All ETF Daily News Articles

Why All Eyes Are On Financial ETFs This Earnings Season

bankEarnings season is upon us and investors have been anticipating this news whether they like the numbers or not; markets and exchange traded funds (ETFs) are sure to respond accordingly. Financials are of particular interest after Wells Fargo’s preliminary earnings were released Thursday morning.  Read full story here: http://www.etftrends.com/2009/04/why-all-eyes-are-on-financial-etfs-this-earnings-season.html
ETF BASIC NEWS April 10, 2009 1:59pm

Was a Wells Fargo Leak Responsible For Staggering Volume On XLF?

whisperThere were two big pieces of news this week contributing to the run in the financials. First was the Tuesday-night leak that the Treasury would expand the TARP to cover the insurers. Shares of companies like Hartford (HIG) and Lincoln National (LNC) soared over 20% the next day.   Then this morning, Wells Fargo (WFC) came out with its positive pre-announcement and the banks are rallying hard on the news. So were traders tipped on the news? Maybe. There was nothing particularly unusual yesterday, but Tuesday there was some very aggressive buying in the XLF (the financial ETF) right at the close. On Tuesday night, the OptionMonster blog cited "staggering" volume in the ETF -- a massive bet right at the close, just hours before the TARP insurance news was set to break. Bear in mind that the XLF includes both banks and insurers. OptionMonster's Jon Najarian concludes that both the news and the Wells Fargo news may have been leaked based on this activity. By: Joe Weisenthal Source: www.buisnessinsider.com
ETF BASIC NEWS April 10, 2009 9:48am

Pisani: Why ETFs May Boom Soon

bob-pisaniCNBC reporter and Trader Talk blogger Bob Pisani says Morningstar predicts that exchange-traded funds (ETFs) may soon see a rich inflow of investor money.

In his regular CNBC 101 investor segment, Pisani explained why.

 "I've championed ETFs," he said, as a low-cost way to play the market, with "lots of diversification and lots of products to choose." But there's been a problem keeping the funds from reaching their full potential: they cannot penetrate 401(k)s, thanks to brokerage fees, which obstruct cost-dollar averaging.

He notes that that 401(k)s currently hold some $2.5 trillion; there is only $541 million in ETFs. (yes, that's trillions vs millions.)

But Pisani reports that Morningstar has projected that 10 percent of 401(k)s could be rolled over through the next several years, bring a torrent of cash to largely unexploited ETFs — potentially boosting ETFs by nearly 25 percent.

Source: www.cnbc.com

ETF BASIC NEWS April 10, 2009 9:43am

Hedging Inflation With TIP ETF

inflation1Is inflation in the US a good thing or a bad thing for individual investors? The answer is that it depends. Inflation can eat away at your purchasing power and your stock returns, or it can become an investment opportunity. This article will introduce you to an interesting exchange traded fund (ETF) that can help you increase your protection against the problems of rising inflation while leveraging the opportunity to profit. The US Treasury sells notes of different yields, maturities and terms. One type of those notes available for purchase by retail and corporate investors are known as TIPS or Treasury Inflation Protection Securities. A TIPS note yield is increased or decreased based on changes in the level of CPI or consumer price inflation. If CPI or inflation is rising, the face value of a TIPS note increases and similarly the face value may fall if CPI falls. This means that TIPS are a hedge against inflation. As prices rise, the value of a TIPS note increases offsetting some of those losses due to inflation. The interest paid on the bond also increases as it is paid on the new increased value. You can buy TIPS from the Treasury through Treasury Direct or from your broker, which is a fine alternative but there is a way to do this through the stock market as well through a TIPS ETF (TIP). You can see this ETF compared to the S&P 500 in the chart below. As you can see, TIP has outperformed the stock market during the last 12 months, which is not surprising considering the recessionary environment in the US. From a fundamental and technical perspective it seems that one of the few things we can count on in this environment is higher levels of inflation in the long term. That may make the TIP ETF an attractive mid-term value play after the correction of the past few months. From a portfolio management perspective this is a good way to add protection against inflation and to insert an element of fixed income to your diversification strategy. Bottom line: Higher rates of inflation are either a problem or an opportunity. Which it really turns out to be is up to you as the investor. Source: www.learningmarkets.com
ETF BASIC NEWS April 10, 2009 9:07am

A Potential Flood Of Money Into ETF’s?

money21You may wonder why there are very few, if any, ETFs to choose from in corporate-sponsored 401(k) plans. It's a simple answer: Just like when you buy a stock, every time you buy shares of an ETF, you pay a transaction fee. With open-end mutual funds in 401(k) plans, the contributing employee pays no transaction fee. Even an $8 fee would be a material performance drag against an investor that is contributing a few hundred dollars every other week. ETF providers would love to break down this barrier given that the majority of the $2.5 trillion parked in 401(k) plans is invested in open-end mutual funds. We don't see an easy solution to this issue, but it may be irrelevant. We predict that over the next few months, 401(k) money will be rushing to ETFs--but in the form of newly converted IRAs. Widespread adoption of ETFs is expected to continue as some of the 78 million baby boomers retire and look to roll over their 401(k) accounts. We also see some silver lining (at least for financial advisors) stemming from the currently difficult economic backdrop. With the massive number of layoffs announced by companies left and right, we think as much as 10% of the 401(k) market could "hit the street," so to speak. As of 2008 year-end, there was about $2.5 trillion in 401(k) plans, according to estimates from the Employee Benefit Research Institute. In our scenario, this would represent $250 billion in assets poised to leave the umbrella of corporate retirement plans. Then, let's assume that only half of this money coming from retirement accounts goes into ETFs. Such a case would result in about $125 billion flowing into the ETF industry. Excluding the market's impact, this alone would represent 23% growth in assets under management; the ETF industry closed out 2008 with approximately $541 billion in assets. Add to that the fund flows from retiring baby boomers, and we can forecast at least another $75 billion flowing into ETFs. We understand some may be critical of this very rough estimate, so let's look at the numbers in a different way. Another way to gauge the potential market opportunity would be to do a simple calculation based on the number of jobs recently lost. According to the Bureau of Labor Statistics, total nonfarm payrolls have fallen by an astounding 3.7 million over the past six months. For our back of the envelope calculation, let's assume that the average account balance is $75,000. Given that many of the layoffs were in the high-paying financial sector as well as the fact that many of these individuals were long-tenured employees, we think our assumption could prove conservative. In any case, if we take the total amount of jobs lost and multiply that by $75,000, the amount of assets poised to "hit the street" is $278 billion. Again, assuming half of that money makes its way to the ETF industry, we're looking at about $139 billion flowing into ETFs. Note that this crude estimate of industry growth--26% year over year--is based solely on recent job losses. In our view, any way you slice it, there is a substantial amount of assets poised to move from 401(k) plans into other self-managed account structures, and savvy financial advisors can capitalize on this by educating these folks about the numerous advantages of using ETFs. If recent fund flow activity is any indication, many investors will be looking to roll over their money and park it in low-cost, transparent, and liquid securities--and ETFs fit the bill. An argument against ETFs versus mutual funds is that transaction costs with ETFs could drag down returns, thereby negating any benefit from their lower expense ratios. This is a valid argument when frequent and small purchases are made, much like in 401(k) plans. However, because we are looking at large one-time rollovers, we think it would make sense for many of these investors to go the ETF route. Also, with income grinding to a halt (job cuts) or declining significantly (retirees), we doubt that unemployed or retired folks looking to roll over their accounts will be interested (or have the means) to consistently "drip" money into their accounts each month. So who stands to benefit from this shift? The financial advisors at wirehouse firms such as  Morgan Stanley (MS) and Bank of America's (BAC) Merrill Lynch and even do-it-yourself brokerages such as Charles Schwab (SCHW) and  TD Ameritrade (AMTD) are probably licking their chops. Financial advisors have been migrating more and more toward using asset-allocation models, and ETFs allow them to execute these strategies at a low cost. Advisors would also earn a small take on transaction costs because ETFs trade on an exchange just like stocks. Of course, we would caution investors against patronizing any financial advisor who trades excessively in order to generate fee income. By: John Gabriel Source: www.morningstar.com
ETF BASIC NEWS April 9, 2009 12:22pm

Wells Fargo Reports $3B Net Income, XLF ETF UP 7.4% Pre Trading

wellsfargo NEW YORK (Reuters) - Wells Fargo & Co on Thursday reported preliminary first quarter earnings of $3 billion, or about 55 cents per common share after preferred dividends, a stronger-than-expected result that sent the bank's shares up 28 percent in premarket electronic trading.  The results also bolstered the overall sector, sending the Select Sector SPDR Financial ETF 7.4 percent higher in premarket trading.  The following is reaction from industry analysts and investors:  WILLIAM SMITH, PRESIDENT OF SMITH ASSET MANAGEMENT INC, IN NEW YORK:  "There are good guys and bad guys, and we're not talking about the bad players here. Not all banks are good, and this is going to start separating the good actors from the bad actors."  "Still it's positive and it should be good for the entire sector. The tide lifts all ships."  CLEVELAND RUECKERT, MARKET ANALYST, BIRINYI ASSOCIATES INC. STAMFORD.  "It's definitely been taken well by the market - it's a very positive number. I'm not sure what the details are going to be but I suspect a lot of the stronger-than-expected earnings has to do with change in the accounting rules that were passed recently.  "Wells Fargo serves as good catalyst to get things going and hopefully we can have a fairly positive day."  "I think so (this is mainly down to changes in mark-to-market rule). The market reacted very strongly to number that came across. I'm sure that number will be scrutinized through out the day to really figure out what's going on there, because we've seen pretty significant discrepancies for actual earnings versus analysts estimates throughout this whole credit crisis so there's obviously stuff going on there that the bank analysts weren't aware of. We'll have to see what the details are but on the surface it's very positive."  MICHAEL FARR, PRESIDENT, FARR, MILLER & WASHINGTON, IN WASHINGTON  "They have been growing and expanding share. And that's what we had been saying that Wells Fargo would do and some of the stronger banks would do. They are probably one of the best positioned to expand and benefit from the particularly low mortgage rate environment. It's a huge portion of their business. So they are seeing some gains.  "I don't think that this is an all-clear for Wells Fargo because they have a considerable portfolio of loans on their books that are somewhat concerning. They have got a huge portfolio of home equity loans.  "The loans on the books are not getting the attention they deserve. It's true for most of the financials right now.  "It's a very solid operator. But with that huge portfolio of home equity loans and still a lot of mortgage loans on the books and some subprime -- we still got housing prices that are declining in this country, and that makes all of those loans problematic.  "Any respite from the torture chamber is worth hearty celebration. That our time in the chamber is done remains unclear."  MATT MCCORMICK, PORTFOLIO MANAGER AND BANKING ANALYST ATBAHL & GAYNOR INVESTMENT COUNCEL, INC:  "The table is set to exceed on the upside for a lot of these guys considering expectations are so low, and certainly Wells Fargo blew the cover off the ball.  "In this terrible environment, to exceed on the upside is going to raise the bar pretty high. Wells Fargo is clearly a dominant bank, one of the best operators out there, you're going to really see the cream rise to the top."  "Instead of this stress test the government is doing, you're going to see a real stress test come out now. This is the real stress test -- how people handled this environment, which was the worst in modern market history for them."  "The government is not going to be the type of business partner you want going forward. If these guys now have the ability to exceed on the upside and get out of the TARP restrictions, stand on their own two feet, wasn't that the goal in the first place?"  NICK KALIVAS, EQUITY MARKET ANALYST, MF GLOBAL RESEARCH, CHICAGO  "It is a surprise. It confirms some expectations that the banks were doing better with their charge-offs. Some lower-rated assets are rallying and the relaxing of the mark-to-market rule is also helping. This public-private plan is helping with the marking up of assets. No one expects them to be this good. It's possibly a good indicator for the market."  (Reporting by Richard Leong, Ed Krudy, Paritosh Bansal and Jonathan Spicer) Source: reuters
NYSE:GLD April 9, 2009 9:03am

Ratio Backspread and the ETF Explained

stockeducationJocelynn Drake from schaffersresearch.com posted a very easy to read explanation of Ratio Backspreads. This option strategy is used with stocks and ETF's when investors are pretty certain the market will move in a particular direction, but want to limit their risk. We found this to be a very easy read and well worth sharing.  Please see the teaser below, followed by a link to the entire story:
Welcome back to another in a series of articles that examines the thought process behind a variety of option strategies using stock and/or exchange-traded fund (ETF) options. This column will examine a potential ratio backspread, the pros and cons of putting on a ratio backspread, and the profit and loss potential of this position. So, let's jump into this interesting strategy. Ratio backspreads are relatively complex strategies employed by investors who expect a big move from the stock, are relatively sure of the direction, but still want to limit their risk. The strategy is structured to allow for sizeable profits if the investor's projections on timing and direction are correct. In fact, the trader could potentially book a small profit, if the directional prediction is incorrect, The call ratio backspread, executed if a trader is bullish on the underlying stock, index, or ETF, involves selling a number of calls at one strike and buying more calls at a higher strike price. Typically, a 1:2 or 2:3 ratio is employed, but the ratio is always 2:3 or less. The position entered is bullishly aligned because more higher-strike (out-of-the-money) calls are purchased than lower-strike (generally in-the-money) calls are sold. The cost of the long calls is modestly offset by the sold call, which helps alleviate the cost burden and helps compensate for the impact of time decay. Meanwhile, a put ratio backspread is the exact inverse. In this bearish strategy, the options trader would buy a number of puts at one strike (usually in the money) and then sell a smaller number of puts at a lower, out-of-the-money strike. In both call and put backspread situations, all of the options involved should have the same expiration date. If a ratio backspread is structured properly, proceeds from the options sold will match or exceed the price of the purchased options and create a hedge. This hedge allows a trader to book a small profit or break even if the trade moves against him. The trade-off is that the upside breakeven point is higher compared to the outright purchase of a call that is naked. Full Story:  http://www.schaeffersresearch.com/commentary/content/ratio+backspread/observations.aspx?click=home&ID=92307
ETF BASIC NEWS April 8, 2009 4:40pm

Large Bullish XLF ETF Purchase; Investor Bet’s on a Financial Rally

spdr CHICAGO, April 7 (Reuters) - The Financial Select Sector SPDR exchange-traded fund XLF.P appears to have attracted a huge bullish stock and option combination trade during the last few minutes of Tuesday's session, according to one trader.  The trade involved the purchase of 100,000 May $8 XLF puts and the purchase of XLF stock at almost the same time, in what professional traders call a synthetic call option, said Jon Najarian, a founder of Web information site optionMonster.com.  In the last few minutes of trade, two huge blocks of May $8 XLF put options of 50,000 contracts were each bought for a premium of 43 cents a contract on the Chicago Board Options Exchange as the ETF shares fell, he said.  The XLF dropped 3.18 percent to $9.13. The put trade represented 10 million shares of stock. The exact number of shares bought in the ETF was not available. The fund's shares would have to rise to $9.58 by May expiration in order to break even on the trade. The strategy enables the investor to take a substantial bullish position in the XLF and could be same as buying a May $8 XLF call option, which gives the right to buy the fund's shares at $8 apiece. "This trader is expecting a resumption of the recent rally in the financial sector," Najarian said. An equity call option conveys the right to buy the company's shares at a fixed price within a specified time period while a put option gives the right to sell the security's shares at a given price and time. (Reporting by Doris Frankel; Editing by Diane Craft) Source: reuters.com
NYSE:GLD April 8, 2009 9:13am

Understanding Triple Leveraged ETFs

3xMuch has been written about the math behind leveraged ETFs and mutual funds, yet most investors fail to realize the true impact. As a result, many of these products have been ridiculed for failing to meet user expectations. Contrary to popular belief, leveraged and inverse products that reset their exposure level every day are not new. Rydex introduced the concept with the launch of Rydex Nova (RYNVX) in 1993 and Rydex Ursa (RYURX) in 1994 (note: Ursa has since been renamed Rydex Inverse S&P 500 Strategy). However, as more and more leverage is applied in these products, the adverse impacts appear to grow exponentially. Direxion introduced 3x ETFs in late 2008, and now we have five months of data to look at. For this example, I have chosen two inversely related leveraged funds: Direxion Financial Bull 3x Shares (FAS) and Direxion Financial Bear 3x Shares (FAZ). The chart below illustrates the returns for the five-month period from 11/6/2008 through 4/6/2009 for the following four scenarios:
  1. Green Line: Buy and hold FAS = -86.3%
  2. Red Line: Buy and hold FAZ = -76.9%
  3. Yellow Line: Buy and hold equal amounts of FAS and FAZ with no rebalancing (what some might consider a perfect hedge) = -81.6%
  4. Cyan Line: Buy equal amounts of FAS and FAZ and rebalance every day (a lot of work) = -25.0% (not counting transaction fees and slippage)
click to enlarge
Chart and data by www.FastTrack.net
Even if you go to the trouble of rebalancing every single day the market is open, you are still fighting a headwind of 25% for a five-month period. Most people would consider that impossible to overcome on any kind of continuing basis. I’ve said it before and I’ll say it again: Leveraged ETFs can be great short-term trading instruments, but make sure you understand the longer-term impact before holding any of them for more than a few days. All the ETF sponsors of leveraged and inverse products provide warnings and educational material. Here are links to such information for DirexionShares, ProShares, and RydexShares. Source:  Ron Rowland www.seekingalpha.com
NYSE:FAS April 8, 2009 7:58am

401kDIRECT and Mid Atlantic Trust launch new ETF program

401k401kDIRECT, a provider of retirement plan administrative services, has partnered with Mid Atlantic Trust Company to launch a new program that gives advisors and plan sponsors access to exchange traded funds. The ETFs will be available for 401k, 457 and 403b plans on the 401kDIRECT platform by means of the Mid Atlantic ETFxChange Program. The exchange traded fund (ETF) program offered through 401kDIRECT and Mid Atlantic Trust Company is expected to eliminate many of the administrative challenges that ETFs once brought to daily recordkeepers, creating a cost effective ETF program for daily valued retirement plans. Mid Atlantic Trust Company is an independent provider of trust and custody solutions for retirement plans. The program aims towards providing low fixed trading costs, ability to trade like mutual funds, providing virtually unlimited daily trading and ability to be offered alone or with traditional mutual funds. David Wade, president of 401kDIRECT, said: "We are excited to bring this program to our clients. Our Advisors and TPAs will now be able to take advantage of the benefits of ETFs and construct diverse investment portfolios using ETFs, Mutual Funds, CIFs or any combination of these investment vehicles. They will be able to build a portfolio that best meets the needs of their clients, and most importantly, will be able to do so in a low fixed cost environment." Source: insurance-business-review.com
NYSE:GLD April 7, 2009 9:43pm

SEC Meets Wednesday to Discuss the Uptick Rule

As you may know Jon Najarian has been calling for a restoration of the uptick rule. Well, an important supporter may have just joined his ranks.

In his Congressional testimony Federal Reserve Chairman Ben Bernanke suggested had the uptick rule been in effect it might have had some benefit in preventing the current financial crisis.

As you might know, the uptick rule, which only allowed short sales when the last sale price was higher than the previous price, was repealed by the SEC in 2007 because the agency found that changes in trading strategies rendered it ineffective.

According to Investopedia, “By entering a short sale order with a price above the current bid, a short seller ensures that his or her order is filled on an uptick.”

And over the week-end the New York Times reported that new SEC Chief Mary Schaprio is considering reviving the uptick rule.

The Fast Money traders have mixed thoughts on the move, but overall they don’t think it will do much. Following are their comments.

“I think the uptick rule is just another way to legislate shiny happy people,” bristles Jeff Macke.

“Considering we trade on decimals now I think the uptick rule is a waste of time,” adds Karen Finerman.

“Oh come on,” counters Zach Karabell. “You have to have some regulatory framework or you'd have everyone in a mosh pit of trading and there would be no order to any of it.”

"If you make the margins a nickle or a dime wide, the uptick rules makes sense," adds Dylan Ratigan. "Without that it makes no sense."

Source: cnbc.com

ETF BASIC NEWS April 7, 2009 4:26pm

Index Funds, Where Are We Now? (SPY, AFK, EFA)

portfolioStaying on top of up to the minute news like President Obama’s trip to the G-20 conference or Madonna’s pending adoption of a child from Malawi can distract investors from taking a breather to look back in time in order to get a better direction of where their investments may be headed in the future. Let’s take a look at how a couple of major indexes and index funds have performed since the beginning of the year to determine if your portfolio has the right balance of risk and return.

Focus

ETF

Year to Date

U.S. Dollar PowerShares DB US Dollar Index Bullish (NYSE:UUP)

2.7%

U.S. Equity SPDRS S&P 500 Index (NYSE:SPY)

-7.4%

Technology PowerShares QQQ (Nasdaq:QQQQ)

8.5%

Europe, Australia-Asia iShares MSCI EAFE Index (NYSE:EFA)

-11.5%

Energy United States Oil (NYSE:USO)

-8.7%

Precious Metals iShares Comex Gold Trust (NYSE:IAU)

-1.5%

Fixed Income iShares Barclays 7-10 Year Treasury (NYSE:IEF)

-4.0%

Frontier Markets Market Vectors Africa ETF (NYSE:AFK)

-3.2%

As of market close, April 6, 2009.
When will the correction begin? Everyone wants to know when the economic situation will improve, but the truth is no one knows for certain. The U.S. is ending its first full quarter with President Obama and his administration in office. The call to repair the ailing U.S. economy has been met with the passage of a stimulus package. Time and the ability of businesses to serve existing and push forward into new markets will help drive the eventual economic recovery.  The S&P 500 index, as tracked by the SPDRS S&P 500 Index (NYSE:SPY) fund, has continued to fall downward over the last year; however, this fund did start to rise in recent months as investors moved in to take advantage of low indexes in early March when the Dow Jones Industrial Average fell below 7,000 and the S&P500 went below 700. (For a complete guide, check out our Index Investing Tutorial.) Pullbacks and Producers Gold futures prices, followed by the iShares Comex Gold Trust (NYSE:IAU) fund, have continued to trade just under $900/oz. IAU hit as high as $91.44 on April 1, and since then has dropped about 6% to close April 6 at $85.37. The U.S. dollar index, followed by the PowerShares DB US Dollar Index Bullish (NYSE:UUP) fund, was also up for the year nearly 4% until April, but has seen a slight drop in the last three trading sessions. Investors have sought out these two investments as protectors against the uncertainty in the markets.  Technology has jumped since the beginning of the year as top PowerShares QQQQ (Nasdaq:QQQQ) fund holdings like Apple (Nasdaq:AAPL), Qualcomm (Nasdaq:QCOM) and Google (Nasdaq:GOOG) all continued to trade in positive territory through April 6. Frontier Markets It’s interesting to note the performance of Frontier markets covered by funds like Market Vectors Africa ETF (NYSE:AFK) in comparison to traditional international investments covered by the iShares MSCI EAFE Index (NYSE:EFA) fund. Frontier markets include areas like South Africa, Nigeria and Morocco. Government corruption, hyperinflation and human rights abuses are a part of the story for the emerging economies of the African continent, but it is not the entire picture. Investors with a high-risk tolerance and an extended time horizon may consider doing more research in this region. Final Thoughts The point of this index fund exercise is a reminder to investors to constantly focus on maintaining a diversified portfolio of investments. In addition, investors should also adopt an investment process for rebalancing their holdings by selling a percentage of winning investments and reinvesting those earnings in whatever you deem important or back into the other investments in your portfolio lagging others. (Find out whether these funds can really deliver low-risk returns, read Enhanced Index Funds - Shiny Paper Or Sparkling Gift?) Source:  By Gregory S. Davis   www.investopedia.com
ETF BASIC NEWS April 7, 2009 3:19pm

Soros “Very Concerned” About Rising Global Unrest, But Sees Positive Signs In Russia

george-sorosThere are always tensions somewhere in the world but the global economic crisis has billionaire financier George Soros "very concerned" about the potential for rising social unrest. "You have a collapse of the financial system that impinges on the life of ordinary people in a very big way," Soros says. "There's terrible human suffering and a lack of understanding why and where it comes from. It creates anger. People want to hit out." Signs of this anger and potential unrest were evident at the G20 meeting last week, as well as current protests against Ukraine's ruling party and attacks against the Gypsy population in Soros' native Hungary. Then there's Pakistan's internal battle against radical Islam, which Soros calls "probably the most dangerous situation" in the world. Pakistan needs "substantial financial assistance because American aide has done nothing for the people," says the author and philanthropist. Furthermore, President Obama needs to use the "utmost discretion" in approving military action against terrorists inside Pakistan because of the risk of civilian casualties, he adds. "Very often an economic crisis reinforces internal political divisions," Soros says. "It could lead to governments losing control." In his most recent book, The Crash of 2008 and What It Means, Soros warned the economic crisis could make Russia's Vladimir Putin "more repressive at home and more aggressive abroad." "But I'm pleased to observe, as of now, that hasn't happened," he said in our extensive interview this week. "In fact, more critical voices in Russia than before so far haven't been silenced by force. Maybe there is a chance of attitudes a change of maybe even a change in government slowly developing. " The outcome of the ongoing (second) trial of former Russian oil tycoon Mikhail Khodorkovsky - who was sentenced to prison in 2005 on charges of tax evasion and fraud - will be an "important test" for Russia, Soros says. The charges against Khodorkovsky are widely viewed as being politically motivated and designed to help Putin consolidate his grip on Russia's natural resources. "If he were found not guilty [that] would be very important sign there is change in the wind," Soros says. Source:  Aaron Task  www.techticker.com
ETF BASIC NEWS April 7, 2009 2:43pm

Could The VIX Be More Than A Volatilty Indicator?

vixVolatility has been measured for the past 20 years by the VIX, and it goes up when stocks and exchange traded funds (ETFs) drop and vice versa. So the million dollar question is why does the VIX move in the opposite direction of the markets?  The answer is options. Generally, when the market tumbles, speculators, hedgers and investors buy options for several different reasons.  As more buyers come into the market, there is upward pressure on option prices, states Mark Wolfinger of Minyanville.  The VIX generally increases during these times. The opposite is also true.  When the markets are rallying and gaining ground, there is no urgency to hedge and panic is absent, therefore bringing the trading volume in calls down.  This doesn’t mean that no one is buying calls, some are, but most are selling options, sending the VIX down. These are general rules and lately we have seen from divergence from the norm.  There have been bullish periods were the VIX increased and bearish periods were the VIX decreased.  As for right now, the VIX is around 43, which means that there is a 68% chance that the realized market volatility will be less than 43 and a 32% chance it will be higher than 43 30 days from now. The aforementioned is exactly what the VIX is supposed to represent: An estimate of future volatility in the options market.  Only time will tell if it more than just a measure of volatility and is a measure of fear in investors, as well. Kevin Grewal contributed to this article. Source: www.etftrends.com
ETF BASIC NEWS April 7, 2009 8:34am

Gold Rises For First Time in Four Days

gold2April 7 (Bloomberg) -- Gold rose for the first time in four days in London after a drop to the lowest price in 10 weeks lured buyers, and as a decline in equities increased the metal’s appeal as an alternative investment. Silver also gained. Bullion slipped 6.3 percent the past three days on speculation government efforts would revive the global economy, curbing demand for gold as a haven. The MSCI World Index of shares fell a second day as the euro-region economy contracted more than estimated. “We fell too much yesterday,” and some investors and physical buyers may be taking advantage of lower prices, Bernard Sin, head of currency and metals trading at Swiss refiner MKS Finance SA, said by telephone from Geneva. “We fell as much as 3 percent yesterday and a lot of people were hurt.” Gold for immediate delivery gained as much as $11.50, or 1.3 percent, to $880.40 an ounce, and traded at $879.75 by 10:47 a.m. in London. June futures added 0.9 percent to $881 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division. The metal rose to $879.25 in the morning “fixing” in London, used by some mining companies to sell production, from $870.25 at yesterday’s afternoon fixing. Bullion, trading 15 percent below the record $1,032.70 set in March 2008, has fallen 4.6 percent the past month while the MSCI Index has climbed 22 percent. Europe’s recession deepened more than estimated in the fourth quarter, the European Union’s statistics office said today. Gross domestic product in the euro region declined 1.6 percent from the previous three months, the most in at least 13 years. A worsening economy has pushed exchange-traded fund holdings to records this year. Inflation Concern Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, was unchanged at 1,127.37 metric tons yesterday, after declining on April 3 for the first time since March 23. Bullion may climb back above $900 an ounce shortly should prices hold around $880, according to Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai. Gains above $900 would be “supported by the inflationary concerns due to the large bailout funds that have been pumped into various economies across the world,” he said in a report today. “This, in addition to investment demand, could prevent gold from an aggressive selloff.” Among other metals for immediate delivery in London, silver rose 1 percent to $12.2563 an ounce. Platinum climbed 1.3 percent to $1,160 an ounce, and palladium was unchanged at $223.50 an ounce. Source: Bloomberg.com Author: Nicholas Larkin
NYSE:GLD April 7, 2009 8:14am

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