Posts Tagged ‘UCO’

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…
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TGI False Hope!

SPY 5 MINUTEI love it when a plan comes together! 

As you know, we took an aggressive, protective short on Wednesday afternoon so it was "wheeeeeee!" on the dip with our prediction of XLF  hitting $14 coming in to the penny while our JPM bottom target of $34.75 missing by .10, as we bottomed out at $34.85 before popping back $1 (3%) but, in all fairness, I did say "around $34.75" in the morning – so we knew it wasn't an exact target

While we bottom-fished all day, I officially called the turn at 2:48, saying to our Members in Chat:  

 If you want a thrill ride, you can now buy the QQQ next week $61/62 bull call spread for .55 and that should be able to stop out with a .20-25 loss if things go badly tomorrow but make a nice double if the Qs head back up (now $61.58).  Note we got wiped out on our this week $63s so not at all a sure thing.  

Also, UCO just seems silly at $23.50 with July 4th coming up – I like the July $23/24 bull call spread at .50.

TNA next weekly $47 calls at $2.15 are also fun but those can cost you if things go the wrong way but TNA was $50 2 days ago and $52.50 2 weeks ago so they could make a nice payoff quickly. 

Damn, I guess I still think the EU comes through tomorrow….

SPY WEEKLYWe didn't have to wait until tomorrow, of course.  Someone (who will never be investigated) jumped the gun with a $3.3Bn block purchase of 50,000 S&P E-Mini Futures and that reversed almost all of the day's drop into the close.  Then we got word of the expected $120Bn whatever they are calling it from the EU after hours and we got even better news at night as they took various steps to do stuff that I really don't care about because it isn't enough cash and it's going to fail again unless they pump it up by about 3x today.  

As we know from PSW's…
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Flip-Flopping Thursday – $267Bn from the Fed Not Enough!

SPY DAILYAnd we're out!

It might be a little early because we did get another $267Bn from the Fed yesterday but that plus $125Bn given to Spain and $100Bn to the IMF this month is "just" $492Bn and that, according to our calculations, should be good for 1,350 on the S&P, tops.  If they want to get to 1,400 – they'll need another $500Bn from Europe and, while it is widely expected to come – the Fed came up short and if the EU comes up short as well, we could be talking flash crash so we took advantage of the pre-Fed run-up (as planned in yesterday's post) to get back to cash.    

My morning Alert to Members was short and sweet:

Good morning!

I don't know if you guys usually click on my little links but this one was the most important of the day – Don't be white people – GET OUT!!!!

This one was so important that I tweeted it (you can follow me here) and Facebooked it (you can follow us here) and I even put it out on Seeking Alpha's Stock Talks (you can follow me here) so don't say I didn't warn you.  Sure the market may go up as funds dress windows into the end of the Quarter/Half next week but we caught the run off the bottom this month so why push it when the upside looks limited and the downside does not?  

Other than 2014 spreads in our new Income Portfolio – all of our virtual portfolios went to cash rather than risking very nice first half gains.  As of yesterday morning they were:  

Much thanks to StJ for keeping these tracking portfolios – all back to cash now and hopefully we can match that performance in the second half of the year although I think we're going to ditch the very boring $5,000 Portfolio in favor of a $25,000 Portfolio
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Zero Hedge

Erdogan Has Ordered Turkish "Operations" Against Political Enemies On US Soil

Courtesy of ZeroHedge. View original post here.

A spokesman for Turkish President Erdogan said during a Friday press conference that "operations" have been ordered against Turkey's political enemies, including those on US soil

"Our relevant units and institutions will continue their operations in the countries the F...



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Phil's Favorites

The next cold war? US-China trade war risks something worse

 

The next cold war? US-China trade war risks something worse

There’s a chill in the air these days. AP Photo/Andy Wong

Courtesy of Charles Hankla, Georgia State University

President Donald Trump is making good on his pledge to escalate the trade war with China by imposing tariffs on US$200 billion of Chinese goods. The Chinese government, for its part, is already retaliating with new taxes on $60 billion of American imports. ...



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Kimble Charting Solutions

Lumber prices fall 45% this year, sending macro message?

Courtesy of Chris Kimble

CLICK ON CHART TO ENLARGE

 Home and Lumber prices can send important messages to how the economy is doing. The chart above looks at Lumber prices over the past 11-years.

So far this year, Lumber and the DJ Home Construction index is diverging against the broad market. This chart highlights that Lumber is now down over 40% from its peak earlier this year.

Below compares the performance of the S&P to the DJ Home Construction index this year-

...



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Chart School

Weekly Market Recap Sep 23, 2018

Courtesy of Blain.

More saber rattling between China and the U.S. did little to distract the market.

On Tuesday, President Donald Trump reiterated his hard-line stance on China during a news conference with Polish President Andrzej Duda and said the U.S. had “no choice” but to levy another $267 billion in duties on China. That would come on top of announced tariffs on about $200 billion in Chinese goods announced late Monday.  China responded with tariffs of 5% to 10% on $60 billion worth of U.S. products that will take effect Sept. 24, and said it may introduce more measures if the U.S. goes ahead with higher tariffs.

This seems to be the prevailing thought process, ...



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Insider Scoop

Buybacks On The Rise, But Buyback ETFs Are Lagging

Courtesy of Benzinga.

Related PKW Buybacks Are Falling, But The Buyback ETF Is Rising Gaining Insight With A Buyback ETF Related ...

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ValueWalk

The U.S. trade deficit with China is a dangerous scorecard as the mainland remains an unlikely source of U.S. profits

By Joe Quinlan. Originally published at ValueWalk.

With the United States and China at loggerheads over trade, investors should be aware of the many economic ties binding the two countries. Bank of America, U.S. Trust has released a new report that explores some of the finer points of U.S.-Sino relations and the strategic, but little understood, competitive advantages for corporate America.

The seven factors described below underscore the dynamism and competitiveness of U.S. companies and may help explain the resilience of U.S. large cap stocks despite ratcheting trade tensions between the U.S. and China.

Q2 hedge fund letters, conference, scoops etc

U.S.-China Checklist: Understanding Some...

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Members' Corner

Why obvious lies still make good propaganda

 

This is very good; it's about "firehosing", a type of propaganda, and how it works.

Why obvious lies still make good propaganda

A 2016 report described Russian propaganda as:
• high in volume
• rapid, continuous and repetitive
• having no commitment to objective reality
• lacking consistency

...

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Digital Currencies

Mania to Mania

 

Mania to Mania

Courtesy of 

“Russell rarely played the stock market and had little investing experience when he put around $120,000 into bitcoin in November 2017.”

This comes from a CNN money article, Bitcoin crash: This man lost his savings when cryptocurrencies plunged. From January 2017 through the peak in early 2018, Ethereum gained 16,915%.

Any time you have something go vertical, you just know that some peopl...



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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

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

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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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 ...



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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

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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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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...

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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.

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