We are adding to our LOOP position as the stock edges up...
Trade well,
Trader D
Tuesday, September 29, 2009
Monday, September 28, 2009
STAR Rising
STAR is looking great as the 21 crosses over the 50. Shine bright....
Trade well,
Trader D
Friday, September 25, 2009
Support
Many of our "speculative" picks this week are starting to head south and are at or close to the 50 day MA. We are using that as support and exiting just a scoosh below. When the market starts to turn down from overbought levels there is NO REASON to stay invested in risky investments. The MBI and SRS helped us out greatly this week and we will be on the lookout for a turnaround.
Something about Mondays during late September and October makes us get a little weeezy.
Trade well,
Trader D
Thursday, September 24, 2009
That's RAD dude
Buying some Rite-aid stores (RAD) as it brushes up against the 50 day MA. We usually don't
like these small caps but it is worth the risk especially with the tremendous volume lately.
Trade well,
Trader D
HEDGE
The SRS postition we placed two days ago are helping out tremendously today.
Trade well,
Trader D
Wednesday, September 23, 2009
Metabolix (MBLX)
Another great chart looking to move higher with light volume and a large short position. It seems like the shorts may finally be capitulating as we get deeper into this Bull Run.
Trade well,
Trader D
Tuesday, September 22, 2009
Real Estate on fire
we are taking our fantastic profits from MBI today and rolling them into
LoopNet (LOOP). This is another commercial real estate play with a massive
short position that looks ready to go.
Trade well,
Trader D
Sunday, September 20, 2009
Sunday Morning Breakfast
Good morning ITM'ers. Grab a cup of coffee, sit back, relax and check out these latest charts:
UT Starcom (UTSI) is a piece of poo. Back in the day our hedge fund visited with this company several times and they could never get things going.. But, with a short ratio over 35 we are placing our bets on a big spike if we can break above resistance.
Decent looking chart for this wind power related company.
The casino companies have had a nice run lately and MGM looks to be next.
Mortgage related issues??? looks like we could get a move higher.
The organic food industry is on fire - just look at Whole Foods (WFMI), this issue is a China based SPECULATIVE stock that's just looking to breakout.
The shorts have ruled this stock for sometime. Time for them to give up the ghost.
UT Starcom (UTSI) is a piece of poo. Back in the day our hedge fund visited with this company several times and they could never get things going.. But, with a short ratio over 35 we are placing our bets on a big spike if we can break above resistance.
Decent looking chart for this wind power related company.
The casino companies have had a nice run lately and MGM looks to be next.
Mortgage related issues??? looks like we could get a move higher.
The organic food industry is on fire - just look at Whole Foods (WFMI), this issue is a China based SPECULATIVE stock that's just looking to breakout.
The shorts have ruled this stock for sometime. Time for them to give up the ghost.
Two weeks ago we created a similiar list of stocks ready for a big move. They worked out great. This list is more on the risky side but we believe the reward can justify the risk.
Trade well,
Trader D
Friday, September 18, 2009
Thursday, September 17, 2009
OPTIONS EXPIRATION
September options expire tomorrow at the close..get ready for some volatility!
Trade well,
Trader D
Trade well,
Trader D
Wednesday, September 16, 2009
GAPS
Yesterday we showed how the Major Indexes are close to "filling the gap". Below is an example we higlighted two weeks ago showing how SunPower (SPWRA) looked like it may be ready for a bounce. If you timed it right you would of made 8 points in less than a week.
The market is showing the exact opposite and looks like it could reverse its
course...anytime. We just bought some QQQQ puts, FAZ (financial Ultra Short), and TWM (Russell 2000 Ultra short)
Trade well,
Trader D
The market is showing the exact opposite and looks like it could reverse its
course...anytime. We just bought some QQQQ puts, FAZ (financial Ultra Short), and TWM (Russell 2000 Ultra short)
Trade well,
Trader D
Tuesday, September 15, 2009
Be very Cautious
Looks like the HUGE bull run is going to hit resistance very soon.
Sep-Oct time frame has the most violent swings of the year..
Trade well,
Trader D
DXO Redemption Information
If you noticed that your DXO position got "called away", here is why:
Investing Specialists: ETF Investing
CFTC Position Limits Claim First ETP Victim
By Scott Burns | 09-01-09 | 07:30 PM
On Tuesday, Deutsche Bank announced that it plans to redeem all the outstanding shares of PowerShares DB Crude Oil Double Long ETN (DXO
Sponsored by:
DXO). There isn't anything to report besides what is in the press release, but we have our own speculation as to what caused this drastic step by Deutsche Bank.
However, before we get into any of that, there is the matter of what happens with the $450 million currently invested in the fund. I'm sure that many investors are asking what they should do given that the fund will redeem in about a week. The mechanics of this redemption are as follows: on Sept. 9 DXO will go ex-date similar to what happens when a stock goes ex-dividend. Shortly thereafter, investors holding the ETN should receive the cash value for the net asset value (NAV) of the fund in their account. That is, at least in theory, what should happen, but you should definitely keep an eye on your brokerage account to make sure that all the right boxes got checked and that your money gets returned to you.
Notice that investors will receive the NAV in cash, not the market value. That is an important distinction as this fund has been trading at a premium to its NAV over the past couple of weeks because it stopped creating new shares. So, if you bought this fund recently at a premium, you are out of luck unless you can sell it at the same premium.
For most investors holding DXO, our recommendation would be to sell the fund before the redemption. For one thing, as of the market close on Tuesday, it was trading at a 4.5% premium. We're not sure how long that premium will last over the next couple of days given that the redemption will be NAV in a week, but a little premium is better than no premium. The best reason to not sell DXO that we can think of is that by simply holding it, you will save yourself a transaction cost by just waiting for the cash. Of course, it is a leveraged fund based on a fairly volatile commodity, so the results over a few days pose their own separate risks.
So why did Deutsche Bank decide to take such drastic measures? First, you need to understand that the position limit being threatened was not DXO's, but the position limit allocated to all of Deutsche Bank. ETNs are promissory notes that don't actually hold the underlying securities unlike an ETF would. But that doesn't mean no one is holding that exposure. In fact, because the backing bank of the ETN has promised to pay investors the underlying return of the index being tracked by the ETN, it is holding a commensurate amount of those underlying securities to hedge the bank's exposure.
And that is where we presume Deutsche Bank was faced with a business decision that cost DXO its existence. Because this is a 2x leveraged fund, the actual exposure in contracts required is double what the assets in the fund would indicate. In this case it means that Deutsche Bank had nearly $900 million in oil futures outstanding in order to back DXO.
Deutsche Bank is a large player in the commodities sector, and the CFTC is breathing down everybody's neck about position limits. It is not improbable that Deutsche Bank looked at all the business that it conducts using oil futures--including proprietary trading, hedging for corporate entities, and other bundled commodity investment products--and realized that the best thing for itself would be to redeem this note and free up $900 million in new position availability. Especially if the other businesses generated more money for the firm. Given the circumstances, it is what any rationale business person would do when faced with this decision.
Whatever the intentions of the CFTC were, there are always unintended consequences to every regulatory action. By choosing to liquidate DXO rather than trim position limits elsewhere, Deutsche Bank is essentially limiting the options that a whole host of smaller investors had come to depend on in terms of accessing these markets. By forcing Deutsche Bank's hand, the CFTC has unintentionally started what we would describe as the de-democratization of investing. If this process continues, the asset class of commodities will once again return to being the sole domain of corporations, endowments, and deep-pocketed investors. Why ETFs have been targeted remains a mystery to us given the broad ownership of the funds and what is actually a lack of concentration in terms of investors.
Before I get all sorts of e-mails, let me point out a few things. Yes, we have recently called for increased safeguards and barriers to entry for investors in commodity-based ETPs. Nowhere in that request did we say that they should be banned or suffer forced liquidations. We just wanted a few speed bumps to slow down investors before they plunged into something they didn't understand. Our position on leveraged ETFs is the same.
ETFInvestor Newsletter
Let our new newsletter, Morningstar ETFInvestor, help you navigate the exciting and new world of exchange-traded funds. Each issue includes recommendations for commonsense ETF investing, ETF spotlights, and critical data on 150 top ETFs. This one-year subscription consists of 12 monthly issues.
Learn more.
Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including Barclays Global Investors (BGI), Claymore Securities, First Trust, and ELEMENTS, for use in exchange-traded funds and notes. These ETFs and ETNs are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs or ETNs that are based on Morningstar indexes.
Scott Burns is the Director of ETF Analysis at Morningstar and editor of Morningstar ETFInvestor.
Investing Specialists: ETF Investing
CFTC Position Limits Claim First ETP Victim
By Scott Burns | 09-01-09 | 07:30 PM
On Tuesday, Deutsche Bank announced that it plans to redeem all the outstanding shares of PowerShares DB Crude Oil Double Long ETN (DXO
Sponsored by:
DXO). There isn't anything to report besides what is in the press release, but we have our own speculation as to what caused this drastic step by Deutsche Bank.
However, before we get into any of that, there is the matter of what happens with the $450 million currently invested in the fund. I'm sure that many investors are asking what they should do given that the fund will redeem in about a week. The mechanics of this redemption are as follows: on Sept. 9 DXO will go ex-date similar to what happens when a stock goes ex-dividend. Shortly thereafter, investors holding the ETN should receive the cash value for the net asset value (NAV) of the fund in their account. That is, at least in theory, what should happen, but you should definitely keep an eye on your brokerage account to make sure that all the right boxes got checked and that your money gets returned to you.
Notice that investors will receive the NAV in cash, not the market value. That is an important distinction as this fund has been trading at a premium to its NAV over the past couple of weeks because it stopped creating new shares. So, if you bought this fund recently at a premium, you are out of luck unless you can sell it at the same premium.
For most investors holding DXO, our recommendation would be to sell the fund before the redemption. For one thing, as of the market close on Tuesday, it was trading at a 4.5% premium. We're not sure how long that premium will last over the next couple of days given that the redemption will be NAV in a week, but a little premium is better than no premium. The best reason to not sell DXO that we can think of is that by simply holding it, you will save yourself a transaction cost by just waiting for the cash. Of course, it is a leveraged fund based on a fairly volatile commodity, so the results over a few days pose their own separate risks.
So why did Deutsche Bank decide to take such drastic measures? First, you need to understand that the position limit being threatened was not DXO's, but the position limit allocated to all of Deutsche Bank. ETNs are promissory notes that don't actually hold the underlying securities unlike an ETF would. But that doesn't mean no one is holding that exposure. In fact, because the backing bank of the ETN has promised to pay investors the underlying return of the index being tracked by the ETN, it is holding a commensurate amount of those underlying securities to hedge the bank's exposure.
And that is where we presume Deutsche Bank was faced with a business decision that cost DXO its existence. Because this is a 2x leveraged fund, the actual exposure in contracts required is double what the assets in the fund would indicate. In this case it means that Deutsche Bank had nearly $900 million in oil futures outstanding in order to back DXO.
Deutsche Bank is a large player in the commodities sector, and the CFTC is breathing down everybody's neck about position limits. It is not improbable that Deutsche Bank looked at all the business that it conducts using oil futures--including proprietary trading, hedging for corporate entities, and other bundled commodity investment products--and realized that the best thing for itself would be to redeem this note and free up $900 million in new position availability. Especially if the other businesses generated more money for the firm. Given the circumstances, it is what any rationale business person would do when faced with this decision.
Whatever the intentions of the CFTC were, there are always unintended consequences to every regulatory action. By choosing to liquidate DXO rather than trim position limits elsewhere, Deutsche Bank is essentially limiting the options that a whole host of smaller investors had come to depend on in terms of accessing these markets. By forcing Deutsche Bank's hand, the CFTC has unintentionally started what we would describe as the de-democratization of investing. If this process continues, the asset class of commodities will once again return to being the sole domain of corporations, endowments, and deep-pocketed investors. Why ETFs have been targeted remains a mystery to us given the broad ownership of the funds and what is actually a lack of concentration in terms of investors.
Before I get all sorts of e-mails, let me point out a few things. Yes, we have recently called for increased safeguards and barriers to entry for investors in commodity-based ETPs. Nowhere in that request did we say that they should be banned or suffer forced liquidations. We just wanted a few speed bumps to slow down investors before they plunged into something they didn't understand. Our position on leveraged ETFs is the same.
ETFInvestor Newsletter
Let our new newsletter, Morningstar ETFInvestor, help you navigate the exciting and new world of exchange-traded funds. Each issue includes recommendations for commonsense ETF investing, ETF spotlights, and critical data on 150 top ETFs. This one-year subscription consists of 12 monthly issues.
Learn more.
Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including Barclays Global Investors (BGI), Claymore Securities, First Trust, and ELEMENTS, for use in exchange-traded funds and notes. These ETFs and ETNs are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs or ETNs that are based on Morningstar indexes.
Scott Burns is the Director of ETF Analysis at Morningstar and editor of Morningstar ETFInvestor.
Friday, September 11, 2009
Taking profits
After the great runup over the past few days we are locking in the majority of our profits.
Trade well,
Trader D
Thursday, September 10, 2009
Wednesday, September 9, 2009
SELL ON THE NEWS
We are buying short-term puts on Apple (AAPL) for a hedge. We know The Beatles will
be releasing their entire catalog as digital downloads this afternoon with a grand announcement.
The stock has been running lately and we feel it will decline as the news comes out.
Speculation? perhaps.
Trade well,
Trader D
Tuesday, September 8, 2009
Monday, September 7, 2009
Welcome back
We looked at several hundred charts this weekend and found way too many great charts to highlight, but here are a few. Hopefully the week will start slow so we can get some good entry levels on the following (click on the chart for a larger view):
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