The Insider Report

Barclays Offers New Variation of 19 Existing Commodity ETNs

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Barclays rolled out 19 new commodity-based exchange-traded notes (ETNs) last Thursday (4/21/11).  The 18 new Pure Beta products attempt to track the same commodities as 18 existing iPath ETNs, the primary difference being the process used by each underlying index to roll future contracts.  The iPath Seasonal Natural Gas ETN (DCNG) was also introduced, although it is not part of the new Pure Beta methodology.

Barclays new Pure Beta indexes intend to provide a more representative measure of commodity market returns by reducing the negative impacts of contango.  Instead of rolling futures contracts on a monthly basis, they may roll into one of a number of futures contracts with varying expiration dates.

Each index will attempt to provide the best proxy for the average price return of the front-year futures contracts for each commodity in the index, while avoiding parts of the futures curve that are subject to persistent market distortions.  A new Barclays’ special report, The Basics of iPath Pure Beta Commodity ETNs (pdf), provides additional information and background on the methodology.

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Where do we stand? A look at Bullish Sentiment & Bull Markets

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According to Bespoke Invest, The S&P 500 is currently on pace to close at a new bull market high for the first time since February 18th.  With this milestone, the bull market will officially make it to the two-year mark (the last closing high on 2/18 was two and a half weeks shy of the two-year mark). In the chart below we compare the current bull market to the 25 prior S&P 500 bull markets since 1928.  With a gain of about 99% in a little more than two years (778 days), the current bull market ranks right near the middle in terms of … Read more

US Dollar-Apropos of Everything

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“In May 2007 we wrote a lengthy piece called The Value of the Dollar in which we argued the following: Consistently excessive money and credit growth has taken the US economy past the point of no return. What (policy makers) have done consistently – and will continue to do – is inflate the money supply and promote more credit, thereby sustaining asset prices at the expense of the purchasing power of the US dollar. We argue the US dollar will ultimatily lose it’s status as the world’s reserve currency. In fact, we believe events currently unfolding may be foreshadowing the … Read more

Two new insider buys today piqued my interest

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Hasbro( HAS) CEO Brian Golden bought  10,000 shares at $44.95 on 4-21 for a total amount of $448,000.  Wells Fargo CFO Timothy Sloan bought 10,000 shares at $28.54.   Both stocks have retreated off of earnings that did not wow investors.  Bank stocks in general haven’t had a good year.  HAS bounced nicely on this news.  Wells did nothing.  I’ve made a lot of money trading around Golden in the past.   He is definitely a good timer.  You wouldn’t expect too much from this announcement with Wells Fargo since it wasn’t an obscene amount of stock that Sloan bought.  Besides he … Read more

The VIX, Defying Gravity. A Peek Behind the Curtain

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The VIX is pretty much color blind, it doesn’t differentiate between bullish or bearish activity. Simply put* If the market starts buying a bunch of calls (which is usually bullish), the VIX goes up…if the market starts buying a bunch of puts (which is usually a bearish trade), the VIX goes up.  Over the past years it’s usually been a lot of put buying that drove the VIX higher and higher. However now, people are using options much more as a capital enhancement tool and less as a capital preservations tool. Thus people are overwriting positions more than they ever have … Read more

The results from the chopping block

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OK, see the post saxangle.com/2011/04/my-neck-is-on-the-chopping-block  You may think this whole thing is silly and I wouldn’t disagree with you.  I’ll doubt if I’ll post this exercise again.  It seems like 70-80% of all volume in the market is involved in playing stupid games.  With commissions so low, I might as well join in.  The final tally between yesterday and today, 21 trades 17 winners 4 losers 80.95% profitable.  Then why am I in a crummy mood?  Because Apple fell almost 10 points off its pre-open high and I didn’t sell a single share.         The Trade  Results are … Read more

‘s chopping block

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I am sure many of you have listened or read investment managers that tell you what to own with tremendous conviction and confidence.  Ignore it.  Before you buy or sell anything, check their record.  You’ll be surprised.  So I’m going to put my neck on the chopping block.  Here are a list of stocks I would buy for earnings tonight and tomorrow before the open.  Never initiate large positions on earnings because the volatility can be gut wrenching.  Here is my earnings play with a very brief explanation why.  If you trade, trade a few of these names  to smooth out … Read more

Sector and Asset Class Correlations

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“Over the last six months, the Industrials and Technology sectors have been the most highly correlated to the S&P 500.  The dollar index and the long bond have been the most negatively correlated to the S&P 500.  Within sectors, Industrials and Consumer Discretionary, Technology and Consumer Discretionary, and Industrials and Materials have had the highest correlations, while Telecom and Energy have had by far the lowest correlation.  The two most negatively correlated asset classes over the last six months have been the US dollar and the S&P 500 Energy sector.”        Source: Bespoke Investment Group    

Apple showing first buy signal in six months

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Apple about to rocket upwards

The proprietary signals I had coded are firing off a buy signal on Apple.  Note the bullish divergence paint signal on the Tradestation chart.  The last time this happened was on 8-27-10 and Apple went on a unparalled tear upwards of 80 points.  There are a lot of fundamental reasons to buy Apple.

1.It’s cheap versus the market or any other benchmarks.

2.The product cycle is explosive.  No Company in the history of technology is at a sweeter point than Apple is now.

3.Earnings are on the 20th.  They will be blowout.

Negatives are well-known.  Steve Jobs may not be coming back and is irreplaceable.  Parts shortage from Japan  overblown.  Apple couldn’t fill the orders for the Ipad before the earthquake.

Recent reports on lacklustre growth in the P.C. notebook are directly attributable to the Ipad.  The netbooks are counted in these notebook totals.   Even though the Ipad is worthless as a business tool, it is emasculating the netbook market.

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Pairs trades or parley bets?

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Pairs trades are tough.  When you are long one stock, ostensibly the strong one, and short another, the weak one, you have taken on the equivalent of the gaming term for parlay.  In essence two bets are harder to win than one, hence the better pay off.  In the stock market word this strategy is viewed as safer or defensive but in reality it might not be any different from the parlay bet so many of us are familiar with each football season.  It’s hard enough to pick one stock’s directional moves, much less two. This is an interesting excerpt … Read more

Stock Checklist- My Perfect 10

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This is a checklist I use to quickly come to a conclusion on a stock.  I score a stock, each line getting a 1, 0, or -1.  A stock  that scored 1 on each line would be a perfect 10.  Buy it! Some of these items are quite subjective.  For example how would I score Cash Flow?  If a company’s cash flow is much lower than it’s reported earnings, that raises a flag and I would score it a -1.  If there are more insiders buying than selling, I would score it a 1.  If there are no apparent catalysts … Read more

Natural Gas Breakout on Nuclear Tragedy

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Notwithstanding our sympathy for those who have suffered tragically as a result of the earthquake, tsunami, and nuclear radiation in Japan, the event has profound long-term implications for natural gas, the most attractive alternative fuel. Trading in futures has begun to validate the strategic change. The latest quote for U.S. delivery of natural gas for the next six years at $5.57 a million btu has crossed above its 40-week average for the first time in the 15 months since December 2009 (see chart below Natural Gas Six-Year Futures Strip). Diminished confidence in nuclear power also helps confirm the price uptrend … Read more

Be Patient- wait for the opportunity

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One of the hardest lessons a trader learns is to do nothing at all.  Being able to sit still, watch the screen and resist the temptation of firing off a trade is too much for some people.  The Internet, the amazing drop in commissions, and the pulsating and riveting graphics of online trading programs have made it almost impossible to resist trading on impulse or inspiration.  Is it really that unlike the casino  with computer monitors replacing slot machines?   Many people learn this lesson the hard way.  It’s only when the account values drops to levels that are painfully … Read more

Top 6 Oil and Gas Drillers Paying Impressive Dividends

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In two of our recent articles, we looked for the top six oil & gas companies, and the top eight gas utilities paying excellent dividends. With oil and gas prices going even higher, we decided to screen for the best oil and gas drillers with quite impressive dividends, and a maximum P/E ratio of 30. All of the companies that follow offered a minimum 5% dividend yield, and have a minimum market capitalization of $300 million. Data is derived from finviz. While there are hundreds of drillers listed in NYSE, only the following large cap drillers fit this criteria: Crestwood … Read more

‘s What Bonds Did The Last Time The Government Shut Down…

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With less than 10 hours left until the federal budget deadline and no deal in sight, a government shutdown now looks imminent. Federal agencies have already prepared to close up shop. But questions remain about what kind of impact it would have and how disruptive it will be to your life. American public. A shutdown might impact the trading volatility since it means the release of certain economic indicators would stop. However, the shutdown would NOT have any affect on tax collection, Treasury issuance, debt interest payments or existing social security beneficiaries. In the end, it is the White House … Read more

Contrarian indicator- newsletters who are bearish have fallen to 15.7%

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Based on data from Investors Intelligence (II), newsletter writers who are bearish on the US equity market have fallen to 15.7%, the lowest since December 2009 (15.6%) and below the level seen at the April 2010 highs (17.4%). II % Bears below 20% suggest that there are too few bears among advisory newsletter writers. As a measure of market sentiment, this has the potential to be contrarian bearish for the US equity market. Sentiment is not the best timing indicator, but after the sub-20% readings for II % Bears in December 2009 and April 2010, the S&P 500 pulled back from late January into early February 2010 (down 9%) and from late April into early July 2010 (down 17%). In addition, II % Bulls vs. II % Bears (see side bar) reached the highest level since June 2003, which preceded a sideways market going into September 2003.

 

 

Investors Intelligence % Bearish Advisors – weekly chart

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Slaughter the Dollar, Cry at the Pump

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The ongoing slaughter of the US dollar is sending everything that still has value, especially hard assets and commodities.  WTI Crude Oil just hit $111.25….1st time since 08….On a side note, China, Asia’s largest oil consumer, raised retail prices of gasoline and diesel for the second time this year, starting Thursday, as international crude oil prices continue rising, China Business News reported on Thursday. The benchmark retail price for gasoline will rise by RMB 500 a metric ton on April 7 and that for diesel will increase by RMB 400, the National Development and Reform Commission (NDRC), said on Wednesday. … Read more

Is Dish getting a Blockbuster deal?

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Activist investor Carl Icahn may have shown up in person at Blockbuster’s bankruptcy auction to place his bid, but it was U.S. satellite TV provider Dish Network that walked away the winner. Dish, led by satellite billionaire Charlie Ergen, won the assets of the once-mighty video rental chain for about $320 million, beating out Icahn and at least two other bidders in an auction that lasted into the early morning hours on Wednesday. NYSE Euronext will “absolutely not” be placing a counterbid for Nasdaq OMX, a source close to the Big Board told Reuters corresondent Paritosh Bansal in an exclusive interview. The … Read more

11,500 tons of radioactive water dumped into the Pacific…

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If you think that dumping 11,500 tons of radioactive water into the Pacific is nothing to be concerned about, look at the facial expression of the Tecpo official announcing the procedure: http://www.youtube.com/watch?feature=player_embedded&v=-W7uGvW8xvY#at=90 (starting at 27 seconds into video, and continuing to 1:00 minute in). Yes, I believe he’s crying. The footage and English translation are both courtesy of NHK TV’s English language addition.

MCHI: There Are Now 23 China ETFs

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 by Ron Rowland  

BlackRock, Inc. (BLK) yesterday (3/31/11) announced the listing of the iShares MSCI China Index Fund (MCHI).  The press release claims it is the first ETF to be benchmarked to the large cap and mid cap MSCI universe, providing exposure to the top 85% of Chinese equities by market cap.  However, MCHI becomes the twenty-third China ETF, and some of the existing ones provide similar or even broader coverage of the country.

The overview page does not currently contain any information, but according to the month old fact sheet (pdf), the fund is slated to have 141 holdings and an expense ratio of 0.61%.  The largest positions are China Mobile Ltd 8.6%, Industrial and Commercial Bank of China –H 7.1%, China Construction Bank –H 6.4%, CNOOC Ltd 6.1%, and Bank of China Ltd –H 5.0%.

Sector breakdown has Financials at 37.0%, Energy 18.4%, Telecom 11.4%, Industrials 8.0%, Technology 6.4%, Materials 6.1%, Consumer Discretionary 5.4%, Consumer Staples 4.7%, Utilities 1.8%, and Health Care 0.8%.

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Game Changer?…Better Place Opens FIRST Battery Swap Station in Israel

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This week, Better Place, the innovative electric car company, opened up their very first commercial battery swap station. The concept of swapping out depleted batteries for fresh charged ones is what distinguishes Better Place in the burgeoning EV market. You’ll never need to wait to charge your car—you just pull into one of the battery swap stations, robots switch out the batteries, and in three minutes you pull away. It’s really no different than a full service fill-up of 93 octane.

Say goodbye to range anxiety…..Just take a look at this video:

http://www.youtube.com/watch?v=4lp_6VyIeSY&feature

Bronfer explains how it works:

The battery switch process itself is thoroughly unexciting, which must mean great praise for Better Place’s work in developing the concept. The driver only needs to flash his Better Place RFID card at the machine, drive into the rather narrow tunnel and find something to occupy himself with during the upcoming 3 minutes. The car slides into position, slightly lifted – then an underground robot grabs the battery, disappears – and returns with a fresh one. All of this is invisible to the technologically impaired driver, while the geekier amongst us can watch the entire process streamed live on a TV planted outside.

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Chart of the day: Why $4-Per-Gallon Gas Is Damn Cheap

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All of the European data comes from the E.U.’s European Energy Portal website. U.S. and Canadian data come from the respective Automobile Associations. From this recent chart in the Economist, you can see that the bulk of the premium costs in most European nations is due to higher taxes and duties on crude and gasoline. Many nations recognize oil as a finite resource, and are utilizing gasoline taxes to reduce oil imports, create a more efficient transportation system, and better prepare for longer-term oil price volatility.