My old friend, Michael, has been watching the rally for signs of exhaustion or continuation with an eye on trading Direxion's 3x/-3x financial sector ETFs, symbols FAS and FAZ respectively.
Last Friday, he wrote about FAS that it "looks like a classic range rider pattern to me. If so, and if it isn't over, the next stop is $13.50 followed by a dip to around $10." He noted that "it could be getting a bit long in the tooth."
Here's the chart he sent with those comments: Financial ETFs Show The Trouble With Trading Ranges
My old friend, Michael, has been watching the rally for signs of exhaustion or continuation with an eye on trading Direxion's 3x/-3x financial sector ETFs, symbols FAS and FAZ respectively.
Last Friday, he wrote about FAS that it "looks like a classic range rider pattern to me. If so, and if it isn't over, the next stop is $13.50 followed by a dip to around $10." He noted that "it could be getting a bit long in the tooth."
Here's the chart he sent with those comments: Commodity Stocks: Let The Good Times Roll
In case you haven't noticed, several commodities have swung to a bullish mode now, particularly RBOB gasoline, the soybean complex and corn. Less well-developed are the trends in the petroleum complex, softs such as coffee, sugar and orange juice, feeder cattle and wheat.
What's been good for commodities has been better still for commodity producers, at least as measured by their stock prices.
Monday saw new highs scored in the MOO/GCC price ratio. The Market Vectors Agribusiness ETF (NYSE: MOO) tracks nearly four dozen producers of agricultural (ag) chemicals and equipment and livestock that make up the DAXglobal Agribusiness Index. The GreenHaven Continuous Commodity Index ETF (NYSE: GCC) is an ag-heavy fund mimicking the current iteration of the Commodity Research Bureau Index.
A rising ratio indicates the relative strength of commodity stocks versus commodities themselves. Equities signaled a turning point two months ago and, with a resurgent stock market, have been steadily grinding upward ever since.
Full Story: http://www.greenfaucet.com/economy/commodity-stocks-let-the-good-times-roll/51832 Second Week Of Oil Inventory Declines Running ETFs (USO, OIL)
It looks like we are seeing the second week of draws in crude oil and oil products. The Department of Energy is confirming data from the EIA last night showing a second week of inventory declines after weeks and weeks of build-ups. This is lending strength to the United States Oil (NYSE: USO) ETF and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL).
This last week’s crude oil stocks fell by 2.105 million barrels down to just over 368.5 million barrels. We had a rough estimate that oil analysts were expecting a drop of 600,000 or slightly more.
The biggest drop came in gasoline inventories with a drop of nearly 4.4 million barrels to just over 203.9 million barrels. We were looking for a draw of more than 1 million, but nowhere near the 4.4 million reported.
Full Story: http://247wallst.com/2009/05/20/second-week-of-oil-inventory-declines-running-etfs-uso-oil/#more-35079 The Dollar Gets Taken To The Woodshed; How To Play It With ETF’s!
The U.S. Dollar is crumbling, down 3.25% this month. Reality is finally sinking in: enormous budget deficits, out-of-control spending, monster bailouts, and banana republic tactics have put a bulls-eye on the greenback. Don’t get trampled as the dollar gets taken to the woodshed!
Fortunately, some ETFs and ETNs are designed to exploit such an environment. We have highlighted many of them here at investwithanedge.com. Here are are two currency and two gold plays that will allow you to profit from the falling dollar.
PowerShares DB US Dollar Index Bearish Fund (UDN): This one is straight-forward. It’s the inverse of the US Dollar Index - a basket of major currencies. If the USD gains against the index, this ETF goes down. When the Dollar loses, this baby goes up. Any questions? Good, you may proceed to the next level. Costs can chip away at 401(k) plans, Try ETFs
April was a scary month for the big dogs in the financial services industry. After decades of the industry hiding the true cost of 401(k) plans, Rep. George Miller, D-Calif., got some movement for H.R. 1984. Otherwise known as the 401(k) Fair Disclosure for Retirement Security Act of 2009, the bill would set new standards for expense disclosure.
April was a scary month for the big dogs in the financial services industry. After decades of the industry hiding the true cost of 401(k) plans, Rep. George Miller, D-Calif., got some movement for H.R. 1984. Otherwise known as the 401(k) Fair Disclosure for Retirement Security Act of 2009, the bill would set new standards for expense disclosure.
In the same month, 60 Minutes correspondent Steve Kroft brought home the devastation the market crash has brought to millions of near-retirees. He also made it clear that many who piously call for improving 401(k) plans are really lobbyists — shills for the industry.
Can An ETF Get You Rich Off Of The Rich?
Those who are rich or relatively rich in America are responsible for much of our consumption. By some estimates, the top 20% of income earners in the U.S. are responsible for more than half of all money spent.
In an effort to cash in on that elite group, one exchange-traded fund, the Claymore/Robb Report Global Luxury fund (ROB), focused in on companies that generate most of their revenue from sales of luxury goods. In hindsight, it couldn't have come public at a worse time.
Why it seemed like a good idea
When the fund started back in mid-2007, investors' views about America and the world were fundamentally different than they are now. Many expected the rich to keep getting richer, with new wealth being created in emerging countries that would lead to increased consumption throughout the world. If that had happened, luxury purveyors would probably have seen their top lines continuing to grow, and their stocks would likely have continued to perform well.
In particular, the fund offered a quick way to get instant diversification into dozens of companies. The stocks the ETF holds include both American and international companies, including Mercedes maker Daimler (NYSE: DAI), luxury retailers such as Coach (NYSE: COH) and Nordstrom (NYSE: JWN), and casino operator Wynn Resorts (Nasdaq: WYNN). About a quarter of its holdings are U.S.-based, with European stocks making up 60% of the fund's portfolio.
Full Story: http://www.fool.com/investing/etf/2009/05/19/can-you-get-rich-off-of-the-rich.aspx Tapping Into Top Country ETFs
A quick glance at foreign stock ETFs will show you what’s happening around the globe.
Since the beginning of the year, emerging market stocks (NYSEArca: EEM) are up 27.20%, making them the best performing segment within the global equity market.
Certain regions of the world are doing better than others. European stocks (NYSEArca: VGK) are up 2.37%, stocks from the Pacific Rim (NYSEArca: VPL) are up 0.80% while Latin American stocks (NYSEArca: ILF) have soared 32.61%.
What are some general characteristics of country specific ETFs?
Most single country ETFs own less than 100 stocks within their portfolio, making them concentrated investments. Along with owning just a handful of individual stocks these types of funds are focused on narrow industry sectors. For example, the performance of the Market Vectors Russia ETF (NYSEArca: RSX) is closely tied to the performance of commodities, like crude oil and industrial metals. Also, country specific ETFs often carry higher annual expenses compared to more diversified foreign stock ETFs.
Single country ETFs offer big opportunities, so let’s evaluate 4 key funds: See full story for funds.
Full Story: http://www.etfguide.com/commentary/547/Tapping-into-Top-Country-ETFs/
Better Banks Abroad? Take A Look At Italy’s ETF
Italy's Banks: A Conservative Lending Business
From the United Kingdom we travel south to the Mediterranean, where an Italian ETF comprised mainly of financials offers investors an opportunity to participate in some of Europe's safest banks.
The MSCI Italy Index Fund (NYSE:EWI) holds approximately 40% financials along with a number of utility, energy and other Italian large caps, serving as a proxy for the broader Italian market. Italian banks are currently attractive because they were not exposed to subprime loans in the way many other European nations' banks were.
Italian banks engage in a far more traditional banking business than their continental counterparts, and therefore don't assume the risks of brokerages, insurance companies and other specialized financial institutions that require gains from underwriting and investments just to compete. The shares are currently yielding a very safe 5.49% annual dividend and have appreciated by over 60% in just the last eight weeks.
Full Story: http://community.investopedia.com/news/IA/2009/Better-Banks-Abroad-HBCBCSEWI0519.aspx MacroShares Home Price IPO Stalls; New Plans
MacroShares’ planned initial public offering for its Major Metro Housing exchange-traded products has failed, due to an imbalance in orders between investors wanting to buy upside exposure to U.S. residential home prices and those wanting to invest on the downside. The company says it will now launch the products using a traditional, market-maker-driven process; the new launch is scheduled for sometime in the next few days.
"We set a $125 million minimum for the initial public offering and we had IPO interest that was a multiple of that," said MacroShares Chief Executive Sam Masucci. "Ultimately, however, we could not get $125 million to cross at appropriate prices."
The Major Metro Housing Up (NYSE Arca: UMM) and Major Metro Housing Down (DMM) are designed to deliver 300% and -300% of the return of the S&P/Case-Shiller Home Price 10 Index over the next five years. They will achieve that return not by buying actual houses, but by following MacroShares' patented "teeter-totter" product structure.
Under that structure, the Up and Down Macros hold Treasury securities as their sole asset. As the benchmark index moves up or down, those Treasuries are transferred back and forth between the Macros. The structure allows MacroShares to launch products tied to any reference price, including previously uninvestable benchmarks like national home prices.
To function, however, there must be an equal number of Up and Down shares, and the price of those paired shares must sum to a predefined number; in the case of the housing Macros, $50 (i.e., if UMM is worth $30, DMM must be worth $20). And that's where the IPO had problems, according to MacroShares.
The firm tried to raise assets for the products through a Dutch-auction IPO, wherein investors "bid" for IPO shares at prices of their choosing. At the end of the IPO, software was supposed to match up orders to ensure the largest possible IPO at the best possible price.
Full Story: http://www.indexuniverse.com/sections/newsinfocus/5853-macroshares-home-price-ipo-fails-traditional-launch-to-follow.html VIX Breaks 30, Kills VIX ETF/ETN Trades (VXX, VXZ)
The CBOE Volatility Index, or the beloved ‘VIX’ or ‘Fear Index,’ has reached a level not seen since September, 2008. While the low yesterday appears to be 30.0, we have not seen this number below 30.0 since September 19, 2008. In October we saw a high of 89.53 and this was around 50 even at the market lows in March. It seems there was some price sensitivity to it as the index values came lower and lower. The drop in the VIX is also having some key impacts on the ETF’s (actually ETN’s) iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX) and the iPath S&P 500 VIX Mid-Term Futures ETN (NYSE: VXZ).
The VIX ETF’s (actually ETN’s) are hitting new lows as well. The iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX) is down 2.2% at $76.16, compared to a 52-week range (actually about 3+ months is all) of $77.49 to $120.00.
Full Story: http://247wallst.com/2009/05/19/vix-breaks-30-kills-vix-etfetn-trades-vxx-vxz/ Who’s the number one asset manager?
BlackRock Inc. and Bank of New York Mellon Corp. are competing to become the world’s biggest money manager as stock markets show signs of recovery. Each company is in talks to buy Barclays Plc.’s fund unit, whose $1.5 trillion in client assets ranks highest in the industry, people familiar with the matter said last week. Each covets Barclays Global Investors’ (BGI) exchanged-traded funds, quantitative index investments and securities-lending business, analysts said.
“This will change the landscape, whether Bank of New York or BlackRock gets it,” said Geoff Bobroff, president of Bobroff Consulting Inc., an East Greenwich, Rhode Island, firm that advises mutual-fund companies.
BGI, based in San Francisco, would vault BlackRock, the largest publicly traded money manager in the US, to $2.81 trillion in assets. Bank of New York Mellon, the world’s biggest custody bank, would rise to $2.38 trillion, surpassing firms including Fidelity Investments and Vanguard Group Inc. The New York-based companies would gain more customers outside of the US and put pressure on their main rivals—Pacific Investment Management Co. for BlackRock, and State Street Corp. for Bank of New York Mellon—to catch up. Playing India’s Stock Surge With ETFs And ETNs
Global investors were greeted with a massive rally in India's stock market to start the week after the Congress Party-led alliance scored a victory in the emerging market country's general election.
Investors are betting in a big way that the ruling party's win can provide a boost to India's economy, and in their haste to snap up shares they triggered market circuit-breakers Monday as stock benchmarks surged to double-digit percentage gains.
"I think the market still has the potential to go up by another 10% to 15%," said Deven Choksey, managing director at K.R. Choksey Shares & Securities in Mumbai. See earlier coverage.
For investors who don't have the time or means to purchase individual Indian stocks, exchange-traded funds and notes can provide a broad-based, indexed approach for catching a prolonged rally.
Choices include Barclays iPath MSCI Index Index ETN INP, PowerShares India Portfolio PIN and WisdomTree India Earnings Fund EPI. Also, WisdomTree Dreyfus Indian Rupee Fund ICN follows the local currency, while First Trust ISE ChIndia Index Fund FNI blends Indian and Chinese stocks in a single wrapper.
The Indian-stock ETFs and ETNs enjoyed gains of more than 20% on Monday as the U.S.-listed funds joined in the buying frenzy. Exchange-traded portfolios following overseas market trade in the U.S. even while the underlying markets are closed due to time-zone differences. As such, some traders use them as a rough gauge of fair value after international markets cease trading.
Full Story: http://www.menafn.com/qn_news_story.asp?StoryId=%7BFE079770-67F6-406E-BA08-1F198E1753DA%7D Time To Follow The Top Hedge Funds And Buy Gold ETF?
So the two top holders of the gold ETF are revealed as hedge funds in their first quarter regulatory filings.
Paulson & Co, whose founder was the highest paid fund manager in 2007 thanks to a well-timed bet against sub-prime mortgages, bought 31.5 million shares in GLD, the gold exchange traded fund, in Q1. Meanwhile, Lone Pine was not far behind with its purchase of 26.5 million shares.
But Paulson has also acquired stock in AngloGold Ashanti to the tune of a cool $1.3 billion. The man who called the US housing market correctly is clearly hoping to do exactly the same with the gold market, and for the record he achieved a double-digit gain in 2008, along with a few stars like George Soros while the average hedge fund loss was 19 per cent.
Follow the stars
Is this hedge fund star on to another winner, or will commodity price deflation send this good fortune into reverse? Former performance is no guarantee of future performance but it is often the best guide we have.
In 2007 few called the US housing market turn, and yet with hindsight this was a bubble that ought to have been obvious. Could we not say the same now of the bubble in US bonds? Interest rates are too low, and the inflation risk too high.
Full Story: http://news.goldseek.com/PeterCooper/1242736780.php The Soul of an ETF
What makes an ETF an ETF? What distinguishes an Exchange-Traded Fund from other investment securities?
When the first US-listed ETF, the SPDR S&P 500 (SPY), arrived on the scene in 1993 it had a number of features setting it apart from every other product that come before it. Yet in some ways it was quite familiar as well. The fact that it was a fund consisting of many stocks was nothing new; mutual funds had been around for decades.
The fact that it tracked the S&P 500 index did not make it unique; the Vanguard 500 (VFINX) was launched in 1976. The fact that it was a fund that traded all day on a stock exchange was also nothing new; closed-end funds had also been around for decades. So what made this product so special? What set it apart from everything else? Two features provided the soul of what was to become the ETF industry:
First, SPY had an Intraday Indicative Value (IIV), sometimes just called the Indicative Value, Underlying Trading Value, or Net Asset Value (NAV). Additionally, this IIV was updated every fifteen seconds while the market was open. For this to be possible, the fund’s holdings have to be 100% transparent because the actual value of the underlying portfolio can be updated only if the actual holdings are fully disclosed.
Second, the first ETF had the ability to create new shares and redeem existing shares through an in-kind exchange process. Since the holdings were known, a large institutional investor (called an Authorized Participant) could put together a basket of stocks that exactly duplicated the ETF’s holdings and exchange these stocks for shares of the ETF (and vice versa).
Full Story: http://seekingalpha.com/article/138439-the-soul-of-an-etf Profit From America’s Empty Shopping Malls With These ETF’s!
While having lunch with my mother yesterday, she told me she’s never seen stores and malls so empty. And she should know - shopping is her favorite pastime.
But you don’t need the keen insights of Mrs. L. to know that the retail sector is struggling big-time. Many malls and shopping centers have more vacancies than they’ve ever had.
With unemployment headed towards the double-digits and the personal savings rate quadrupling since 2007, this is hardly surprising. There’s simply a lot less money sloshing around the retail sector. And this is having a negative trickle-down effect on a couple of other sectors… Commercial real estate is in trouble. Perhaps more trouble than the housing market was when it started its slide. Consider this:
Delinquencies in retail office space have doubled over the past six months. And they’re up 80% in apartments and industrial buildings.
Commercial loan delinquencies have risen from 1% to 5% in the past year. General Growth Properties (Pink Sheets: GGWPQ), second-largest mall owner in the U.S., recently became the largest U.S. real estate bankruptcy in history.
Simply put, commercial landlords are in a jam. With fewer customers patronizing their properties and major tenants closing up shop, there aren’t many options to improve their businesses. After all, it’s not easy to replace a big-box retailer like Circuit City. And the loss of that store leads to declining traffic at the other retailers in the mall. 
