Friday, September 30, 2011

Bank of America, BAC's Kiss of Death

BAC has announced it will impose a $5 monthly fee on debit cards. We cannot envision this fee lasting for very long as the backlash will be horrendous for the bank, a la Netflix.

It is truly a sign of desperation and that the bank must be severely cash-strapped. If my bank did that, I'd switch banks right away.

It's not like people have much love for banks these days anyway. What were they thinking?

There is nothing to like on BAC's chart:

Below are straddles for BAC and XLF, computed with the wonderful StraddlesCalc.

Not advice! Options are dangerous and may cause 100% loss. Please do your own due diligence.

Thursday, September 29, 2011

Nat Gas and UNG Falls off a cliff, attacked by all sides: Huge contango, hurricanes, storage

UNG is falling off a cliff today, as pretty much expected here. It is suffering from an attack from all sides.

Meanwhile, there are no expected hurricanes in the near future:

Storage numbers were released today, showing a large injection of 11Bcf.

Contango today is nasty, at a whopping 7% for the two front months (December and November)

Bad news all around for UNG.

Total breakdown in Germany: Parliament passes bailout that majority oppose

In a sign of complete disconnect and breakdown between politicians and the people they are supposed to represent, the German parliament has just backed the expansion of the European bail-out fund.

523 politicians voted in favor of it, 85 opposed, three abstained.That is 85.6% in favor.

However, a poll released yesterday showed that 75% of Germans opposed any new bailout measures. The WSJ reports: "A poll for national German broadcaster ZDF earlier this month shows three-quarters of Germans are against the expanded European rescue fund that's subject to Thursday's vote."

EWG is the ETF for Germany, FXE the most popular for the Euro.

We also track global countries ETF live and global currency ETFs live:

Wednesday, September 28, 2011

More Leveraged ETF Torture: 2X ETFs Become 3X ETFs

As if we needed more leverage!

Direxxion is changing its 2X ETFs into... 3X.

"Currently, the investment objective of each of the funds with “Bull” in its name is to seek daily investment results, before fees and expenses, of 200% of the fund’s target index. The investment objective of each of the funds with “Bear” in its name is to seek daily investment results, before fees and expenses, of -200% of the fund’s target index.
Effective December 1, 2011, each fund’s investment objective will be changed to seek daily investment results, before fees and expenses, of 300% or -300% of the performance of its specific target index".

The fact that 300% actually means 4X is too complicated math of course.

The higher the X, the faster the ETF's value goes to zero.

At least it's tough to do 4X though, as the fund risks having to drop it's value to zero in a single day if the market moves 25%.

Tuesday, September 27, 2011

Bad for UNG: huge natural gas contango to december

This is the current situation with natural gas contango:

It is currently 0.65% for November and October, and a whopping 7.2% from December to October. This implies prospects of prices rising, however, the contango is very bad (high) for UNG for December. Not good.

Gold ETFs Jump as Buying of Physical Gold is Intense

A report by Reuters today confirms that physical gold buying has been "exceptional", taking today's prices much higher. With it, gold ETFs are soaring, as expected.

We track all gold ETFs live here.

"... Meanwhile, heavy buying of physical gold stocks -- often a price-sensitive area of demand -- suggested that Monday's price fall had whetted investors' appetite for the metal.

Swiss bank UBS said it had seen very strong physical buying in Asia, particularly number one bullion consumer India, on Monday. "To be clear, physical demand right now is not just decent, it is exceptionally strong," the bank said.

Other precious metals also bounced back after Monday's hefty losses. Silver, which slid as much as 16 percent to a 10-month low of $26.04 an ounce on Monday, rose more than 9 percent to a high of $33.48 an ounce.

Spot platinum was up 1.3 percent at $1,575.50 an ounce, while spot palladium was up 3.7 percent at $650.22 an ounce.

Gold's premium over platinum stood at around $90 on Wednesday, with a ratio of 1.06, its highest in 20 years".

Monday, September 26, 2011

FXY and the next Bank of Japan intervention; a la Swiss? Yes, says Nissan.

The question is not If but When will the bank of Japan intervene to lower the yen.

Today, a Nissan Motor Co. senior executive urged Japan to take "decisive" action to prevent the strong yen from hollowing out the country's industrial base. He also mentioned that they should learn from Switzerland's intervention in the foreign-exchange markets to weaken its currency.

Can you imagine if all central banks had the funds to intervene to lower their currencies? "I have more money to weaken my own currency than you!".

Here are current FXY straddles, from the wonderful StraddlesCalc tool.

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

Friday, September 23, 2011

Surviving - And Profitting - From Meltdown or Wild Monday, With ETFs

Gold and silver were severely beaten up in these last two days, and there are even more renewed talks of a Greek default. The possibilities were even mentioned by the Greek finance minister himself. Some say this could be prelude to major weekend action.

A meltdown Monday, or a massive injection of money and stimulus will cause the market to move wildly.

Below are straddles computed with StraddlesCalc tool.

As always, options are very dangerous and may cause 100% loss. Please do your own due diligence.

Wednesday, September 21, 2011

Contango and The Dire Effects on UNG Once Again Proven

On Setember 14 we posted about the state of contango an its dire effects on UNG. This is precisely what happened.

Buyer beware.

Monday, September 19, 2011

New ETF To Be Launched Trades Based on Share Buybacks

This is quite interesting.

A new ETF is being launched in early October and invests based on share buybacks by companies.

The TrimTabs Float Shrink ETF (symbol TTFS) will open for trading on Wednesday, October 5, 2011. The portfolio management team of TTFS is a part of TrimTabs Asset Management (“TrimTabs”).

TTFS’ investment objective is based on TrimTabs proprietary research, which measures the "change in float shrink" (net change in number of shares outstanding), the change in free cash flow (after tax income + non cash charges – capital expenditures) and net debt issuance.  The strategy selects the top 100 U.S. stocks based upon float shrink, free cash flow growth and net equity ratios from the largest 3,000 U.S. based companies.  Those 100 stocks are then equally weighted and periodically reallocated and rebalanced as corporate metrics change. 

The premise here is that share buybacks are a good indicator of stocks going up. Sounds very reasonable.

Charles Biderman is the founder and Chief Executive Officer of TrimTabs. He says that “Top insiders at a firm know more about its fundamentals than the investing public. We have discovered that it has been strategic over the years to buy the overall market when the trading float of shares is shrinking; and to sell the overall market when the trading float of shares is growing.  We have discovered that float shrink, free cash flow and debt/equity analysis have been good indicators in determining future performance of stocks.”

Noah Hamman, CEO and Founder of AdvisorShares. : “We believe investors will be excited about TTFS because it is a fundamentally attractive alternative for U.S. equity market exposure to a Russell 3000 or S&P 500 Index. Why own the entire U.S. market when you can buy the 100 companies shrinking their trading float of shares, growing cash flow and not borrowing to buy back shares?”

Thursday, September 15, 2011

Natural Gas Results: +220% ROI UNG

This was from yesterday.'s post

ROI was 220% for the September straddles (as of 2:10PM).

Wednesday, September 14, 2011

Contango Strikes Back In Full Force; Natural Gas and UNG Poised to Explode

Which way is the question, but that is matter?

The price of natural gas has held relatively steady in recent weeks.While this is good news for investors in the commodity, contango is now back in full force.

Contango means very bad enws for UNG as it has to pay more every month to roll over its
contracts: same money, fewer contracts. This is buyer beware.

This is however, hurricane month and season, all the makings for a very interesting - and volatile -  combination. Just near perfect.

Below are straddles for UNG for both September and October 2011. These allow an investor to profit either way, up or down.

September only has 2 more days to go and is an obvious extreme risk. October requires an 8% move or so for the position to become profitable.

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

Tuesday, September 6, 2011

The German courts decide on bailout legality: Effects on the Euro ETF, FXE, GLD, ad TLT

The German courts decide tomorrow whetehr the European baiklouts are illgeal. While they seem to be, it is unknow if the courts will be willing to say so. Either way, the Euro will move, and so will the markets, gold, and bonds.

Below are straddles for FXE, GLD, and TLT.

Computed with StraddlesCalc.

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