China conducts stress tests for devaluation of the Yuan: Chinese currency ETFs

China is conducting "stress tests" in the export sector of the country to see how much appreciation of the yuan companies can support, according to local newspaper 21st Century Business Herald on Friday.

The newspaper quoted industry sources saying that the test results, conducted jointly with the Ministry of Trade and the Ministry of Industry and Information Technology, will serve as reference for future monetary policy of the Chinese government. These tests, according to the newspaper, do not necessarily mean that Beijing let the yuan appreciate.
 
According to initial results of the tests, which focused on exporters of textiles, shoes and toys, each percentage point of appreciation of yuan would take one point from their profit margin. That would be a serious blow to profitability, since often the net profit margin of exporters is only 3% to 5%.

Two ETFs that track Chinese currency are CNY and CYB, with CYB having much higher volume:

The $950B health care plan and the top pharmaceutical ETFs

Following president Obama's update on the $950B health care plan, BNN had a segment on pharmaceutical ETFs and how they are being affected.

The two main ETFs in this segment are  PPH and IHE.

PPH is much less diversified, wit its top three holdings representing over 60% of its value, and the top four making up 71.6%. These are the top holdings and their percentages:

• Johnson & Johnson    24.82
• Pfizer Inc    18.86
• Merck & Co    16.79
• Abbott Laboratories    11.2
• Bristol-Myers Squibb Co.    6.73
• Medco Health Solutions, Inc.    5.67
• Lilly (Eli) & Co.    5.29
• Forest Laboratories, Inc.    1.9
• Allergan, Inc    1.87
• Zimmer Holdings, Inc.    1.75

Chart:

IHE Holdings:

• Abbott Laboratories    7.09
• Allergan, Inc    4.64
• Bristol-Myers Squibb Co.    5.19
• Lilly (Eli) & Co.    5.47
• Forest Laboratories, Inc.    3.75
• Hospira Inc    3.6
• Johnson & Johnson    9.14
• Merck & Co., Inc    7.68
• Mylan Inc.    3.09
• Pfizer Inc    8.54

Chart:

BNN also reported on the very high number of options traded on these ETFs.

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Best oil ETFs to buy and to sell

Oil prices have been quite erratic lately, in great part due to the volatility of the US Dollar. We looked at the RSI (relative strength) values of all oil ETFs in three time frames.

- Daily: short term
- Weekly: medium term
- Monthly: long term,

These are the values, ordered from low to high, i.e, from oversold to overbought.

Short term:

Most oversold are DTO, SZO and HOD.TO, all leveraged oil shorts.
Correspondingly, most overbought are USO, and UGA (long oil and gasoline)

Medium term:

Interestingly, the medium term order is the same as the short term.

Long term: 

In the longer time frames, DUG is the most oversold, while there are really no overbought ETFs (the closest being OIH).

FXE, Euro straddles results as of options expiration February

With prices as of 10:50AM, results of the FXE straddles previously posted:

Fed raises rates: using GLD for gold going up or down

With the Fed raising the discount window yesterday, gold took  a minor tumble. Below you will see straddles for the popular GLD ETF which tracks the price of gold. Gold is highly volatile and it could really be trading anywhere between $500 and $5,000 an ounce. This is why straddles are so attractive.

They are however risky as they may cause 100% loss if the underlying does not move ther indicated amount. These were calculated with StraddlesCalc tool.

Currency ETFs have gone wild

Global currency ETFs are tracked at this site. Below are the tables and charts showing day trading ranges. Currencies used to be boring and stable. Now they are now extremely volatile. The Euro went up over 1% yesterday, and it's down over 1% today.

Euro ETF update

With concerns over Greece seemingly abating for some reason, the Euro has rebounded. We have updated the straddles for the FXE ETF February, March, and June 2010.

As always, options are dangerous, in particular because FXE is trading between strikes. However, the recent move is puzzling as the situation in Greece is far from over.

Top global ETFs for the week, what is overbought and what is oversold

We computed the relative strength values of all global ETFs in the market. These RSI values are very valuable in determining whether an ETF is oversold or overbought.

Here is the list, ordered by RSI daily, which is a short term indicator. The weekly (medium term), and monthly values are also shown.

The most oversold are PJO (Powershares Japan FTSE portfolio) and PEF (Powershares Japan FTSE portfolio)

There are no overbought ETFs. The two closest are are EWC (Canada) and GULF (Middle East).

You can see also that IDX (Indonesia) is the only overbought ETFs in the long term, with an RSI-M of over 80.