocks: Profit Either Way

Or did they? Was Germany's decision to abandon nuclear power just  a vote-grabbing decision that will be reversed once they come to their senses?

Either way, investors can profit with straddles.

The ETF we use for uranium stocks is URA.

 These are June and July 2011 straddles (strangles), as well as Jan 2012.

Computed with StraddlesCalc.

This is not advice. Options are dangerous and may cause 10o% loss. Please do your own due diligence.

Monday, May 30, 2011

China hikes power rates to fight worst huge power shortage, fueling more inflation: Chinese ETFs

China raised power prices for industrial, commercial and agricultural users in some regions in an attempt to ease the worse power shortage in seven years.

The hikes were of about 3%.
The power price rise is expected to add to inflationary pressures - but boost profit margins at power producers.

That should prompt an increase in electricity supplies from loss-making power plants that had failed to keep up with rising demand. Higher prices should also discourage excess power consumption.

China has many power problems such as the grid and the transportation of coal, are long-term and can only be solved after several years.

Reuters reports that China may have its worst summer power shortages since at least 2004 "as demand growth remains strong while coal-fired power plants, which generate 80 percent of national electricity output, have restricted production due to operating losses resulting from high coal costs".

At the same time, hydropower has been hit by a drought in central China, including Hubei province, home of the Three Gorges Dam, the world's biggest hydropower project.
The government raised the prices that grid firms charge industrial consumers by 0.0167 yuan per kilowatt hour , Chinese state media said after a briefing by the National Development and Reform Commission, the country's top economic planning body".

We track all Chinese ETFs live here.

Thursday, May 26, 2011

UNG and natural gas: new 2X Leveraged ETFs for natural gas

Direxxion, the company that specialized in infamous leverage ETFs has now released 2X bull and bear ETFs for natural gas.

Leveraged ETFs are notorious for losing most of their owners' money. In Canada, 2X gas ETFs have existed for years. In general, these ETFs do not reach a $0 value because they do reverse splits.

Consider the HNU chart:

It is a beautiful asymptotic curve that tends to zero (beautiful unless you own it).

The Direxxion ETfs are GASL and GASX. The Direxion Daily Natural Gas Related Bull 2x and Direxion Daily Natural Gas Related Bear 2x ETFs seek daily investment results of 200% of the price performance, or 200% of the inverse of the daily performance (before fees and expenses), of the ISE Revere Natural Gas Index™.

Wednesday, May 25, 2011

Naural gas contango today and the pattern: UNG rises, then collapses, but bullish signs

UNG has rise somewhat in recent days, as it has been the case for the last few weeks, only to collapse back down when storage numbers are released on Thursdays.

This is the current contango.backwardation situation:

Currently, we have contango of 1.07%. This is on the low side, as low as it has been quite some time. Nor ally, this is  a bullish sign, but inventories are still growing too fast.

Interestingly as well, the current storage is lower than last year, 1.92Tcf vs 2.15Tcf a year ago. This is also slightly bullish:

Monday, May 23, 2011

Oil ETFs are tumbling

With the situation in Europe causing a general stock meltdown, oil ETFs are also crashing earth.

UCO is off 6.64%::

From our live tracking site of oil ETFs:

Friday, May 20, 2011

Japan sinks; Profit from Japanese ETFs rebounding up or going further down

EWJ is the main Japan ETF. Right now it is trading at a perfect $10. Perfect for straddles that is.

Here are June straddles for both EWJ and FXY, the currency ETF.

The move required for the position to be profitable is 4.2% for EWJ, and 2.58% for FXY.

Computed with the free online StraddlesCalc tool.

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

Thursday, May 19, 2011

China launches 8th GPS satelllite, creates $62B/year market out of thin air

China is following the lead of the U.S. and Europe and is creating its own GPS system. The move is expected to create  a market of $61B/year out of thin air, literally.

In April China put into orbit the eighth Beidou navigation satellite, to be followed by eight more by the end of next year to cover the Asia-Pacific region. The system will ultimately consist of 35 satellites, and makes up the Compass Navigation System

Compass Navigation Satellite System, a Chinese global navigation system, will create a market as big as 400 billion yuan ($61.54 billion) by the end of 2020, the head of China's navigation management office said.

We track Chinese ETFs live here.

According to China Daily, an automobile navigation device using compatible Compass and GPS signals can be bought in Beijing for about 10,000 yuan. A highlight is that it can send text messages.

The Compass navigation system has also been applied to weather forecasting since 2010 in a trial program that improved the accuracy of forecasts and significantly reduced costs.

"We plan to put the positioning system into nationwide weather forecasting in 2013 and 2014," said Cao Yunchang, deputy director of the China Meteorological Observation Center.

As Japan enters big recession, Japanese ETFs are extremely volatile

Japan posted an expected (to me) drop of 3.7% in GDP. EWJ is the main Japanese ETF:

There is some recovery shows after the earthquake, but that optimism may be premature.

The main currency ETF is FXY. It has also been very volatile:

Wednesday, May 18, 2011

Beware natural gas contango strikes; UNG finishes rollover

UNG has just finished rolling over its contracts, from June to July:

Here is the contango/backwardation situation today:

We still have contango, of 1.28%. This is on the low side, as it has been around 1.5/1.6% lately, but as noted above, the contracts just finished rolling over. We need to wati further in the month to see which way it is really going.

We have found that when there is backwardation, UNG rises, as was a rare case last last year. Please see our previous posts. UNG is on a slightly short term bullish pattern, higher low, higher highs, but the long term chart is still a disaster:

Long term:

What  a beauty... to have shorted UNG in 2008/2009: 12.5X return.

Tuesday, May 17, 2011

Investment in China rises 15.2%; the Top Chinese ETFs?

China's Ministry of Commerce announced today that the foreign direct investment (FDI) in China rose 15.2% in April, compared to the same month last year, to $ 8.46 billion. The result was below the $ 15.52 billion recorded in March when there was an annual high of 32.9%.

During the period from January to April there was an increase of 26.03% in FDI over the same period last year to U.S. $ 38.80 billion. According to Yao Jian, spokesman of the ministry, investments in real estate sector accounted for between 23% and 24% of total FDI in April and increased in comparison with March.

The Ministry also reported that investments by Chinese companies in overseas non-financial companies totaled U.S. $ 13.40 billion in the first four months of this year, up 17.50% over the same period of 2010.

Most Chinese ETFs continue to be volatilel:

Performances are not the best. The best performer is CZM, but that is a 3X ETF, so this is temporary as those ETFs always end up losing value.

Next is Hong Kong (EWH), followed by Chinese technology ETF CHIB.

We track them live here (click)

Thursday, May 12, 2011

Commodity sell offs? Not at all; investors use lower prices to flock in oil and agriculture ETFs concerned with inflation

Following the commodities sell offs that started last week, USO, and MOO are the two ETFs that have attracted the most money than any other U.S. exchange-traded fund in the past week.

A report by XTF Inc. says that USO oil attracted $514.4M in the past week, while its agriculture counterpart  received $500.9M.

It appears that investors still do not believe in the U.S. dollar  and are betting or insuring themselves against inflation.

We track all commodities ETFs live on this site.

Read Bloomberg report.

Natural gas keeps dropping, so does UNG as contango now 1.67%

Natural gas, and the woeful UNG have dropped sharply in the last week, as we expected. Today's storage showed an injection of 73Bf. On top of this, there is contango of 1.67%, which is relatively large -. i.e, even worse for UNG.

Monday, May 9, 2011

Oil drops: good news or bad news for oil ETFs? The best ETF? Gasoline!

The recent Oil price decline, relatively speaking, an leave more money in the pockets of consumers, in other words, " boost consumers' discretionary spending power, calm inflation concerns and perhaps bolster confidence.

However, it may also reduce short-term demand.

Reuters reports that "fearful of further price increases, some U.S. businesses have rushed through orders and built up inventories. While that probably helped lift April's exports from China and elsewhere, it may have come at the expense of orders and future shipments".

At the heart of the question is that inventories are growing at U.S. manufacturing and services companies, as per reports last week by  the Institute for Supply Management's survey of purchasing managers. 

We track oil ETFs live here.

The best performing ETF since 2009: UGA, the gasoline ETF. We all knew that - every time we filled up.

Thursday, May 5, 2011

The stunning collapse of silver and gold ETFs: AGQ off 50%

We had been posting about the QGQ silver ETF. Today it is off 17%. In the last week, it is off a stunning 50%!

As for gold ETFs, we track them live here.

Natural gas collapses today, brings UNG and HNU with it, contango rules, HND soars

Natural gas is collapsing today - again, yet again! This happens over and over. As we posted yesterday, prices dropped sharply today, bringing UNG down hard.

The 2X  bear ETF, however, is up 15% in the last few days (we went long 4 days ago). These setups are almost too easy.


Contango is still in effect. It was indeed a UNG bullish trap.

Wednesday, May 4, 2011

Buyer beware the natural gas contango at 1.55%, UNG bullish trap?

Natural gas is in contango, of 1.545% more precisely:

The chart for UNG looks slightly bullish - in recent weeks that is:

However, we know what happens with UNG when there is contango. The reality is that we are not aware of any changes in the fundamentals for natural gas. It's buyer beware, certainly for UNG, which does not need any movement at all in natural gas prices to lose value.

Monday, May 2, 2011

Gold and Silver Being Dumped, Margin Calls, AGQ ETF -18%

With the mini-crash going on, started with silver, and now apparently moving to gold, please take a look at the AGQ ultra silver ETF:

Margin calls tomorrow? It will be quite interesting.