Wednesday, June 30, 2010

Massive Volume In Ares Capital Recently (ARCC and July 12.5 Puts)

I checked out Ares Capital ($ARCC), a Business Development Company (BDC) or publicly traded private equity/debt firm, and saw interesting volume in both the stock and puts recently. Like the Leveraged Loan Index and high yield bonds ($HYG), ARCC has had a huge run off its 2009 low (up 5 fold).

Tuesday, June 29, 2010

GLD Decoupled From SPY, JJC, Joined Safe Haven Bid, GVZ Outperforming GLD! (Charts)

GLD, SPY, JJC, TLT, UUP 6/29
GLD made an interesting move this morning. It started trading in the red with $SPY (S&P) and $JJC (Copper), however, at 9:50am GLD decoupled from the S&P and Copper and joined the safe haven and deflation crew ($UUP (US Dollar ETF), $TLT (20+ Treasury Bond ETF), $VXX).  Look at the chart below. GLD is at a critical point, it is testing December 2009 support, May resistance, channel support and an ascending triangle inflection point. Hedge it up (see below). Today's action was also interesting because it pierced channel resistance in the morning, decoupled from the losers at 9:50am, and gathered enough strength to form a bullish tail into the close (although weak, +0.15% to $121.27). It showed GLD's resiliency when the safe haven/deflation bid was in play.

Deflation, Safe Haven Bid? 10-Year Treasury, IEF, UUP, TNX

The 10 Year Treasury Note Yield made a new low today, riding a death cross (50D/200DMA cross) and is testing a shelf from early 2009. $IEF (7-10 Year Treasury ETF) pierced through the December 2008 high and $UUP (US Dollar ETF) held its 50 day moving average. Are we experiencing a little safe haven/deflation bid at the moment? UUP is trading in a pendulum on 50DMA support. Either it falls hard to the uptrend line or spikes to test the recent high. Gold, silver and E-mini S&P are correcting overnight.  What's up.

Meredith Whitney, Gary Shilling See 10% Further Decline in Housing Prices (Videos)

Video 1: Meredith Whitney, during yesterday's Fortune interview, predicted a double dip recession in housing, fueled by banks releasing inventory. Prime real estate coming to market will affect housing prices on a larger scale. She sees a 10% decline in home prices over the next 6 months and is concerned about municipalities (states underfunded by $200 billion!).  Also, the mortgage and consumer lending market are shrinking which will affect bank earnings.

Video 2: Gary Shilling, in a recent interview with Tech Ticker's Henry Blodget, predicted a 10-20% decline in housing on excess inventories, possibly new lows on the S&P 500 and is long the US Dollar and Treasuries.

Monday, June 28, 2010

Two Potential Outcomes For GLD, Look at Spot Gold Move Earlier Today

Like I said on June 23 ($GLD at Very Important Support Level (Dec 2009 High/2010 Uptrend), GLD is testing ascending channel support and the December 2009 peak (now floor).  Two potential outcomes:

Microsoft's Death Cross and P/E Ratio Analysis (Moving Averages, MSFT)

MSFT 50DMA/200DMA Cross
I see a death cross on Microsoft's chart (the 50 day moving average crossed below the 200 day moving average). The chart needs an injection of green volume at $24 support. Unless a positive catalyst presents itself, I'd wait for exhaustion and a solid base. As of today's close, MSFT is trading at 12.6x trailing earnings, 11.7x 2010 estimates and 9.64x 2011 estimates (S&P report/operating EPS estimates). The mid-range for MSFT's P/E over the years has been: 2009: 14, 2008: 14, 2007: 22.5, 2006: 21.5, 2005: 23, 2004: 36.5, 2003: 29, 2002: 39.5, 2001: 45, 2000: 47.  The earnings multiple is down 70% since 2000 and more than half the 9 year average (29.2x). It's interesting that the P/E mid-range found support at 14 in 2008 and 2009 (double bottom?).

Hugh Hendry on the Euro, Asia and George Soros Germany Speech

Hugh Hendry of Eclectica Asset Management, who recently battled professors Joseph Stiglitz and Jeffrey Sachs on BBC, said the "Euro is finished" ("analogous to the gold standard in the 1920s") the "noose is getting tighter" in Asia and dissed George Soros mildly. Soros made a speech on Germany and had an op-ed in the Financial Times last week on Germany and the Euro  (Germany must reflect on the unthinkable).  The video was from last week.

Rick Santelli to Liesman: Read Austrian Economists Not Funny Pages (Ohhhhhhh!!!!!!!!)

Oh sh**! Steve Liesman vs. Rick Santelli on CNBC 6/28/2010 during the personal income, spending, saving rate and pce price index report.

Japan Public Debt 2x GDP With Deflation Threat, NIKKEI Down 75% Since 1990, What If Deflation Invades US

Check out a video update on the Japanese economy reported by Al Jazeera at BondSquawk (hat tip). In summary, Japan has "$9.5 Trillion in public debt", 2x GDP (192% 2009 estimate, #2 behind Zimbabwe at 3x from CIA.gov) with threats of deflation and falling wages. This is after 2 lost deflationary decades and a loss of 75% on the NIKKEI index since 1990 (39,000 to 9,700 today, 1st chart below). The good news is, most of Japan's public debt is held domestically in Japanese Yen. Some analysts believe US Treasuries could end up like Japanese Government Bonds (JGBs) and catch a bid even with hardcore reflationary policies (see David Rosenberg's debate on March, 2010). What about the S&P, would it follow in the NIKKEI's footsteps in a deflationary environment?  Or is the US economic machine too strong for that to happen.

Sunday, June 27, 2010

US Unemployment Rate at 9.3% (Chart 1981-May 2010), Michigan, Illinois, California From 1990

I came across this chart of the US Unemployment rate (not seasonally adjusted by the US Bureau of Labor Statistics) from 1981 to May 2010 on Google - public data. I also included Michigan, Illinois and California (from 1990) who have been hit hard. Unemployment could be rolling over from its peak. I'm trying to figure out what the market is saying here.  Are we setting up for a double dip or mild slow down, and how will unemployment react? There might be an issue with loading the flash chart. US 9.3%, Illinois 10%, California 11.9%, Michigan 12.8%.

Is Silver Ready? Jim Rogers Prefers Silver, SLV August $19 Calls Active (SLV, Comex Charts) UDPATE

(Charts, option activity from Thursday) Both Comex Silver (Sep, SIU10) and the ETF $SLV are knocking up against solid 2.5-year ceiling resistance and could break out, unless a few trilli's in charge of the money supply decide to sell it off here :]. If $SLV takes out $19.50 it could rally to $25-26, which is channel resistance extended. The structure of the trend could change and not sure about an exact time frame.  It could chop around between $19.50-$22 (2008 exhaustion peak). GLD took out its 2-year resistance level in October and I wondered in March if SLV would do the same. Hedge fund manager Eric Sprott of Sprott Asset Management was bullish on silver on CNBC in May. He also started the physical gold ETF ($PHYS).

Jim Rogers (see recent posts) was bullish on silver last week on CNN, as well as sugar, oil and commodities in general as usual. Video below courtesy of CNN Money.

Friday, June 25, 2010

S&P E-mini Future Update, 1,045 Neckline MUST Hold (ESU10)

E-mini S&P Future (OptionsXpress)
I'm watching the September E-Mini S&P Future trade overnight during the House-Senate Conference Committee - Financial Regulation hearing.  It's still going on at 2:45 eastern time on CSPAN2.  The S&P future could be forming a head and shoulders pattern with 1,045 as the neckline.  It is currently trading at 1,072.  Also read: S&P 500 Past ‘Neckline’ Could Slump to 883: Technical Analysis at Bloomberg.com.  For ETF chart analysis on SPY, DIA, UUP, GLD, TLT, QQQQ and VIX at yesterday's close visit my previous post.

Thursday, June 24, 2010

BP Oil Spill Cam Live via PBS Newshour Ustream, CBS News Update on Suicides

Here's the live BP oil cam on Ustream via PBS Newshour. Also, BP's stock made a new low today and a fisherman who lost his business committed suicide (see CBS Video below). Not good.

Greece CDS, New BP Low, Albert Edwards on Recession, EUR/USD May Weaken 20%, XLF Put Protection (#finreg), VIX Upside Calls, Hungary Bond Auction

Greece puts its islands up for sale to save economy - Guardian
Greece Closing CDS: 1126.85bps +192.66 +20.62% (#1 sovereign default risk) - CMADatavision 
One Big Difference Between Chinese and American Households: Debt - Forbes
VIX traders get into AUG upside calls - OptionMonster video
Hungary Debt Auction Misses Target for Second Time - BusinessWeek (h/t fuTuRe_sHOcK)
ChartCast - Market Update - 6/24 - SPY Descending, DIA Below 200-DMA, UUP at 50-DMA - Link
Meet The New Regime: Welcome AUDJPY, Goodbye EURJPY - Zero Hedge
Albert Edwards Sees New Recession By End Of Year, Market Collapsing - Zero Hedge
Gross Vows This Time Different as El-Erian Leads Equities Push- Bloomberg
Guy Adami, Jon Najarian, Steve Grasso and Patty Edwards see lower market - Fast Money
Euro May Weaken 20% Against the Dollar on Deflation, RBS Says - Bloomberg
"Pessimistic options players establishing bearish positions on the XLF (#finreg) - OptionsIntel
Homebuilder Default Swaps Rise as New Sales Fall to Record Low - BusinessWeek (6/23)

and last but not least, BP made a new low today and closed at $28.74.

ChartCast 6/14: SPY Descending, DIA Below 200-DMA (QQQQ, UUP, GLD, SPY, DIA, TLT, VIX Charts)

I went over SPY, DIA, QQQQ, UUP, GLD, TLT and the VIX at today's close on DVtv's Chartcast.  RIMM is trading lower in after hours trading by the way.  These charts are courtesy of FreeStockCharts.com.  SPY is approaching the shelf of judgment again, after possibly forming a right shoulder in a descending triangle. What do you think? It could test the shelf and decide from there, like July 2009 1, 2, 3.  The market could be pricing in a double dip recession or slow down.  I always thought that the June 2009 plateau looked like decent support for $SPY, which is $96, down 10.2% from here.

A Bankrupt BP - Worse For The Financial World Than Lehman Brothers? - Guest Post

Guest post by OilPrice.com

A Bankrupt BP - Worse For The Financial World Than Lehman Brothers?

The BP crisis in the Gulf of Mexico has rightfully been analysed (mostly) from the ecological perspective. People’s lives and livelihoods are in grave danger. But that focus has equally masked something very serious from a financial perspective, in my opinion, that could lead to an acceleration of the crisis brought about by the Lehman implosion.

ETFs Above/Below Their 200 Day Moving Average (*IYR, *QQQQ, DIA, IYT, IWM, FXI, XLK vs. SPY, *XLF, *XLV, XHB, *ITB)

I few hours ago I tweeted "ETFs Above 200DMA: DIA, IYT, IWM, FXI, QQQQ, XLK, IYR, Below 200DMA: SPY, ITB, XHB, XLF, XLV" so I thought I'd chart them out to show you visually.  Some ETFs are testing the 200 day moving average as we speak.  $IYR (real estate etf) is trading 8.8% above the 200-DMA, the highest in the sample.  Housing, financials and health care are the losers and must get back above the 200D or they could pull everyone down. Thoughts?  Charts are courtesy of StockCharts.com.

ETFs Trading Above 200-DMA:

Wednesday, June 23, 2010

Warren Buffett Testifies About Moody's, Einhorn Says Shut Down Ratings Agencies (MCO)

If you haven't seen Warren Buffett testify on the role of credit rating agencies during the sub-prime mortgage crash, check it out. He also gave his thoughts on the financial crisis.  If you remember, Buffett's Berkshire Hathaway owned 20% of Moody's at the same time they set up a municipal bond insurance entity when AMBAC and MBIA (who were supposed to boost bond ratings by providing insurance) were insolvent.  David Einhorn (Greenlight Capital) on Bloomberg said they should just look at market spreads (credit default swaps, yield spreads). I agree!

The backward looking nature of these credit ratings agencies allowed John Paulson and other forward looking thinkers to short subprime CDOs (Abacus CDO 2007) with reference obligations rated one notch above junk before the downgrade occurred. The business model doesn't work when there's volatility and credits get taken advantage of easily.

$GLD at Very Important Support Level (Dec 2009 High/2010 Uptrend) - UPDATE

GLD is testing December 2009 floor support, uptrend support in an ascending channel since Feb and a near term ascending triangle using May as ceiling resistance.  It's hard to put it in words.  $119.50 is where the December 2009 high and 2010 uptrend cross, which is an important level to hold.  I added two more charts to show the ascending triangle.  With GLD trading in an ascending channel and ascending triangle it means near term ceiling resistance is magnetizing buyers, but the next breakout/breakdown decision point is imminent.  I'm going to chart out more ETFs tonight, it looks like there's appetite for Treasuries.  As always, protect yourself from breakdown risk.

Bernanke Leaves Fed Funds Rate at 0 - 0.25%, June 23, 2010 FOMC Statement

DJIA's 200-Day Moving Average: Will the Dow stay above or below this demarcation line?

May New Home Sales Down 33%, ITB Fades Data, Months Supply Up 46% to 8.5 (From April)

May New Home Sales (Census.gov)
As I said in my post last night on existing home sales, the lumber contract and Home Construction ETF ($ITB) could have been pricing in the poor housing data after the April 30 tax credit expired.  After today's new home sales release showed a 33% decline in May over April, ITB made new lows but rallied back into the green.  Watch the downtrend line for a potential breakout (or continuation) on the chart below.  ITB is currently up 1.19% to $11.95.  Below is the New Home Sales Data with a table snatched from Census.gov.

May Existing Home Sales Down 2.2%, Market Eyeing New Home Sales Data, Lumber and ITB Moving in Tandem

The existing home sales number knocked down the market today (I believe).  Here's a Bloomberg Vid explaining what happened.  Get ready for the New Home Sales number tomorrow.  The Bloomberg survey (average economist estimate) sees new home sales down 17.4%.  With the price of Lumber down 42% from its peak in April, it could be pricing in lower new home sales, construction permits and housing starts going forward.  I'm not sure which data point tracks lumber directly, but I threw up a 6 month chart of Lumber and $ITB (Dow Jones Home Construction Index ETF) and they pretty much moved in tandem. 
  • Existing Home Sales (SA) -2.2% vs. last month (unexpected), +19.2% vs. last year (not bad)
  • Existing Home Inventory -3.4% vs. last month, +1.1% vs. last year
  • 8.3 Months of Existing Housing Inventory, -1.2% vs. last month, -14.4% vs. last year
  • Median Sales price +2.7% vs. last year
  • Average Sales Price +3.8% vs. last year

Tuesday, June 22, 2010

Energy Analyst Urges New Approach In Egyptian Offshore Production - Guest Post

39 Conduit Cancellations, Henderson Land Update (0012, HLDCY)

Distressed Volatility (仿旧波动):  Here is an update on Henderson Land Development in Hong Kong.  The company trades on the Hong Kong Stock Exchange (HKG:0012) and in the U.S as an ADR (OTC:HLDCY).  It appears that the record breaking $57 million 39 Conduit unit sale back in October 2009 was canceled!  In total, 20 of the 24 flats were canceled.  Were the transactions used to prop up prices or were people thinking Florida 2007 (or just saw Jim Chanos on TV).  The Hong Kong Government is investigating the cancellations.

In November 2009 a Tomson Riviera unit in Shanghai broke a record as well.  Keep an eye on the Hang Seng Property Index and the important 30,000 resistance level (chart below).  Below are articles and charts of Henderson Land Development and the Hong Kong Property Index.  For your viewing pleasure I also embedded a Google Map (street view) of 39 Conduit Road so you can visit Hong Kong.  Is Jim Chanos about to be right regarding China's property bubble?

I-Shaped Lumber Recovery Turns Into Upside Down V-Shaped Crash ($LUMBER, $ITB)

Lumber Contract
Remember lumber was going parabolic in late April? (link: Lumber Contract In I-Shaped Recovery, Up 91% On Year).  Housing stocks were breaking out left and right, riding that tax credit to the moon.  Here are housing posts on my blog from March to May 2010 sorted by date to see options activity and various predictions by Meredith Whitney, John Paulson (Paulson & Co.) and Whitney Tilson (T2 Partners).  If Paulson hasn't changed his view, he expects 8-10% housing price gains in 2011 and sees a V-shaped recovery.  Whitney Tilson went public with a research report on May 20 giving reasons to short $ITB (Dow Jones Construction Index).  ITB was at $13 at that time.  Guess where it's at today people, $12.  Tilson made you 7.7% in a month on the short side.  Back to lumber.  Lumber went parabolic and as you can see from the chart below, the I-shaped recovery turned into an upside down V-shaped crash.  It lost 42% from the April peak and wiped away all of 2010's gains.  I'll be watching for support, which looks like $170.

Monday, June 21, 2010

Gold Decoupled from US Dollar Index During June (Futures Charts, GCZ10, DXZ10, UUP/GLD)

I was watching the Gold/US Dollar relationship recently waiting for a divorce (see posts on 6/2 and 6/3) and since the beginning of June they decoupled.  The December Gold Future (GCZ10) broke out of an ascending triangle to the upside and the December US Dollar Index Future broke below an uptrend (ascending channel) to the downside.  Since May 21 ( over 1-month), Gold is up about 8% and the USD is unchanged.  You don't see it on the chart but the US Dollar Future is approaching its 50 day moving average which could act as support.  The Sep S&P E-Mini Future (ESU10) is up 1.51% (16 points) tonight on breaking news regarding the Chinese Yuan and a lower US Dollar.  September Crude oil is up 1.79% to $80.60.

Stocks, Commodities, U.S. Futures Rally as China Lets Yuan Gain on Dollar - Bloomberg
Yuan Climbs Most in 18 Months as China Signals End to Peg; Forwards Jump - Bloomberg

Gold Comex December 2010 vs. US Dollar Index December 2010 (OptionsXpress)

Gold Move is "Reserve Driven", Euro is Doomed Currency - Dennis Gartman

Hat tip Miss Trade for this Bloomberg video featuring Dennis Gartman (of the Gartman Letter). He's still bullish on gold in non-US Dollar terms, thinks the Euro is a doomed currency and Gold's move is strictly "reserve driven" (currency driven), meaning Central Banks could be diversifying out of Euros, Pound Sterling, Yen or US Dollars (eventually?) and into Gold. For recent posts on Gartman, click the label.

Sunday, June 20, 2010

Chinese Yuan Peg In Play, BP Spilling 100,000 Barrels, Mich Unemployment Rate Drops, Chavez Battles Prices and Venezuela CDS Tops Default Percentage, Elliott Wave Thinks Dow Going Below 1,000!

Chinese Yuan peg in play!!!!!  Links for Sunday Night 6/20/2010:

Nouriel Roubini on Chinese Yuan (Saturday June 19): - "China's decision to move away from its currency peg might mean the yuan weakens against the dollar instead of strengthens as Washington wants" - Reuters

Beijing Move Threatens to Shake Up Its Neighbors - WSJ (h/t @FLYiR)
Dollar Weakens as End to Yuan Peg Signals Confidence in Global Recovery - Bloomberg
Yuan Forwards Strengthen After Central Bank Signals End of U.S. Dollar Peg - Bloomberg
China Turns Tables on AAA Time-Bomb Nations: William Pesek - Bloomberg
Asia Company Bond Spread Gap Shows Battered Junk Debt May be Set to Rally - Bloomberg
BP estimates oil spill up to 100,000 barrels per day in document - Reuters 
Chinese Yuan Under Scrutiny Before G20 Meeting - CNBC (Reuters)
US Treasuries retreat after China's yuan move - Reuters (h/t @alea_)
Hugo Chavez Spearheads Raids as Food Prices Skyrocket - CNBC (Reuters)
Venezuela Using $1B Of Reserves To Meet Dollar Requests- WSJ
Venezuela 5-Year CDS at 1242.4 bps, default probability at 55.16% (6/18) - CMA DataVision
Venezuela Has No Plans to Lift Currency Controls, Chavez Says on State TV - BusinessWeek
Michigan’s unemployment rate drops to 13.6% in April - Crain's Detroit Business
Rahm Emanuel expected to quit White House - Telegraph.co.uk
Wall Street's cues differ in looking at historical and technical trends - MarketWatch
Gold Bubble? What Bubble? - Zero Hedge
US manufacturing crown slips - Financial Times (h/t @upsidetrader)
Elliott Wave predicts triple-digit Dow in 2016 - MarketWatch

Michael Pento: Double Dip Recession Assured, US Never Healed (Debt/GDP 370% and Rising)

Click for Bloomberg TV Video
Going back a week here.  Michael Pento (Delta Global Advisors), who called the recent gold run in 9/2009, was on Bloomberg TV on June 9 saying a double dip recession was "virtually assured". He's betting against Ben Bernanke's positive stance given his poor track record and would rather take cues from oil, Treasury prices and "Dr. Copper".

Pento also mentioned a Debt/GDP statistic:

Yale's Shiller: Significant Risk of Further Declines in Stocks, Housing, Also Case Shiller Home Price Index ETF Coming Soon

Click for Bloomberg TV Video
Yale Economics Professor and MacroMarkets LLC Co-founder Robert Shiller was on Bloomberg TV on June 11 talking about the chance of a double dip recession.  He first brought up the savings rate.
"The saving rate in the United States, the personal saving rate, has been declining since the early 1980s.  We used to save 10% of our income, it got down to zero or negative, and so I think we were in an abnormal state, it wouldn't surprise me if we returned to something more like a normal saving rate and I think that would be a good thing in the long run, maybe not the short run."
"The short run fear is it will be a depressant on the economy".
Robert Shiller on the stock market and housing:

Saturday, June 19, 2010

BP CEO Tony Hayward Testifies Before Congress (Full Cspan Video)

Below are embedded CSPAN videos of BP CEO, Tony Hayward, testifying before congress on the oil rig explosion / oil leak in the Gulf of Mexico.  If interested, watch a crazy lady covered in oil (or black ink) interrupt the hearing. BP has a live feed of oil leaking into the Gulf of Mexico.
"Tony Hayward testified on the role of BP in the Gulf of Mexico offshore oil rig explosion and oil spill. Questions from members focused on the scope of the accident, causes of the explosion on the Deepwater Horizon oil rig, BP's poor safety record over the past several years, the company's commitment to cleanup efforts, and documents which showed the company had disregarded safety concerns at the oil rig site and had cut corners to save money." [C-spanvideo.org]

Crude Oil Holds on to Week’s Gains After High Inventories Threaten Rally - Guest Post

Friday, June 18, 2010

The Case for Pursuing Uranium, Analysis - Guest Post

Guest post by OilPrice.com

Why Uranium Will Make Someone Rich

Uranium is a very unusual sector. For one, it's small. So small, that at one point in history top-producing nations like Canada and France tried to form a uranium cartel to control prices for the metal.

The "uranium OPEC" failed. But production today is de facto controlled by a handful of companies.

Consider this. The world's top ten uranium mines account for 59% of global production. (The top mine, Saskatchewan's McArthur River, alone puts out 15% of the world's supply.)

Thursday, June 17, 2010

Illinois, California Default Probability Higher Than Portugal (CDS)

It will be interesting to watch Illinois and California CDS going forward. As mentioned in my previous post, the CPD% (cumulative probability of default percentage) next to the CDS quote at CMA Market Data measures the probability of default.  The State of Illinois and California took out Portugal today on the "highest default probability list"!  They are now up against Iraq.  Since Distressed Volatility has a cell in Chicago, Illinois, agents there might have to move to Asia.

Highest Default Probabilities
Source CMA DataVision on June 17, 2010

"Entity Name Mid Spread CPD (%)
Venezuela 1318.02 57.29
Greece 814.68 48.88
Argentina 1033.74 48.68
Pakistan 766.70 39.59
Ukraine 614.31 34.02
Dubai/Emirate of 466.15 27.04
Iraq 399.30 24.05
Illinois/State of 304.64 22.81
California/State of 296.05 22.59
Portugal 306.85 22.57"

News:
Moody's Lowers Illinois Rating On Budget Woes - WSJ 
Moody’s Downgrades Illinois as State Eyes $3B of Deals - Bond Buyer
Moody's downgrades state bonds, revenues continue slide - State Journal
Fitch Downgrades Illinois' GO Bonds to 'A' from 'A+' - Street Insider
*Illinois Has $4.5 Billion In Unpaid Bills, $1.75 Billion Due June 10 - 5/17/2010

BP Protester Covered In Oil Breaks Into Hearing With CEO (Video!)

I'll embed the full House Subcommittee on Oversight and Investigations hearing with BP CEO Tony Hayward later tonight. Enjoy the oil lady.

Trader LEAPs into 2012 Hecla Mining Calls As Puts, Short Interest Rise! Jefferies & Co. Initiates $HL With Buy Rating, $7 Target

You remember all that action last week in Hecla Mining's January 2012 $2.5 Calls on the International Securities Exchange?  I took snapshots the other day of the activity.  On the ISE, 21,451 moved at 3.2.  HLs ISEE ratio was the highest that day on the widget. Ever since the March 2009 low, Hecla's Put/Call open interest ratio has been rising even though puts open are less than half the call count.  The ratio is at 0.43 up from 0.11 in April 2009.  Short interest has been rising as well. It's the highest its been since 2008 with 40.23 million shares short as of 6/01/2010.  The Schaeffers Volatility Index is also at two year lows.  So what happens next?

Top Default Probabilities: Venezuela, Pakistan, California, Illinois (CDS)

CMA Datavision has a Sovereign Risk Monitor which "identifies and ranks the world’s most volatile sovereign debt issuers according to percentage changes in their 5 year CDS" (Credit default swap). They also provide the "cumulatve probability of default" CPD% next to the CDS quote (Mid spread, priced in basis points).  Illinois and California made the "highest default probability" list today.  Venezuela topped the list with a 58% CPD%.  Pakistan should merge with Illinois to cut costs and leverage synergies, why not.  You can monitor the largest daily movers (overall, sovereigns and financials) and CDS index levels free at cmavision.com/market-data. Hat tip @Ro_Patel for the update.  Credit default swaps are insurance contracts on a company's debt.  The contracts measure financial health risk of an entity and are privately structured and traded between hedge funds, insurance companies and banks.  States and Countries (sovereign debt) also have credit default swaps.  Basic transparency is a must here imho.

6/16/2010
Entity Name Mid Spread CPD (%)
Venezuela 1359.27 58.41
Argentina 1065.47 49.74
Greece 833.20 49.63
Pakistan 769.20 39.70
Ukraine 613.77 34.01
Dubai/Emirate of 469.87 27.24
Iraq 403.10 24.26
Portugal 313.48 22.99
California/State of 298.71 22.78
Illinois/State of 302.24 22.67

$LQD Symmetrical Triangle Break Point, 5,000 July 106 Puts Open (Charts), Investment Grade Corporate Bond ETF

Watch LQD here, the investment grade corporate bond ETF.  It's trading in a symmetrical triangle near the break point and is being supported by the 50 day moving average.  LQD's relative strength index is at 52 (tug of war).  On the second chart you can see that LQD is trading in an ascending channel (uptrend) right at support.  A move is coming in either direction. A breakdown would violate the three support levels I just mentioned so keep an eye out.  Are the 5,000 puts there for protection?

Wednesday, June 16, 2010

Top Soros Fund Holdings for 3/31: GLD, NG (NovaGold), PBR (Petroleo Brasileiro), DTV (DirecTV), SU (Suncor Energy) [Table]

This post is backward looking. I'm reviewing some of Soros Fund Management's holdings (hedge fund run by George Soros) reported on March 31, 2010. I'm doing this after posting George Soros's speech in Vienna on June 10 (Act II of drama speech). I didn't plan on doing this, it just had to be done. You can find better analysis at GuruFocus or MarketFolly.com. Remember, it's been more than 2 months since these holdings were reported, so all of these positions could've been dumped for all I know. Below is a table of Soros's top holdings greater than $100 million.

George Soros: "We Have Entered Act II of the Drama" (Full Speech in Vienna)

Source: GeorgeSoros.com, h/t Zero Hedge.

"IIF Spring Membership Meeting Address, Vienna

June 10, 2010

In the week following the bankruptcy of Lehman Brothers on September 15, 2008 – global financial markets actually broke down and by the end of the week they had to be put on artificial life support. The life support consisted of substituting sovereign credit for the credit of financial institutions which ceased to be acceptable to counter parties.

Bill Gross: Equities Trading at Low P/E, Almost As Secure As Sovereigns, What About the Cyclically Adjusted P/E Ratio?

Pimco's Bill Gross, who manages the largest bond fund in the world, is moving into equities. On CNBC he said equities are selling at low P/Es (price/earnings ratio) and are almost as secure as sovereigns themselves. What about Shiller's cyclically adjusted P/E ratio Bill? From Morningstar: Are the Odds Stacked Against Stock Funds?.

Be careful with corporate bonds. JP Morgan's Chief US Equity Strategist, Thomas Lee, said corporate bonds could be the next bubble and "sees relative value of stocks verses their own corporate bonds" (video link).  Treasury yields could have put in their 30 year low in 2008 (see post with 30 year chart and thoughts from Bill Gross, Jim Grant, David Rosenberg, who sees lower yields, on 4/5/2010).  Yields move inversely with price.  Also, Gregor Macdonald energy/macro analyst at Gregor.us and MacroTwits believes Treasury bonds have peaked (see MacroTwits hour 6/13/2010). Last but not least, "S&P Warns of Rising Corporate Defaults" - DealBook. Look at the chart of maturities.
"In 2011, there will be about $300 billion in debt due, of which 41 percent is considered speculative. But by 2014, the amount of debt due climbs to about $550 billion, 72 percent of which is speculative" [read more at DealBook].

BP Chairman, Oil Executives Congressional Hearing Video (C-SPAN)

BP America President/Chairman Lamar McKay appeared before the House Energy and Commerce Committee today at the "Offshore Drilling Operations and Safety" hearing.  Other oil executives, including Chevron Chairman/CEO John Watson, ExxonMobil Chairman/CEO Rex Tillerson, Shell President Marvin E. Odum and ConocoPhillips Chairman/CEO James Mulva, testified as well. Remember I said beware of the oil volatility monster back in April?  It ended up being an evil black swan. I embedded the full 5 hour hearing below (courtesy of C-SPAN). Don't forget you can watch 60,000 barrels of oil spew into the Gulf of Mexico from the damaged BP riser 24 hours a day, 7 days a week.  Watch the madness here.

On Tuesday, Fitch downgraded BP's credit rating to BBB from AA, BP CDS rose 20% and bonds that mature next March yield 10.847%, 3.06% higher than 7.782% on Monday [WSJ].

Guest Post - Geothermal Elbowing its Way into the Mainstream

Guest post by OilPrice.com

Geothermal Elbowing its Way into the Mainstream

As I've mentioned a few times, geothermal looks to be approaching a rolling boil. A few more positive indicators on the sector presented themselves over the past week.

Tuesday, June 15, 2010

Google TV Looks Cool (New Youtube Video Up)

Watch shows and movies on your television plus watch videos on the web, browse photos and play games. Watch the Google TV Keynote and CEO partners speak at Google I/O 2010 here. It's coming Fall 2010.

JP Morgan's Tom Lee: S&P Target 1,300, 14.5x 2011 $90 Earnings By Year End

As mentioned previously on Bloomberg (fading AAII sentiment ratio) and at the Reuters Investment Summit (next bubble could be in corporate bonds, or stocks post 2011), JP Morgan's Chief US Equity Strategist Thomas Lee sees "relative value of stocks verses their own corporate bonds". He thinks the "S&P will trade at at least 14.5x 2011 earnings by year end, which would be $90 (EPS), so it's roughly $1,300 by year end".  Lee sees upside to cyclical groups (steels, technology, basic materials, financials).

However, Tom said, "I think it's going to be very important for any forecast of 2011 earnings to not have Europe enter a recession.  We cut our forecast to Europe last week actually from about 2% growth for the next few( 3?) quarters to 1%.  We do think that the crisis will slow down growth but will not lead to a recession."  Click here for recent posts on Thomas Lee.  Video courtesy of CNBC.com.

Watch Gold 1240 (Japanese Candlesticks), S&P Resistance - Videos

Adam Hewison of MarketClub has free video updates up on Gold (XAU/USD) and the S&P.   He gets into Japanese candlesticks, fibonacci retracements and resistance levels.  Check out the trade triangle tech.

Monday, June 14, 2010

ACT II: Moody's Downgrades Greece to Junk, Euro Wedge Break, BP Plunges, Market Tests 200-Day and Illinois Teachers Union Sold CDS?

-ACT II -

Diversified Link Fest for 6/14/2010

Euro May Rise to 3-Week High on Wedge Break (Forecast Pte in Singapore) - BusinessWeek
Greece Cut to Junk by Moody’s on ‘Substantial’ Economic Risks (Ba1) - BusinessWeek
Euro Turmoil Sends Borrowers to Loonies, Francs: Credit Markets - Bloomberg
Japan’s Bonds May Rise as Greece Downgrade Boosts Safety Demand - Bloomberg
Interest rates rise despite Greece downgrade - Associated Press
61% Underfunded Illinois Teachers Pension Fund Goes For Broke, Sells Billions In CDS - ZeroHedge
Copper Drops for First Day in Six After Greece Is Cut to Junk - BusinessWeek
BP shares plunge as spill costs grow - Financial Times
Lawmakers to BP: Put up $20 billion escrow - CNN Money
Coffee at Two-Year High on Shortage Fears - WSJ
Starbucks Announces Free Wi-Fi, Proprietary Content Network - Wired
Spain sees credit squeeze, denies EU rescue bid - Reuters  h/t @gold_tracker
Bulls Heartbroken As Stocks Kiss 200-Day, Then Fail - CNBC Fast Money
News Corp. Prepares for Paid Online Content (Skiff) - NY Times Business
Trading in Film Futures Contracts Approved - NY Times Business
Kass: Black Swans Return - TheStreet.com
The Crash of 1929 Documentary Video - HedgeAnalyst
Ron Paul's committee assignments and industry investments overlap - WashingtonPost
Forrester: Steve Jobs is wrong, GoogleTV will work - Fortune
Distressed CMBS Loans Now Returning Less Than Half Their Note Value - Costar h/t @mynurealtor
WaMu files new reorganization plan - Associated Press
Stocks Party Like It's 2009, but Soros Sees Ghosts of the '30s - Tech Ticker
Cash Flow for BP, but Investors Worry - New York Times
Florida Appraisers Ask to Cut Value of Gulf Property Hit by Oil - BusinessWeek h/t @mynurealtor

GLD Winning Year To Date +11.2%, UUP +9%, SPY -0.84% CHART

GLD (Gold) is winning year to date. GLD +11.2%, UUP (US Dollar) +9%, SPY (S&P) -0.84%. Chart comparison courtesy of FreeStockCharts.com.

Sunday, June 13, 2010

The $1 Trillion Afghanistan Mineral Rush - NYT

It looks like Afghanistan has a trillion dollars worth of "untapped mineral deposits", including "iron, copper, cobalt, gold and critical industrial metals like lithium". "Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe".  Add on to that marijuana and poppy fields and they're pretty diversified.  How clean will the transformation be?  Read the whole story at New York Times.

Oil Price Rally Stumbles Friday on Negative Economic News - Guest Post

Prechter: US Dollar Bull Run Over, Wave 5 Complete, Euro Could Bounce to 1.30 But Would Rather Own Swiss Franc (CNBC Video)

Robert Prechter of Elliott Wave on June 10 on CNBC said the US Dollar was ready for a correction (after the 20% run from December) and the Euro's ready for a bounce.  Jim Rogers felt the same way about the Euro a few days ago on CNBC.  Prechter said the Dollar completed a Wave 5 structure (see below) and the Euro could bounce to 1.30 and squeeze some shorts (bears).  He said he'd rather be long the Swiss Franc than the Euro.  It was interesting that he said "Europe won't look as bad as somewhere else for a while".  That's how powerful charts are people, they predict serious events!  I hope you all bought the Dollar when Prechter was bullish in late 2009.  Regarding the market, Prechter thought the bear market that "resumed in April was still in force".  He didn't mention gold but on Tech Ticker he didn't see much upside given the massive bullish sentiment (front page NYT today!).  Trend is your friend until it ends...  I embedded the CNBC video below.  See my Jim Rogers post from Friday to see UUP, FXE and UUP/FXE ratio charts.

Muni Updates, Municipal Bond Yields [Cities, States] [6/13/2010]

Here is a quick muni link fest.  See recent posts on the financial health of Municipalities and municipal bonds (via Distressed Volatility Public Finance).

Obama Presses for Aid to Cities and States - NYT (h/t @gregormacondald)
*Fitch Downgrades Illinois General Obligation Bond Rating to A from A+ - Hedge Analyst
Illinois’ CDS widened by 17 basis points this afternoon, to 283 basis points - Barron's Blog
Buffett Expects ‘Terrible Problem’ for Municipal Debt - BusinessWeek
Investors Looking Past Red Flags in Muni Market - WSJ (h/t creditwritedowns)
Households Bust $1 Trillion Muni Mark - Bond Buyer
Cash-poor NY state may issue IOUs like California - Reuters
Goldman bet $35m against California - Financial Times
Calif. treasurer urges leverage limit for muni CDS - Interactive Investor 6/4
San Francisco Sells $400 Million Build Americas as Spread Grows - BusinessWeek
Controller Chiang - California May Issue IOUs Again If Budget Not Fixed - BusinessWeek
New York Borrows $900 Million as City Gains Favor Over State - BusinessWeek
Foreign Buyers Boost U.S. Muni Assets 19% on Build America Lure - BusinessWeek
‘Investor Resistance’ Boosts Muni Yields to Highest in 4 Weeks - BusinessWeek
Costs could snag moving Detroit police, fire to former casino - Detroit News
Council: Let's talk Detroit budget -- face-to-face - Detroit Free Press
Three American cities on the brink of broke (May 28) - CNN Money
America's 7 junkiest cities - CNN Money

State of Emergency in Jalal-Abad #Kyrgyzstan [Videos, Articles]

Up early this morning and saw there were ethnic riots in Kyrgyzstan (Dzhalal-Abadskaya). Remember the revolution in Kyrgyzstan not too long ago?
*Videos of Anti-Government #Kyrgyzstan Riots and Protests - link
The Truth Behind The Recent Unrest in Kyrgyzstan - Guest Post - link
The Aftermath of the Kyrgyz Revolution - The Lesser Players - Part 2
Kyrgyzstan: Business, Corruption and the Manas Airbase - Part 3
This is what's going on today:
Kyrgyzstan declares state of emergency in Jalal-Abad oblast amid deadly clashes - BNO
More than 100 killed as Kyrgyz police are ordered to shoot to kill - NYT
Kyrgyz ethnic riots spread, 84 killed - Montreal Gazette
US Embassy in Kyrgyzstan calls for restoration of order amid deadly clashes - WireUpdate
Provokers spread rumors in Zhalal-Abad (Kyrgyzstan) - eng.24.kg
Mobs burn villages, slaughter Uzbeks in Kyrgyzstan - Associated Press
Kyrgyz Rioting Spreads in Apparent Ethnic Violence - NYT
Deadly ethnic unrest escalates in southern Kyrgyzstan - BBC News
Videos from RussiaToday and ITN

Friday, June 11, 2010

Jim Rogers: Short Stocks, Long Commodities, Might Get Long Euro [CNBC Video, FXE, UUP, UUP:FXE Charts]

UUP:FXE
June 11, 2010, charts for FXE [Euro ETF], UUP [US Dollar Index ETF], UUP:FXE

TECHNICAL RALLY coming for the Euro? Jim Rogers on CNBC yesterday said he was short stocks, long commodities and thinking about getting long the Euro given the bearish sentiment. If that's the case, do Gold and the Dollar go down from here or is decoupling in the cards. Below are charts (courtesy of stockcharts.com) of FXE, UUP and the ratio plus an embedded video with Jim on CNBC. He thinks you should leave the city and become a farmer. Jim timed the US Dollar trade in December 2009. For recent posts with Jim Rogers in the media click here or the label.

Thursday, June 10, 2010

High Hurricane Activity Threatens Gulf Oil Production, Cleanup Efforts - Guest Post

Guest post by oilprice.com

High Hurricane Activity Threatens Gulf Oil Production, Cleanup Efforts

As hurricane season begins in the Caribbean and Gulf of Mexico, forecasters are predicting higher-than-usual activity that could disrupt oil and gas production in the Gulf and hinder efforts to clean up the Deepwater Horizon oil spill.

BP 5Y CDS at 380 on Bankruptcy Rumor, Puts Active Down to $7.50, Bond Yields 7.89%, Stock Hits $29 and Value Investor Tilson Buys More [Charts]

This BP action reminds me of my first blog posts back in mid 2008 when large caps were trading at multi-decade lows.  Look at the similarities between BP today and the action in Bear Stearns, GM, Freddie, Fannie and Lehman Brothers 2 years ago.  This is a cash rich big oil co. though, but a fierce battle with the other side of the balance sheet (liabilities) is coming.  By the way, what ever happened with the GM exchange traded notes (retail bonds)?

BP bankruptcy rumors and chatter hit the mediasphere today.  Some value investors see opportunities.  If you want to see live BP video of the oil leak go here.
"They have about a month before they declare Chapter 11. They're going to run out of cash from lawsuits, cleanup and other expenses." - Matt Simmons  Simmons & Co. (CNN Money)

BP ADRs Plunging As Two Rumors Of Imminent Bankruptcy Hit Market - (Zero Hedge)

Has BP Sprung A Counterparty Risk Leak? - (Zero Hedge)

US Lawmakers sent a letter to BP: "We urge you to halt your planned dividend... until you have done the hard work of capping the well, cleaning up the Gulf Coast and making whole those whose livelihoods are threatened" (BBC)

BP Bonds Trade as Junk, Credit-Default Swaps Soar - (Bloomberg)

*Value Manager Whitney Tilson is buying more BP stock.  He increased his position to 5% today and called bankruptcy silliness - CNBC June 8, June 9

Check out the price action in BP PLC securities and derivatives.  BP's 5-Year credit default swap spiked 45% to 382bps today (credit insurance priced in basis points from CMA Datavision).  BP CDS is up 128% from June 1.  Remember 424,000 options traded that day on 7.15x average volume (59,300)?  There was no doubt volatility would continue.

Today saw heavy put volume in June and July, way above open interest and all the way down to the $7.50 strike.  BP stock closed at $29.20 down 15.8%, options traded 9x average volume (829,970) and ISE Implied Volatility hit a new high of 117.  Also check out BP bonds (BP.JE) due in 2013.  6,000,000 in par value blew out in three blocks at 91.50, yielding 8.16% (look at the table).  A million traded at the end of the day at 92.25.  WOW, value players placing bets???  Look at chart snapshots of BP's option chains, stock, CDS and bonds.  This was a crazy black swan event.

Wednesday, June 9, 2010

Waste Freight/GDP, Credit Suisse on Gold, BP CDS Spike Again!, Medicare Exchange, US Debt to $19.6 Trillion by 2015, Tom Lee, Abby Cohen Bullish on S&P

Reading for June 9, 2010 with a few updates:

*China Exports Jump 48.5% as Europe Crisis Yet to Bite - Bloomberg
*U.S. senators vow action on China currency bill (2 weeks) - Reuters
*China property price growth continues to soar in May - China Economic Review (ht @asiablues)
*Financial Bill Would Create World Model, Volcker Says - New York Times
Waste on Freight Cars Up Most Since 1994 (+45% in April/May over 2009) - Bloomberg
U.S debt to rise to $19.6 trillion by 2015 (will top $13.6 trillion this year) - Reuters
Risks to Economy Have Risen ‘Significantly' (IMF) - Bloomberg
Greek Default Seen by Almost 75% in Poll Doubtful About Trichet - Bloomberg
The Gulf Coast oil spill's Dr. Doom (Matt Simmons) - Fortune
BP, Anadarko, Transocean CDS costs surge - Markit - Reuters 
Largest US Medicare Exchange Crosses Threshold (Extend Health Exchange) - InsuranceNewsNet
Credit Suisse Sees Gold at $1,360 - Zero Hedge
John Taylor (FX Concepts) On A Schizophrenic Europe - A Must Read - Zero Hedge
UBS Messes With Client, Literally Gets A Bull’s Horns - Deal Breaker
ECB's Weber: High public debt could lead to higher rates - Reuters
Hedge Fund sues Goldman over Timberwolf CDO deal - Reuters
Economy improving modestly: Fed's Beige Book - Reuters
BP shares slammed as Gulf oil spill probed - Reuters
Next bubble may be corporate bonds.. or stocks, S&P to 1,300 (JP Morgan's Tom Lee) - Reuters
JPMorgan Chase's Lee: Stocks near bottom (sees summer rally) - Reuters
Goldman's Abby Cohen: S&P to 1300, Gold +17% from here, likes industrial commods - Reuters

Bernanke Testimony: Economic Outlook, Developments in Europe and Fiscal Sustainability (6/9)

[Source: FederalReserve.gov]

Chairman Ben S. Bernanke
Economic and financial conditions and the federal budget
Before the Committee on the Budget, U.S. House of Representatives, Washington, D.C.
June 9, 2010

Chairman Spratt, Ranking Member Ryan, and other members of the Committee, I am pleased to have this opportunity to offer my views on current economic and financial conditions and on issues pertaining to the federal budget.

First Gold ATM in Abu-Dhabi, Chinese Love Gold Over Currencies, Soros Warns Gold Bubble Forming

Gold ATMs are coming.  German entrepreneur Thomas Geissler unveiled the first Gold ATM machine (Gold to go) in an Abu-Dhabi hotel.  They sell gold bars and coins weighing 1-gram to 1-ounce.  They provide franchise opportunities if you're interested!  According to the website, the first 200 Gold to go ATM machines will be in Germany, Austria and Switzerland.

The second video (h/t @howardlindzon) showed Chinese consumers giddy about gold.  The video also mentioned that hedge fund manager George Soros thinks gold is in a bubble.  Remember when Soros said "the ultimate asset bubble is gold" at the 2010 Davos conference?  So when will the Fed prick the gold bubble?  See recent posts on $GLD (Gold ETF) with charts and technical analysis.  The first video is from ITNnews.


Tuesday, June 8, 2010

Middle East Producers See More Heavy Oil in their Future - Guest Post

Guest post by oilprice.com

Middle East Producers See More Heavy Oil in their Future

Middle East oil countries should increase production of heavy oil as oil prices remain higher and improved technology makes it easier, those attending an industry conference in Bahrain were told.

Bahrain’s oil minister, Abdulhussain Mirza, told the Heavy Oil World MENA conference that heavy oil reserves in the region were estimated at 1 trillion barrels, or 28% of total world reserves, but historically accounted for little more than 10% of production.

Is GLD Ready For 2010 Breakout? DXY, SLV, GDX, GVZ, GLD Charts

Here are charts of SLV (Silver ETF), GLD (Gold ETF), GDX (Gold Stock ETF), DXY (US Dollar Index) and GLD/UUP (Gold ETF/US Dollar ETF).  Gold, Silver and their fiat buddy $USD are testing ceiling resistance levels as we speak and could spike or decouple at any moment.  The US Dollar took out a downtrend (chart 1) but still needs to break above the late 2008 high to be scot-free.  GLD could spike if it violates $122, look at the ascending channels for potential targets (chart 2, 3).

Links for June 8: Goldman Recommends Hedging XLF With Puts

Goldman Sachs recommends hedging XLF with put options, based on CDS - MarketWatch
Bear Options at Record as Wien Says Stocks to Rally (puts cost more than calls) - Bloomberg
ES (s&p e-mini future) vs. EUR/JPY - Zero Hedge
Bernanke Q&A with Sam Donaldson, Unemployment will remain high - Bloomberg
Morgan Stanley shutting 300 branch offices, cutting 1,200 jobs - Zero Hedge
Matolcsy Says Hungary Needs Extra Budget Cuts of 1%-1.5% of GDP - Bloomberg
Apple’s Jobs Unveils IPhone-4 With 100 New Features (video chat, thinner) - Bloomberg Video
Chinese Steelmakers to Cut Output, Baosteel Says - Bloomberg - h/t @chinabizwatch
Chrysler recalls nearly 600,000 vehicles - Reuters

Monday, June 7, 2010

Marc Faber Mises Circle Speech, When is the Next AIG to Fall? (5/22/2010)

Marc Faber gave an interesting speech at the Mises Circle ("Austrian Economics and the Financial Markets") in Manhattan, New York on May 22, 2010. He gave potential consequences of prolonged zero percent interest rate policies (ZIRP) and printing money. Another bubble is brewing folks, watch the video. He shows a powerpoint with historical charts during his speech. Marc Faber called the failed $115 $SPY breakout in the beginning of March. He runs the Gloom Boom Doom report, find recent posts on Marc Faber w/ embedded media appearances here. Long live Austrian Economics, reflexivity and technical analysis. That's all you need folks!

Friday, June 4, 2010

BP’s Continued Existence Seen Coming Under Threat as Gulf Oil Spill Continues - Guest Post

Guest post by OilPrice.com

BP’s Continued Existence Seen Coming Under Threat as Gulf Oil Spill Continues

The continued failure of BP’s efforts to stop the Gulf oil spill and mounting political pressure are putting the very future of the British-based oil giant in question.

$SPY Must Hold Shelf of Death, Under 200DMA, $107.75 -2.67%

$SPY (SPDRS S&P ETF) is trading on a wobbly shelf under the 200DMA. Let the force be with you $SPY.  Are we still in Wave 3?

$SPY [courtesy of FreeStockCharts.com]

Tom Lee (JP Morgan): AAII Survey Bearish Sentiment = Capitulation, Watching Credit Spreads and Risk Assets for Confirmation

On June 1 on Bloomberg TV, Thomas Lee, JP Morgan's Chief US Equity Strategist, said he was fading the net-bearish sentiment in the AAII Sentiment Survey (bull/bear ratio).  He thinks it shows bearish capitulation.  Tom also mentioned that credit spreads have widened a bit (pricing of risk) and equities need confirmation from other risk assets (high yield) in order to move higher.  He still thinks we're in a normal bull market correction but remains a selective "slow buyer".  Interesting, watch the video below.  The market better get above the 200DMA.  Lee made correct calls throughout 2009.  I also threw up a snapshot of the AAII Sentiment chart.

Mark Zuckerberg at D8: Things Will Be Designed More Around People and Will Be Powerful Direction [Facebook]

Below is a video of Mark Zuckerberg (Founder and CEO of Facebook) speaking at the AllThingsDigital D8 conference. He gets into Facebook privacy settings, social plugins, the news feed backlash and future predictions. I cooked up a Zuck quote and embedded a video clip, courtesy of AllthingsD.
"My prediction would be that a few years from now we'll look back and wonder why there was ever this time when all these websites and applications, whether they're mobile applications or websites, weren't personalized in some way, whether it's through social plug-ins or connect or instant personalization, or whatever programs other companies come out with but I just think that the world is moving in this direction where things are going to be designed more around people and I think it's going to be a real powerful direction."

Thursday, June 3, 2010

You Down With UUP? Dollar and Gold Decoupled Today, GLD at Ascending Triangle Inflection Point!

Continued from my previous post Who Decouples Next with a bunch of charts. Look at the GLD/UUP relationship widen today. UUP is preparing for a ceiling breakout (or failure) in a mini ascending triangle and GLD just took out the 20 day moving average and mini uptrend on the 30 minute chart. GLD is trying mercifully to break above the December high and through the year long ascending triangle. If the Australian Dollar wants to take down Gold, so be it.  These are near term technical indicators but could be part of a major confirmation signal soon to come.  Charts below are courtesy of FreeStockCharts.com.

CMBS, CRE Losses "Worst Coming", Municipal Budget Shortfalls, Goldman S&P Earnings Revision [links]

Japan Deflation vs. U.S Today (Nasdaq v. Nikkei Charts)

Interesting post at Business Insider: If We're Japan, Then The NASDAQ Is Going To 800 In Three Years. Click the chart links below.

Wednesday, June 2, 2010

Who Decouples Next? (GLD, UUP, SPY, AUD/JPY, AUD/USD, EUR/USD, FXI)

I want to know what you internet folk think of this.  In the beginning of May, $SPY (S&P ETF), AUD/JPY (Australian Dollar/Yen) and AUD/USD decoupled from $UUP (US Dollar Index ETF) and $GLD to the downside.  Yield plays and carry trades unwound a bit at that time.  The Australian Dollar rose in tandem with Gold during the reflation trade last year but decoupled during the 2008 carry trade massacre (financial crisis).  Australia is the second biggest producer of gold (mining weekly).  The Euro was already moving lower in late '09 on Greek/Eurozone sovereign debt fears and China ($SSEC, $FXI) was making lower highs.  Now it appears that AUD/JPY, AUD/USD and $SPY are testing downtrend resistance and UUP is being squeezed at an inflection point.

Tuesday, June 1, 2010

BP Stock -15%, CDS Spikes to 167bps, ATP Notes Down $300M, ATPG -18% and APC -19.5% [Stock Charts]

This BP "black swan" event in the Gulf (live BP oil cam) is not only killing the environment, but losing investors big money.  Except those long credit default swaps, short stock or long puts. BP's stock is down about 15% today after the "top kill" operation failed (bp.com).  They now have to drill relief wells which could take 2 months to complete (msnbc).  London investment bank Arbuthnot Securities thinks "BP Plc may break up or become a takeover target" (bloomberg).  The cost of the spill so far is $1 billion for $BP (npr).

BP stock lost 15% today and 40% since mid-April.  Andarko Petroleum lost 19.55% today and 45% since mid-April and ATP Oil & Gas lost 18% and 60% respectively (look at the comparison chart).

SPY and S&P 500 Future in Descending Channel, Testing 200DMA (Charts)

$SPY (SPDRS S&P 500 ETF) and the S&P June future are trading in a steep descending channel, just below the 200 day moving average. The falling 20 day moving average could bump heads with traders soon (light blue line on second chart). High frequency traders need to team up and make things happen. Charts courtesy of Stockcharts.com and Optionsxpress.

Updates: GLD/Currency ETF Ratios (GLD/UUP, GLD/FXE, GLD/FXB, GLD/FXY, GLD/FXY, GLD/FXC, GLD/FXA)

I'm watching the Gold ETF ($GLD) against major currency ETFs ($UUP-US Dollar, $FXE-Euro, $FXB-British Pound, $FXA-Aussie, $FXC-Canada, $FXY-Yen), especially GLD/UUP with the recent flight from the Euro.  GLD/UUP is sitting on 2008 support in a symmetrical triangle.  Get ready for Gold/US Dollar divergence or a tandem dance (direction same, speed different).  GLD/UUP RSI (relative strength index) is at 52.