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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ValueWalk

Ant Group Overhaul Could Lead To IPO After All

By Michelle Jones. Originally published at ValueWalk.

Ant Group’s initial public offering (IPO) could get back on track if it falls in line with what Chinese regulators want. The company is reportedly planning a major overhaul in response to pressure from then. News reports indicate that Ant Group intends to become a financial holding company under the oversight of China’s central bank.

Q4 2020 hedge fund letters, conferences and more

Major overhaul planned

Sources told Fox Business that Ant Gr...



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Kimble Charting Solutions

Bond Rally Here Sends A Bearish Message To Stocks

Courtesy of Chris Kimble

Bonds have experienced a large percentage decline since the highs of last March. Have bonds fallen enough?

If they rally, could they be sending a bearish message to stocks?

This chart looks at Govt Bond ETF (TLT) over the past 20-years. TLT has created a series of higher lows and higher highs inside of the rising channel (1). An upside breakout took place last year as stocks started tanking in late January, as news of Covid started taking place.

The large decline in TLT currently has it testing the top of the channel, which now comes into play as support at...



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Zero Hedge

10Y Yield Tumbles Below 1.00% As Liquidations Lash Stocks

Courtesy of ZeroHedge View original post here.

As the short-squeeze malarkey accelerates this morning...

Source: Bloomberg

Funds are being forced to liquidate their longs to cover losses/margin...

Source: Bloomberg

And that is weighing on the broad market...

...



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Phil's Favorites

Gamestop Monday....WTF Happened?

 

Gamestop's crazy run on Monday didn't stop there. Take a look at Gamestop Tuesday, Gold Edition. The daily chart doesn't show it but GME surged another 60 points in after-hours trading! 

Source: Investors.com

Gamestop Monday….WTF Happened?

Courtesy of Howard Lindzon 

I like this ‘explainer’ post from ...



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Biotech/COVID-19

South African scientists who discovered new COVID-19 variant share what they know

 

South African scientists who discovered new COVID-19 variant share what they know

Health care workers and patients in the temporary outside area Steve Biko Academic Hospital created to screen and treat suspected Covid-19 cases in Pretoria. Alet Pretorius/Gallo Images via Getty Images

Courtesy of Willem Hanekom, Africa Health Research Institute (AHRI) and Tulio de Oliveira, University of KwaZulu-Natal

Late last year the ...



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Digital Currencies

Ethereum Surges To New Record High As DeFi Boom Re-Accelerates

Courtesy of ZeroHedge View original post here.

Coins that power decentralized finance (DeFi) protocols are soaring recently as bitcoin treads water.

While bitcoin grabbed all the headlines early on in the year, it is the rest of the crypto space that is stealing its thunder most recently as Ethereum, the backbone of the smart contracts that define much of the DeFi space, has drastically outperformed...

Source: Bloomberg

That is the highest for ETH relative to BTC since

...

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Politics

Far-right groups move to messaging apps as tech companies crack down on extremist social media

 

Far-right groups move to messaging apps as tech companies crack down on extremist social media

Far-right groups like the Proud Boys, seen here marching in Washington, D.C., on Dec. 12, are increasingly organizing their activities on messaging services like Telegram. Stephanie Keith/Getty Images

Courtesy of Kevin GrishamCalifornia State University San Bernardino

Right-wing extremists called for open revolt against the U.S. government ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Saturday, 11 July 2020, 05:26:16 PM

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


Comment: This is lack of liquidity means support is likely to break if it is tested hard!



Date Found: Saturday, 11 July 2020, 09:51:58 PM

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


Comment: Nasdaq losing momentum.



Da...

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Mapping The Market

The Countries With The Most COVID-19 Cases

 

The Countries With The Most COVID-19 Cases

By Martin Armstrong, Statista, Jan 12, 2021

This regularly updated infographic keeps track of the countries with the most confirmed Covid-19 cases. The United States is still at the top of the list, with a total now exceeding the 22 million mark, according to Johns Hopkins University figures. The total global figure is now over 85 million, while there have been more than 1.9 million deaths.

You will find more infographics at ...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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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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