Posts Tagged ‘DIG’

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since then, oil has hit a multi-year low at around $42.50 and is now approaching $60, still well below its highs of 2014 but probably closer to a breakeven price for American shale producers. In this post I want to see what ETF would have profited best from that rebound and also which one would have fared worse. Let's look at a couple of performance charts. First, the standard oil proxies based on the futures:

Oil (red) is up 40% since March 17 but what is interesting is how the pure oil ETFs are tracking that move. USO (blue) which is not leveraged is not tracking very well. In fact, it's up only about 27% or about 2/3 of the oil move. As expected, SCO (pink) is down, but clearly, the leveraging is not the 2x that you would expect as it's only down a bit less than 40%. And UCO (green), while the clear winner here, is only up 57% which is lower than the advertised 2x leverage factor. Once again, these future based ETF are victims of some decay.

Let's look at some ETFs not based on oil futures but who should benefit from an oil price rebound. In the next performance chart, we'll look at OIH and XLE. 

It's not surprising that there should be a lag between the time oil prices start…
continue reading


Tags: , , , , , , , ,




Q2 Buy List – Rounding Out The Top 20 (Members Only)

Finally a chance to buy again! 

The problem with hitting the dead bottom with our June 7th Buy List is there haven't been any good entry opportunities since for new Members.  Now we are back down to about the bottom of the "flash crash" (S&P 1,065) and it does look like we may be forming another bottom. right about where we were when I wrote on June 6th "The Worst-Case Scenario:  Getting Real With Global GDP!" where I pointed out:  Things are just simply not bad enough to sit on our hands with a big pile of cash

I am still not advocating going over a 25% commitment to long-term positions so PLEASE - keep that in mind at all times - our buying premise is that we have cash (with a target of staying at least 75% cash right now) and we will need more disaster hedges if we can't hold this week's lows.  If we have a 2% hedge in place now that pays 10% on a market drop of no more than 20% below where we are now, then we can expect to have 10% of our money from that hedge to pay for any stocks that are put to us and, if we are only allocating 20-25% of our cash to buy round 1 here, then logically, that extra 2% we're putting up as insurance will pay for half of an unexpected drop.  If we get less confident in holding our levels, then we can up our hedges.

That means, if we spent $25,000 to buy round 1 of stocks and $5,000 of insurance that pays 500% if we hit our assignment area (down 20%) and we are assigned a basked to stocks, which force us to double down, then the $25,000 we need to double down with will come from our insurance hedge and that means we'll be in 2x the stock for $30,000 with $75,000 more cash on the side (assuming it was a $100K Virtual Portfolio). 

Let's keep this example dead simple and say we buy the SPY for $106.82 and let's say we buy 300 shares for $32,000.  Now we cover that with the sale of the March $103 calls for $12 and the $95 puts for $6 and that nets out to $88.82 ($26,346) and our upside at $103 is $14.18 ($4,254 or 13%).  We are committed to owning 600 shares of SPY at the $88.82 we paid
continue reading


Tags: , , , , , , , , , , , , , , , , , , ,




Monday Monetary Meltdown – Sill the EwRo!

Oh what a World, what a World

It's funny how much damage a splash of cold water can do, isn't it?  Especially when that splash of cold water is reality and the witch is fiat currency.  You are very, very lucky because I do not have to rant on about this for 2 pages here because I already told people this was going to happen in March of 2007, when I warned that rising oil prices were indicating a serious issue with fiat currencies and would eventually undo our then-indestructible rally.  The title of that post was "Are We Heading for an Economic Tornado?

The Dow was just above 12,000 at the time but, to an old fundamentalist like me, it seemed a little pricey and my dire warning at the end of the article sounds more like a recap of the last 3 years now when I said:

If we manage to topple the entire house of cards that is commodity pricing, perhaps we won’t need sub-prime mortgages to buy ourselves affordable housing at realistic interest rates.  There is certainly a storm brewing as a vacuum of money has been left in our heartland as the Broker/Commodity/Financial triumvirate has funneled $6T away from you and the things you enjoy (consumer goods) to force you to spend it to maintain the things you need (cars, tractors, appliances).  They’ve created a storm that threatens to tear the global economy apart.

As I've said many times, I don't have the power to fix things (but, if appointed dictator for life, I will serve) – I can only tell you what's going to happen and how to profit from it.  At the time we were buyers of gold, looking to ward off a probable slide in the dollar and what looked like inevitable inflation.  Now we are sellers of gold because, in this post-crash Gobal economy – who can afford it?  Sure speculators can afford it but just like houses or oil (or tulips for that matter) – eventually they have to find a real buyer.  Did you know gold demand is plunging in Asia?  What?   They didn't tell you that in any of the 100 TV commercials?  I am shocked… 

Actually, I can tell you the easiest way to time the gold market – count the number of commercials from people who want to buy your gold vs the…
continue reading


Tags: , , , , ,




Pick: Ultra Proshares Oil and Gas ETF (DIG)

[For a free subscription to Phil’s Stock World, click here - it’s easy, no credit card required]

Pick: Ultra Proshares Oil and Gas ETF (DIG)

Courtesy of David at the Oxen Group 

DIG - Oxen TradeThe Oxen Group, for Thursday, is optimistic to hope for a good day from the market. Too many red days even in a bearish trend, means a correction every few days. Tomorrow, futures are already up as investors may be getting excited about jobless claims, which have been bullish for the past few weeks. Additionally, Research in Motion will be releasing earnings that are expected to be very positive for the tech sector and TARP paybacks were successful.

The market is due for a fundamental correction, as there are some bargains presenting themselves again. One of these is oil, oil service companies, and oil ETFs. After oil prices have slipped, with a late small gain today, oil may be ready for a move on Thursday. Gasoline wholesale prices have continued to slip, which is signalling a pullback in gas prices. Further, oil may get a boost from a very bullish Chinese inventory announcement that shows the Chinese economy is pumping again, helping to increase oil prices in the Asian market. We like Ultra Proshares Oil &Gas (DIG) to rally, with major holdings in Exxon and Chevron, which have both been hit with losses for the past four days. DIG has lost 13% in the past four days and moved down too quickly, presenting an opportunity for money to pour into the stock. If jobless claims are bullish and gas prices rescind, investors will push this stock up as inventories really did not get a chance to increase the oil market, which was a bullish indicator. Oil looks ready to rise, therefore, BUY DIG!

Entry: Recommend buying within first 10-25 minutes.
Exit: We recommend exiting after a 2-4% increase.
Upper Resistance: 30.50

David’s Oxen Trade Results:

Date  


continue reading


Tags: , ,




 
 
 

Phil's Favorites

Boris Johnson: populists now run the show, but what exactly are they offering?

 

Boris Johnson: populists now run the show, but what exactly are they offering?

Move aside. Shutterstock

Courtesy of Richard Carr, Anglia Ruskin University

According to the Conservative member of parliament for Witham, ...



more from Ilene

Zero Hedge

Russian And South Korean Fighter Jets Face Off In "Mid-Air Confrontation"

Courtesy of ZeroHedge. View original post here.

For the first time since the fall of the Soviet Union, Russian jets flying through South Korean airspace provoked the South Korean military into a "midair confrontation" that involved firing hundreds of warning shots. All told, South Korean jets fired 360 machine-gun rounds and at least 20 flares, Bloomberg reports.

Three Russian military planes (two Tu-95 bombers and one A-50 airborne early warning and control aircraf...



more from Tyler

Insider Scoop

The Daily Biotech Pulse: Acadia Schizophrenia Drug Fails, Viveve Plummets, Eisai Gets Breakthrough Therapy Designation

Courtesy of Benzinga.

Here's a roundup of top developments in the biotech space over the last 24 hours.

Scaling The Peaks

(Biotech stocks hitting 52-week highs on July 22)

  • Acasti Pharma Inc (NASDAQ: ACST)
  • Apellis Pharmaceuticals Inc (NASDAQ: APLS)
  • Arcturus...


http://www.insidercow.com/ more from Insider

Kimble Charting Solutions

Is Crude Oil Sending a Bearish Message to the Stock Market?

Courtesy of Chris Kimble.

Crude Oil (NYSEARCA: USO) and the S&P 500 Index (INDEXSP: .INX) have peaked and bottomed together several times in the past 9 months. See points (1) and (2) on the chart above.

In summary, the correlation between Oil and the stock market has been quite interesting and demands investors attention.

Crude Oil has been creating lower highs of late and is breaking price support at (3).

If the correlation remains the same, Crude Oil may very well be sending a bearish message to stocks.

Tricky spot for active investors – careful here.

...

more from Kimble C.S.

Chart School

RTT Plus Chart Book (Sneak Peak)

Courtesy of Read the Ticker.

The magic of support and resistance channel lines and how they direct price. Here are some chart disclosed to members via the RTT Plus service. All charts are a few weeks old. 


XAU bound by parallel channel lines.


Click for popup. Clear your browser cache if image is not showing.



Newmont Mining support from Gann Angles.



Click for popup. Clear your browser cache if image is not showing.



US Dollar index (DXY) dominate cycle ...

more from Chart School

Digital Currencies

Cryptos Suddenly Panic-Bid, Bitcoin Back Above $10k

Courtesy of ZeroHedge. View original post here.

Following further selling pressure overnight, someone (or more than one) has decided to buy-the-dip in cryptos this morning, sending Bitcoin (and most of the altcoins) soaring...

A sea of green...

Source: Coin360

Bitcoin surged back above $10,000...

Ethereum bounced off suppo...



more from Bitcoin

Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



more from Biotech

ValueWalk

Professor Shubha Ghosh On The Current State Of Gene Editing

 

Professor Shubha Ghosh On The Current State Of Gene Editing

Courtesy of Jacob Wolinsky, ValueWalk

ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.

...

more from ValueWalk

Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



more from Our Members

Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  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 virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





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 >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>