Posts Tagged
‘UUP’
by Phil - February 3rd, 2011 6:14 am
Courtesy of Chris Vermeulen
As most sophisticated investors and traders are aware, the U.S. Federal government has run up significant deficits and the long term debt burden is becoming a drain on Gross Domestic Product. That being said, most economists are discussing the possibility of a major decline in the value of the U.S. Dollar going forward as inflationary monetary policy begins to strangle growth. While that view point may prove right over the long haul, in the short run most traders are not likely expecting the U.S. Dollar to rally.
The U.S. Dollar is expected to reach a multi-year cycle low in the near future. From the cyclical low, I expect the U.S. Dollar to regain a strong footing and work higher against the crowd. This is not to say that the U.S. Dollar will not eventually decline, but financial markets do not work that easily. Shorting the U.S. Dollar is a crowded trade and Mr. Market punishes crowded trades quite often by pushing prices the opposite of what the heard is expecting. Should the U.S. Dollar find a strong underlying bid, precious metals and domestic equities would feel the brunt force of such a move. While it remains to be seen if the U.S. Dollar rallies, if it does it will catch many traders and economists by surprise and the unwinding of the short dollar trade could unleash a wave of buying that we have not seen for quite some time.
Let’s take a look inside the market…
Major Index Price Action Over The Past 12 Trading Sessions – Bearish
Below is a table showing the main indexes used for tracking the market. The interesting thing about this data is that the indexes which typically lead the market have been deteriorating for the past 12 days and no one has noticed.
In short, the Nasdaq, Russell and Dow Transport indexes typically lead the market
Every radio station and business channel covers the Dow and SP500 indexes therefor the general public hears the market performance based on the those indexes. The problem here is that the Dow only consists of 30 stocks and the SP500 only holds the top 500
…
Tags: DIA, Dollar, GLD, Gold, IWM, QQQQ, SPY, UUP
Join Member's Chat - 2 Comments Here »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Phil - January 24th, 2011 8:14 am
.jpg)
Big week ahead!
$30Bn in POMO from the Fed runs headlong into earnings reports from 15 of the 30 Dow components along with MoMo darlings like VMW (tonight), BLK (tomorrow morning), POT (Thursday morning) and AMZN (Thursday night). I already sent out an Alert to Members this morning outlining our strategy and Stock World Weekly did it’s usual amazing job of wrapping up last week’s action and laying out the week ahead so I won’t be too redundant here. The key driver for the markets continues to be the dollar, which is making more sense now as it saved the Dow and the S&P last week (50% of revenues come from overseas) but not the Russell (only 10% of revs from overseas) or the Nasdaq (30%).
The Dollar was relentlessly driven down last week, bottoming out at 78 on Friday evening, back to November lows, where they ditched the Dollar all the way down to 75.63 in early November before it broke back up and ran to 81.44 on the last day of the month. Now we’re back down 4.2% from the Thanksgiving highs for the Dollar and the Dow and S&P are up 8%, which is our usual 2:1 correlation yet Uncle Rupert’s Journal would have you believe that the Dollar no longer matters and that this rally is about (please sit down, PSW cannot be responsible for any beverages you are about to spit on your keyboad) – wait for it – Fundamentals!
According to the Journal: In recent weeks, for example, moves in stocks and the U.S. dollar have had little connection—a breakdown of the trend during much of 2010, when they were virtual mirror images of each other. Stocks were considered risky and would rise when investors were feeling confident, while the dollar was a haven, benefiting when investors were worried. Commodities, too, have broken away from rising and falling with risk perceptions. Now more old-fashioned concerns, like the weather, are having an impact. Corn, soybean and wheat prices jumped this month after supply estimates were cut due to dry weather in South America and floods in Australia.
Really? So the run in DBA from 22.85 in June of last year to 31.65 (38.5%) in early November was speculation but the run from 31.65 to 33.50 (6%) since then has been based on solid fundamentals. ROFL!!! That…
Tags: AMZN, BHI, BLK, CMG, CREE, DBA, DIA, FCX, GOOG, GS, JPM, MS, POT, UUP, VMW
Join Member's Chat - 164 Comments Here »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Andrew Wilkinson - December 3rd, 2010 4:12 pm
Today’s tickers: UUP, FTI, ZRAN & NDAQ
UUP - PowerShares DB US Dollar Bullish Fund – A sea change in attitude toward the dollar following today’s weaker-than-expected employment report inspired one options player to cut and run from a large bullish position in the US Dollar Bullish Fund this morning. Shares of the UUP, an exchange-traded fund that tracks the performance of the dollar index, are down 1.00% to arrive at 22.93 just before 11:30 am. It looks like the trader originally purchased a massive position in March 2011 24 strike calls to gain exposure to a rising dollar, or alternatively to defend against dollar appreciation, ahead of the Fed’s decision to roll out a second round of quantitative easing. The investor appears to have purchased 105,500 calls at the March 2011 24 strike back on October 27, 2010, at a premium of $0.34 apiece. Since the calls were purchased, the fund rose approximately 3.8% from 22.65 up to this week’s high of 23.52. In hindsight, the trader would have been better advised to act ahead of Friday’s employment data release as he did when he initially purchased the calls ahead of the Fed announcement. Premium on the March 2011 24 strike calls stood at an average of $0.48 each on Tuesday when the UUP touched its intraweek high of 23.52. The plunge in the value of the dollar today combined with the adverse effects of eroding time value on the contracts pushed premium on the calls down significantly. The investor received just $0.24 per call option on the sale of all 105,500 contracts today. Net losses on the closing sale amount to $0.10 each. We do not know whether the options were tied to an underlying position or if the initial long call position was intended as a hedge against a strengthening dollar. These are important factors that would likely change the interpretation of the activity observed on the UUP this morning.…
Tags: FTI, NDAQ, UUP, ZRAN
No Comments »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Phil - November 17th, 2010 7:52 am
Strap in kids, it’s going to be a bumpy ride!
Nomura Holdings joined Goldman Sachs in advising investors to cash out of China and that sent the Hang Seng down 478 points for the day (2%) along with another 2% loss on the Shanghai. “The likelihood of a re-introduction of price controls on food is growing,” Nomura’s Sean Darby said in a report today. “The recent run-up in agriculture prices worldwide and signs of hoarding appear to have pushed the authorities to reconsider draconian measures.” Premier Wen Jiabao confirmed on state television that the cabinet is drafting measures to counter overly rapid price gains. “Command style economic principles generally mean much lower multiples over time on the sector and stocks,” said Darby.
The US has it’s own "command style" economy with B-B-B-Bennie and the Fed commanding our inflation to go higher while China is trying to get their 4.4% inflation under control. The joke is, like Sidney Poitier and and Tony Curtis, our economies are shackled together through the Yuan peg as well as our codependent trading relationship. That has the World’s #1 (falling) and #2 (rising) economies engaged in a Global tug of war that threatens to tear the rest of the World to pieces and it’s just getting worse every day.
With the US pushing top-down QE2 inflation and China’s Premier calling for consumer price controls on food (and soon fuel too as a severe winter is forecast for China) it’s not surprising that Carlsberg’s Chongquing Brewery Company fell limit down (10%) on the Shanghai this morning along with several other food and beverage distributors. Copper, sugar and rubber also went limit-down in China with copper dropping all the way to $3.60 (down 10% in a week) into China’s close at 3am.
Meanwhile Bernanke is like the Sorcerer’s Apprentice: Given the magic hat – he commands his broom army to fetch buckets of dollars to inflate the economy the easy way but his lazy solution quickly turns into disaster as the waters start rising and he finds he has no way to stem the rising tide of inflation. Already, the rest of the world is drowning and not many have China’s ability to bail themselves out. This is not likely to end well…
Europe (who are caught in the middle) is already under tremendous strain with Matt…
Tags: HOV, IYR, NFLX, Oil, PCLN, SRS, USO, UUP
Join Member's Chat - 209 Comments Here »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Phil - November 16th, 2010 8:29 am
It’s hard to be in cash, isn’t it?
I’ve been calling for cash for weeks and now I’m starting to feel like Braveheart, trying to get anxious Members to hold, Hold, HOLD in chat every day as traders, by nature, like to trade and sitting in cash waiting for market certainty is pretty boring. Of course it’s a lot less boring than riding the market down all tied up in positions, isn’t it? As you can see from David Fry’s TLT chart, we did get it right when I called a top on Treasuries at $105 (Sept 24th) but it did take it a little while before it really began breaking down – better early than late in your market timing!
I was early with "October’s Overbought Eight" on the 3rd although, obviously, we had a few huge winners on our short-term plays as we caught that first dip on NFLX, PCLN, BIDU and FSLR while AMZN is looking good as is TLT (Dec $102 puts now $8.50 from net .35 entry, up 2,328% and done, of course). MOS, on the other hand, went up and up but is finally backing off it’s run. Dec $62.50 puts at $2.10 should do quite well if they fail to hold the $65 line.
CMG, on the other hand, has become our white whale, now up 27% from where we first looked at them. The original play was a ratio backspread of 4 March $190 calls at $10.75 ($4,300), selling 5 Nov $175 calls for $8.75 ($4,375) which was a net credit of $75 on the spread. The good news is the March $190 calls are now $51 ($20,400) but the very bad news is the Nov $175s are now $56 ($28,000). We have, of course adjusted this trade several times but it is still very painful to wait out.
An example of a simple adjustment on a trade like this is to roll the calls to 10 Jan $210 calls at $28 ($28,000) and rolling the March calls to 8 June $230 calls at $29 ($23,200) so an extra $2,800 put into the trade to buy a more manageable 6-month spread. When you do this, you have to keep in mind that your net entry has gone up from a $75 credit to a $2,725 debit and killing the trade now would cost $4,800 more so the…
Tags: AMZN, BIDU, CMG, DIA, FCX, FSLR, NFLX, PCLN, QID, SPY, TLT, TZA, UUP
Join Member's Chat - 205 Comments Here »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Phil - October 29th, 2010 8:29 am
Is bad news going to be good news?
Last quarter, after several adjustments, it has been decided that our GDP grew at a 1.7% rate. The general consensus is that this quarter we should be up around 2% but the whisper number is a big miss, down to 1.3%. Slower GDP growth will be GOOD for the stock market as it gives Ben and Tim the excuse they need to crank up the printing presses for some real Zimbabwe-style inflation.
It’s easy to pay off $15Tn in fixed rate 2-year to 30-year notes when your country is cranking out $1Tn bank notes, right? Can this really be the path our nation is following? The markets are certainly betting on it but we have been betting against it with longs on UUP at $22.50 (still there) and a short play on the QID weekly $13 calls at .46 yesterday along with other bearish trade ideas we’ve entered ahead of the GDP as well as the elections and next week’s Fed meeting.
Why can’t we just give up and go with the flow? Well, first of all, you can read my last few weeks of posts or you can read our last few Newsletters so I won’t rehash the great global macros here but I will make the point that (and this may shock you) we are not alone in the World and the things we do, or try to do in our economy, affect the economies of other nations. Perhaps when the US was 40% of Global GDP, we could have gotten away with it but now we are 20% and falling fast yet we still attempt to run our foreign and economic policies as if we are large and in charge.
This is not the way the rest of the World sees us anymore. To the rest of the World we are unrealistic children with dangerous spending habits who happen to owe them A LOT of money. We borrowed $15Tn and our "plan" is to pay them back with hyperinflated dollars that are already discounted 33% from where we began cranking up the borrowing in 2002 (to pay for wars and tax cuts).
Already, other nations are refusing to lend us more money so we have begun to engage in what Bill Gross, the world’s biggest bond…
Tags: CHINA, DIS, FAS, GDP, GE, inflation, NWS, QE2, QID, quantitative easing, UUP, VIA, XLF
Join Member's Chat - 267 Comments Here »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Chart School - September 22nd, 2010 4:40 pm
Courtesy of Chris Kimble
Last week I highlighted the flag/head & shoulders potential pattern in the Dollar ETF (UUP), first chart (see post). As I mentioned in the chart below, a “Break of line (1) would benefit commodities and international investments.”
The dollar did break support, (chart below), commodities/international markets have benefited. Now what? Support line has been broken and now the CRITICAL NECKLINE is breaking to the downside!
A break of the neckline should usher in even lower prices for the Dollar ETF (UUP), continuing to benefit Gold/Silver and other commodities.
One thing that MUST be respected is the 80 level, in the dollar (not shown). 80 has been support many times over the past 20 years. Will post that chart in the next couple of days.
Tags: Dollar, Gold, silver, UUP
No Comments »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Phil - August 12th, 2010 8:59 am
The markets are clearly insane.
I diagnosed manic depression in the markets years ago but it’s been getting worse and worse to the point where we now have mood swings from week to week and sometimes even day to day. Much of this is politically driven with the Conservatives currenly in overdrive – looking to "prove" that every single thing the Democratically-controlled Government does is nothing short of a disaster. Nothing works, nothing will work and nothing proposed will work other than more tax cuts and "throwing the bums out" (the Democratic bums, not the Republican bums).
There is a 24-hour television network that is slightly conservative and, if you look on the Fox web site, you will find out that 8% of the children in the US are born to "illegals," that cutting the World’s largest defense budget will make U.S. less safe (YOU DECIDE – they say), Democrats IGNORE ethics cloud by attending Charlie Rangle’s 80th birthday party, Democrats are using the Tea Party against the GOP (but don’t worry because "the tide is turning at the polls"), the drilling ban is crippling the Gulf, we’re "wasting" Billions of dollars by sending aid to other countries and, best of all, the page is sponsored by BipolarDepression.com!
Heck, after reading that page I’m ready for a few Xanex myself!
The front page of the WSJ is not much better with the headline: "ECB Warns on Economic Recovery" along with their very accurate Page 1 print headline: "Markets Swoon on Fears." Of course, if you actually read the ECB article, you’ll find what they actually said is "The sustainability of the recovery in global and euro-area trade will depend critically not only on a further strengthening of private demand, but also on the robustness and health of the global financial system" IN THE CONTEXT of an article analyzing the collapse of global trade in the wake of the 2008 financial crisis. But that doesn’t make a great headline does it? That doesn’t make you pick up the paper or stay tuned through the commercial so it’s ALTERED, spun to maximize the FEAR reaction in the readers – the one that is most likely to lead to a purchase decision.
The European Union’s Eurostat statistics office, meanwhile, said industrial output dropped 0.1% from May and was 8.2% stronger than last June. Economists…
Tags: Dollar, DXD, Euro, Pound, QID, UUP, Yen
Join Member's Chat - 220 Comments Here »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
by Andrew Wilkinson - January 12th, 2010 4:11 pm
Today’s tickers: IYR, PFE, FXI, WFT, UUP, JPM, GLD, ERTS, STJ & PVH
IYR – iShares Dow Jones U.S. Real Estate Index ETF – Bullish options activity on the IYR flies in the face of bearish momentum across equities in the broader market today. The investor responsible for the optimistic positioning in the February contract appears little concerned with the current 2% decline in the value per IYR share today to $45.31. It looks like the trader sold a put credit spread in order to offset the cost of buying out-of-the-money call options. The three-legged combination involved the sale of 10,000 puts at the February $45 strike for a premium of $1.56 each, spread against the purchase of 10,000 puts at the lower February $42 strike for $0.65 apiece. The net credit of $0.91 per contract received on the credit spread is more than enough to cover the cost of the 10,000 calls purchased at the February $48 strike for $0.55 each. After establishing all three legs of the spread, the trader pockets $0.36 per contract. The investor keeps the full $0.36 only if IYR’s shares trade above $45.00 through expiration next month. Additional profits amass only if shares of the fund rally 6% from the current price to surpass $48.00. We note that the investor responsible for the trade may suffer maximum potential losses of $2.64 per contract if the price of the underlying slips to $42.00 by expiration day.
PFE – Pfizer, Inc. – A bullish risk reversal on the global pharmaceutical company today suggests shares may rally to $20.00 by expiration in June. Pfizer’s shares withstood downward market pressure for the majority of the trading session, and even climbed slightly higher in earlier trading, but edged 0.75% lower to $18.70 by 2:15 pm (EDT). The reversal play involved the sale of 10,000 in-the-money put options at the June $20 strike for a premium of $2.07 apiece, spread against the purchase of 10,000 out-of-the-money call options at the same strike for $0.70 in premium. The investor receives a net credit of $1.37 per contract, which he keeps if PFE’s shares rally up to $20.00 by expiration. The short sale of put options implies the trader is willing to have shares put to him at an effective price of $18.63 each. However, the investor would optimally like to see shares rally at least 7% over the current price to…
Tags: ERTS, FXI, GLD, IYR, JPM, PFE, PVH, STJ, UUP, WFT
No Comments »
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
BlinkBits
BlinkList
September 22nd, 2011 5:36 pm
Courtesy of John Nyaradi.
Jobless claims improve while leading indicators decline in today’s economic report card
by Wall Street Sector Selector Staff
Weekly jobless claims declined to 424,000 from last week’s 432, 000 but stubbornly stayed above the all important 400,000 level for another week.
August Leading Indicators came in at +0.3% compared to 0.5% for July, as the economy continues registering weakness.
Good news came from July Home Prices which rose to +0.8% from the previously reported +0.7%.
But the biggest economic news of the week came yesterday when the Federal Reserve said it saw “significant downside risks to the economic outlook, including strains in global financial markets.”
Global stock markets responded negatively yesterday an...
more from Ilene
May 5th, 2011 5:10 pm
Courtesy of Benzinga
Shares of Priceline.com Incorporated (NASDAQ: PCLN) are trading higher in the after-hours following the release of its Q1 earnings results. Currently, shares are up 2.74%, trading at $548.60; they closed the regular session down 0.67 %, at $533.97.
The company said that its Q1 EPS came in at $2.66 on revenues of $809.3 million; this compares to the Street's estimate of $2.46 per share on revenues of $779.5 million. Revenues rose 38.6% year over year.
"In the 1st quarter, the Group benefited from strong growth in our global hotel business, particularly at Booking.com and Agoda," said Jeffery H. Boyd, Priceline President and Chief Executive Officer.
He added, "Room nights booked grew by 55.8% and our international gross bookings grew by 79% compared to prior year...
http://www.insidercow.com/ more from Insider
March 12th, 2011 9:41 am
Courtesy of Tyler Durden
The damage control to the Fukushima explosion reported earlier is coming fast and furious. According to CNN, "the explosion at an earthquake-damaged nuclear plant was not caused by damage to the nuclear reactor but by a pumping system that failed as crews tried to bring the reactor's temperature down, Chief Cabinet Secretary Yukio Edano said Saturday. The next step for workers at the Fukushima Daiichi plant will be to flood the reactor containment structure with sea water to bring the reactor's temperature down to safe levels, he said. The effort is expected to take two days." While the government is trying to play down the threat from the explosion, it has nonetheless double the evacuation zone radius from 10 to 20 kilometers: "Radiation levels have fallen since the explosion and there is no immediate danger, Edano said. But authorities were nevertheless expanding the evacuation ...
more from Tyler
March 12th, 2011 9:35 am
Courtesy of Doug Short
Note from dshort: I retired this chart series last summer in deference to my prefered inflation-adjusted series that aligns the S&P 500 2000 high with the Nikkei peak in 1989. However, I continue to receive requests for this version, despite the "V" shape of the the recovery since the March 2009 low. This chart series overlays the current S&P 500 with the L-shaped "recoveries" after the Dow Crash of 1929, the Nikkei 225 after Japan's 1989 bubble, and the post Tech Bubble NASDAQ. Click the chart below for a larger version and use the links to see various comparisons.
Click for a larger image
I've ...
more from Chart School
March 12th, 2011 12:00 am
Top 5 RisersStockRatingAnalysis
VLOSTRONGBUYAn increasingly positive growth rate of past earnings, along with improving expectations for long term growth, make Valero a good prospect for high returns.
KROSTRONGBUYKronos Worldwide has been gaining recognition from analysts as a good canditate for achieving higher than expected earnings along with higher overall projected valuation.
SFIBUYiStar is one of the top candidates projected to achieve both higher than previously projected earnings in the short run and a higher earnings growth rate in the long run.
AMATSTRONGBUYApplied Materials has been...
more from Sabrient
March 10th, 2011 4:33 pm
Today’s tickers: S, FTR, JTX & SBUX
...
more from Caitlin
March 6th, 2011 11:25 pm
This post is for live trades and daily comments. Please click on "comments" below to follow our live discussion. All of our current virtual trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading portfolio (strategy, performance, FAQ, etc.), please click here
Optrader
Swing trading portfolio
One trade portfolio
...
more from OpTrader
March 6th, 2011 8:22 am
Here's the newest Stock World Weekly: Illusion Based on a Fantasy
Comments welcome... share your thoughts.
Download Newsletter 3/6/11
Stock World Weekly archives here >
...
more from SWW
March 1st, 2011 9:42 am
February is now past, and the Biotech Porfolio is loaded with winners and a miss (PLX). MRK is down a bit, but I expect that trade to recover, and one could be more agressive and double down on it, or play another round at the Jan13 $30 options for roughly the same price. Below is the summary, and note the grey boxes are ones that did not fill. I am still a fan of BMRN, and like DEPO as well. Now let's look at a few others.
Table 1. PSW Biotech Plays Since January 2011
 
Our newest play is Momenta Pharmaceuticals (MNTA), who is pursuing a three-part business model which includes complex generic equivalents in partnership with the Sandoz division of Novartis, proprietary compounds, and follow-on- biologics (FOB). It seems that this company is tied up in competition/litigation wit...
more from Pharmboy
About Phil:
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Learn more About Phil >>
About Ilene:
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(blogroll, archives,
more).
Contact Ilene to learn about our affiliate and
content sharing
programs.
Favorites Site >>
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
