USO

Israelis Killed in Bulgaria Blast as Netanyahu Blames Iran – Bloomberg

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Israelis Killed In Bulgaria Blast As Netanyahu Blames IranBy Elizabeth Konstantinova and Calev Ben-David – Jul 18, 2012 1:43 PM MTFacebook ShareLinkedInGoogle +15 COMMENTSPrintQUEUEQSix people were killed and more than 30 injured in an blast on a bus carrying Israeli tourists in Bulgaria. Israeli Prime Minister Benjamin Netanyahu blamed Iran for the attack.Five people were killed in the explosion at the airport in Burgas, on the Black Sea coast, and one person died in hospital, the Foreign Ministry in Sofia said on its website today. Bulgarian authorities are working on the assumption that the attack was an act of terrorism, … Read more

Why Are Oil Markets So Short Sighted?

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Other than the occasional headline, the Iran embargo is a distant memory.  And oil markets seemed to forget that an increasing oil reserve is a direct result of preparing for such an embargo.  Just because reserve levels happened to beat expectations (it’s not like analysts regularly and accurately deal with embargo situations anyways), is it reason for a 2% or more correction in USO?  I doubt it.

Global Markets Declare War On Speculators: Shanghai Gold Exchange Follows CME Hiking Silver Margins

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According to Mr. Durden at ZeroHedge, the Fed has now ordained Japan to carry out the global reliquification scheme in the form of a new, and powerful batch of QE, so the regional war on (Fed liquidity engorged) speculators has just gone global. Following 5 consecutive silver margin hikes by the CME (which oddly did nothing on yesterday’s price collapse even as the silver vol surged to near record levels) at which point it would appear silly for the exchange to continue its speculator eradication campaign, the memo has now been sent to foreign bourses. Sure enough, the Shanghai Gold Exchange … Read more

New IQ Global Oil Small Cap ETF Is A Viable Alternative

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Index IQ launched IQ Global Oil Small Cap ETF (IOIL) last Thursday (5/5/11), the first ETF to target small cap stocks in the global oil industry.  The underlying index defines small caps as stocks in the bottom 10% of the entire oil industry’s market capitalization.  The sub-sector breakdown shows Refining & Marketing at 40.5%, Exploration & Production 36.9%, and Equipment, Services & Drilling 22.6%.

The fund’s 61 holdings are weighted by float-adjusted market capitalization.  While no stock is supposed to exceed a 10% allocation at the quarterly rebalancing, presently no holdings need to be capped.  The largest position is Sunoco Inc (SUN) at 6.2%, followed by Oceaneering International Inc (OII) 5.3%, Core Laboratories (CLB) 5.2%, Tesoro Corp (TSO) 4.5%, Petrominerales Ltd (PMGLF) 4.3%, and Alliance Oil Company Ltd (ALLZF) 3.9%.

The IOIL portfolio currently spans 14 countries, including both developed and emerging markets.  I was somewhat surprised to see Thailand with the third largest allocation but Russia and Mexico not represented at all.  My guess is that this reflects the large size of oil-related companies in those places.  The rest of the list was no surprise with the U.S. at 45.1%, Canada 11.7%, Thailand 7.5%, Colombia 4.3%, Japan 4.0%, Sweden 3.9%, U.K. 3.9%, Finland 3.0%, and six others combining for 13.5%.

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Chart of the day: Rolling 3-Month Correlation Between Oil & S&P500

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Over the past few years the correlation between oil (especialy WTI Crude Oil) and the S&P500 has been remarkably consistent with an average of about 0.75 (scale from -1 to 1).  However, over the past month that strong correlation that traders had become acustomed to has diminished at an exponential rate.  Over this past month, the rolling 3 month correlation (rolling windows give a much more accurate measure) has fallen to its lowest level since the early 2000s (less than 0.20). Basically, the Energy sector and oil have been moving less in tandem with each other on a day to day basis than they have in years.  Source: Bespoke Investment … Read more

XOIL Tries to Be Spot-On Spot

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  Global X launched a new equity ETF on Tuesday (3/15/11) that attempts to achieve high correlation to crude oil spot prices. Global X Oil Equities ETF (XOIL) provides exposure to pure-play oil companies with significant oil reserves that are typically not involved in other industries such as natural gas or downstream operations.

The underlying Solactive Global Oil Equities Index tracks the performance of 25 equal-weighted companies that have shown a high correlation to the spot price of oil. Constituents are ranked and chosen by their correlation to the spot price of oil in the quarter preceding the selection day. The index has a global mandate, but only North American stocks passed the most recent correlation screen with 80% currently allocated to the U.S. and 20% to Canada.

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Oil, Gold, and Market Correction- Should be no surprise to our readers

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Radar Screen Flashing Red Overbought on Multiple=If you will search on our posts, you will see we suggested buying the USO (that’s the most popular ETF tracking crude oil), several of the largest gold miners, and lastly we have repeatedly warned of a toppy market. Now you might say we have been lucky, that the Mideast democracy contagion has worked in our favor

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