Vikram Saxena's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/141279/comments http://seekingalpha.com/article/158102/comments?source=feed#comment-650211 650211
1) GAZ was trading without any premium to NAV till they too decided not to issue new shares. Last Thursday (8/20) the news leaked and since then it has built up a healthy premium to NAV which lead to the run its price. The spread between NGX9 and NGV9 has also increased; it is showing up in a percentage change plot of GAZ.IV versus UNG.IV

2) UNG does not lose value just because of the roll. The total value does not change simply because they now own smaller number of contracts at a higher price. However UNG does not benefit from the higher price of the new contract because of negative roll yield. The spread between the two contracts (plot NGV9 - NGU9) widens just prior to the roll date, further short-changing UNG holders.]]> Fri, 28 Aug 2009 00:22:51 -0400
1) GAZ was trading without any premium to NAV till they too decided not to issue new shares. Last Thursday (8/20) the news leaked and since then it has built up a healthy premium to NAV which lead to the run its price. The spread between NGX9 and NGV9 has also increased; it is showing up in a percentage change plot of GAZ.IV versus UNG.IV

2) UNG does not lose value just because of the roll. The total value does not change simply because they now own smaller number of contracts at a higher price. However UNG does not benefit from the higher price of the new contract because of negative roll yield. The spread between the two contracts (plot NGV9 - NGU9) widens just prior to the roll date, further short-changing UNG holders.]]> http://seekingalpha.com/article/157659/comments?source=feed#comment-644459 644459
ZeroHedge is taking on the titans of the financial industry and I can completely understand their need for anonymity. However, ZH should not only ensure that their claims are properly substantiated (they typically are), but also that the conclusions reached do not need a stretch of imagination (which they often do).

Though I read ZeroHedge to get a better picture, you can not trade based on what they write. ]]> Mon, 24 Aug 2009 21:08:02 -0400
ZeroHedge is taking on the titans of the financial industry and I can completely understand their need for anonymity. However, ZH should not only ensure that their claims are properly substantiated (they typically are), but also that the conclusions reached do not need a stretch of imagination (which they often do).

Though I read ZeroHedge to get a better picture, you can not trade based on what they write. ]]> http://seekingalpha.com/article/155900/comments?source=feed#comment-640750 640750 The problem with UNG is the contango roll costs. You can look up the forward curve for natural gas
finance.yahoo.com/q/fc...

The price for the January '10 is a full $2 above the price of the Oct '09 contract. This a lot more than the same spread next year; Jan '11 is just $1 above the price of the Oct'10. If you go further out, the difference between the Oct and the next Jan contract is even smaller (70-80c). So even if the price of Natural Gas rises in a few months, UNG investors will be short-changed since the forward curve is already pricing in the rise in the price of natural gas.

Since UNG and other commodity funds have become very big players in the futures market the market games them. Plot NGV9-NGU9 and you notice that the spread went up from around 25c to 40c just as UNG was rolling over.

In the short term the market is really depressed because storage is almost full since supply is not diminishing at the same rate as demand, thanks to new shale wells which have very high output initially. The September contract collapsed in pricing as it got close to expiration; there is the same risk even with the October contract. Over the past 4 weeks the spread between October and November contract has widened by almost 30c!

Right now the premium to NAV for UNG is close to 14.2%. GAZ is relatively less pricey though its premium shot up as the news about GAZ not issuing more shares leaked out yesterday.

What we need is a product like USL which has an equal weighted portfolio of contracts spread over an year. Such a fund can capture the structural moves in the pricing of natural gas. Right now UNG is just a proxy of the front month contract.]]> Sat, 22 Aug 2009 01:42:47 -0400 The problem with UNG is the contango roll costs. You can look up the forward curve for natural gas
finance.yahoo.com/q/fc...

The price for the January '10 is a full $2 above the price of the Oct '09 contract. This a lot more than the same spread next year; Jan '11 is just $1 above the price of the Oct'10. If you go further out, the difference between the Oct and the next Jan contract is even smaller (70-80c). So even if the price of Natural Gas rises in a few months, UNG investors will be short-changed since the forward curve is already pricing in the rise in the price of natural gas.

Since UNG and other commodity funds have become very big players in the futures market the market games them. Plot NGV9-NGU9 and you notice that the spread went up from around 25c to 40c just as UNG was rolling over.

In the short term the market is really depressed because storage is almost full since supply is not diminishing at the same rate as demand, thanks to new shale wells which have very high output initially. The September contract collapsed in pricing as it got close to expiration; there is the same risk even with the October contract. Over the past 4 weeks the spread between October and November contract has widened by almost 30c!

Right now the premium to NAV for UNG is close to 14.2%. GAZ is relatively less pricey though its premium shot up as the news about GAZ not issuing more shares leaked out yesterday.

What we need is a product like USL which has an equal weighted portfolio of contracts spread over an year. Such a fund can capture the structural moves in the pricing of natural gas. Right now UNG is just a proxy of the front month contract.]]> http://seekingalpha.com/article/152523/comments?source=feed#comment-610886 610886
(1) The yield curve is very steep especially in intermediate term bonds. So going out an year or two gives you over-sized gains in yield. With the risk appetite growing, bond buyers might be willing to extend their duration and start moving further along the steep curve instead of crowding into the shorter term maturities. This seems to have been reflected in the good 7 year auction.

(2) The local demand for US treasuries is going to increase as the US savings rate goes up, and the boomers retire and shift towards less risky investments. So while foreign demand will continue to be critical, the pendulum will likely swing back as more Americans try to secure their nest-eggs in the perceived safety of Treasuries. The spreads on High Yield, Corporate and MBS have come back close to pre-Lehman level and a result treasuries are going to see an increased domestic bid vis a vis non-govt. bonds.]]> Sat, 01 Aug 2009 13:53:41 -0400
(1) The yield curve is very steep especially in intermediate term bonds. So going out an year or two gives you over-sized gains in yield. With the risk appetite growing, bond buyers might be willing to extend their duration and start moving further along the steep curve instead of crowding into the shorter term maturities. This seems to have been reflected in the good 7 year auction.

(2) The local demand for US treasuries is going to increase as the US savings rate goes up, and the boomers retire and shift towards less risky investments. So while foreign demand will continue to be critical, the pendulum will likely swing back as more Americans try to secure their nest-eggs in the perceived safety of Treasuries. The spreads on High Yield, Corporate and MBS have come back close to pre-Lehman level and a result treasuries are going to see an increased domestic bid vis a vis non-govt. bonds.]]> http://seekingalpha.com/article/149817/comments?source=feed#comment-597388 597388
The currencies of interest should be the commodity currencies (NOK, AUD, CAD, BRL, NZD, even the RUB), not the EUR.]]> Tue, 21 Jul 2009 21:05:49 -0400
The currencies of interest should be the commodity currencies (NOK, AUD, CAD, BRL, NZD, even the RUB), not the EUR.]]> http://seekingalpha.com/article/140014/comments?source=feed#comment-544131 544131

On May 28 12:08 PM RiskReturnOptimizer wrote:

> Please elaborate your Long TBT Bearish Put Spread position.
>
> This one is very interesting to me, since TBT is already double inverse
> price of 20 year treasury.
>
> Put spread is buying one put and selling another put.
>
> What strike prices are you using?
>
> What exactly is the derivative trade (e.g., put spread on a double
> inverse index) ....... is there is simpler bet on direction of treasury
> yield?]]> Fri, 12 Jun 2009 13:13:31 -0400

On May 28 12:08 PM RiskReturnOptimizer wrote:

> Please elaborate your Long TBT Bearish Put Spread position.
>
> This one is very interesting to me, since TBT is already double inverse
> price of 20 year treasury.
>
> Put spread is buying one put and selling another put.
>
> What strike prices are you using?
>
> What exactly is the derivative trade (e.g., put spread on a double
> inverse index) ....... is there is simpler bet on direction of treasury
> yield?]]> http://seekingalpha.com/article/141520/comments?source=feed#comment-533153 533153 Fri, 05 Jun 2009 08:04:43 -0400 http://seekingalpha.com/article/139505/comments?source=feed#comment-525266 525266
www.treas.gov/press/re...

These are the monthly inflows in the last quarter of 2008. The net inflows were 273.1,61.3,74.0 in Oct,Nov&Dec respectively; a total of 408.4B for Q4 2008.

www.treas.gov/press/re...
The TIC data for Jan-March 2009 showed inflows of -143.5 -91.1 23.2, a total of -211.40B for Q12009.

So over the last two quarters the net-inflow has been 197B. The number for Sep2008 was 142.7, taking the total to 339.7B since Sept08.

Were the outflow in Q109 is a readjustment after the rush to safety last Fall? Also note that the inflow went positive in March in spite of the Fed's Quantitative Easing Policy.]]> Sun, 31 May 2009 13:23:37 -0400
www.treas.gov/press/re...

These are the monthly inflows in the last quarter of 2008. The net inflows were 273.1,61.3,74.0 in Oct,Nov&Dec respectively; a total of 408.4B for Q4 2008.

www.treas.gov/press/re...
The TIC data for Jan-March 2009 showed inflows of -143.5 -91.1 23.2, a total of -211.40B for Q12009.

So over the last two quarters the net-inflow has been 197B. The number for Sep2008 was 142.7, taking the total to 339.7B since Sept08.

Were the outflow in Q109 is a readjustment after the rush to safety last Fall? Also note that the inflow went positive in March in spite of the Fed's Quantitative Easing Policy.]]> http://seekingalpha.com/article/138906/comments?source=feed#comment-514974 514974
Indian economy is a lot more insular and less affected by foreign countries. China had to pump its economy with a massive stimulus package to ensure that the economy does not follow exports and collapse. India had to do an order of magnitude less to get similar results, since most of the growth in India is organic and not export driven.

Much of China's stimulus has been handed out as loans, whose future performance is uncertain. Though it has created a big buzz, it is not clear whether it will result in sustainable growth, in the absence of growth in exports.]]> Fri, 22 May 2009 17:57:16 -0400
Indian economy is a lot more insular and less affected by foreign countries. China had to pump its economy with a massive stimulus package to ensure that the economy does not follow exports and collapse. India had to do an order of magnitude less to get similar results, since most of the growth in India is organic and not export driven.

Much of China's stimulus has been handed out as loans, whose future performance is uncertain. Though it has created a big buzz, it is not clear whether it will result in sustainable growth, in the absence of growth in exports.]]> http://seekingalpha.com/article/138330/comments?source=feed#comment-509284 509284

On May 19 07:05 AM Respirate wrote:

> Vikram, if you can answer a question: What level are you looking
> at for an OIH trade? $86-87?
>
> I agree that 'Services' is the sweet spot in the oil sector. It's
> easily outpaced the S&P in recent months and may be expensive
> in the short term.
> Thanks -- R]]> Tue, 19 May 2009 07:47:11 -0400

On May 19 07:05 AM Respirate wrote:

> Vikram, if you can answer a question: What level are you looking
> at for an OIH trade? $86-87?
>
> I agree that 'Services' is the sweet spot in the oil sector. It's
> easily outpaced the S&P in recent months and may be expensive
> in the short term.
> Thanks -- R]]> http://seekingalpha.com/instablog/141279-vikram-saxena/4630-weekend-roundup-the-standoff-continues-but-sentiment-shifting?source=feed#comment-508161 508161
Trade the channel on the IYR. I have written some articles on IYR and the technical levels it follows religiously; they might give some better tools to work with. Also avoid the SRS; if you need leverage use IYR puts.



On May 18 03:09 AM fatcat wrote:

> IYR has spent the last 6 months in lala land....been a hard trade
> for me,one that looked so obvious...oh well...]]> Mon, 18 May 2009 10:22:13 -0400
Trade the channel on the IYR. I have written some articles on IYR and the technical levels it follows religiously; they might give some better tools to work with. Also avoid the SRS; if you need leverage use IYR puts.



On May 18 03:09 AM fatcat wrote:

> IYR has spent the last 6 months in lala land....been a hard trade
> for me,one that looked so obvious...oh well...]]> http://seekingalpha.com/article/138134/comments?source=feed#comment-508144 508144
The frontier markets are going to be the emerging markets of the last decade. As long as you are selective about where you go, there is a strong chance of out-sized returns as these markets are discovered. Of course out-sized returns come with the risk of out-sized losses. Loose but firm stop levels, is what you definitely need with these markets.

Look at the Indian market today. If you had bought some index options last week, you might as well be ready to retire today :).


On May 18 09:43 AM morph366 wrote:

> One thing to remember about being a pioneer in a "frontier market"
> - you might end up with an arrow in your back :-)]]> Mon, 18 May 2009 10:12:12 -0400
The frontier markets are going to be the emerging markets of the last decade. As long as you are selective about where you go, there is a strong chance of out-sized returns as these markets are discovered. Of course out-sized returns come with the risk of out-sized losses. Loose but firm stop levels, is what you definitely need with these markets.

Look at the Indian market today. If you had bought some index options last week, you might as well be ready to retire today :).


On May 18 09:43 AM morph366 wrote:

> One thing to remember about being a pioneer in a "frontier market"
> - you might end up with an arrow in your back :-)]]> http://seekingalpha.com/article/137318/comments?source=feed#comment-502255 502255 twitter.com/aviat72

Use tweetdeck to filter out relevant tickers.


On May 13 09:56 AM Techtrader10 wrote:

> You might be someone I want to follow as I day trade Apple usually
> on the short side. How do you find the time to follow all the various
> indicators you mentioned? And do you really find all the index information
> of any real value?]]> Wed, 13 May 2009 12:43:54 -0400 twitter.com/aviat72

Use tweetdeck to filter out relevant tickers.


On May 13 09:56 AM Techtrader10 wrote:

> You might be someone I want to follow as I day trade Apple usually
> on the short side. How do you find the time to follow all the various
> indicators you mentioned? And do you really find all the index information
> of any real value?]]> http://seekingalpha.com/article/136091/comments?source=feed#comment-493963 493963
The note about preferred is from the WSJ article. I am including the relevant excerpts below.
Quote WSJ:
"In addition, it isn't clear what happens to hobbled regional banks that could have a hard time finding extra capital. Many are facing a deluge of bad loans to finance residential and commercial properties.

Regions, based in Birmingham, Ala., is among a handful of the tested banks without any privately held preferred shares that it could convert into common stock to boost its capital buffer, according to Deutsche Bank. That leaves it with a narrow range of options beyond turning to the government for aid."

On May 07 11:02 AM greedcanbgood wrote:

> "Many of these banks, especially Regions, do not have a large cushion
> of preferred capital to convert to common."
>
> Your analysis is incomplete unless you provide details. Otherwise,
> the reader is led to believe that all your regional listed are in
> the same boat and clearly, they are not.]]> Thu, 07 May 2009 12:09:15 -0400
The note about preferred is from the WSJ article. I am including the relevant excerpts below.
Quote WSJ:
"In addition, it isn't clear what happens to hobbled regional banks that could have a hard time finding extra capital. Many are facing a deluge of bad loans to finance residential and commercial properties.

Regions, based in Birmingham, Ala., is among a handful of the tested banks without any privately held preferred shares that it could convert into common stock to boost its capital buffer, according to Deutsche Bank. That leaves it with a narrow range of options beyond turning to the government for aid."

On May 07 11:02 AM greedcanbgood wrote:

> "Many of these banks, especially Regions, do not have a large cushion
> of preferred capital to convert to common."
>
> Your analysis is incomplete unless you provide details. Otherwise,
> the reader is led to believe that all your regional listed are in
> the same boat and clearly, they are not.]]> http://seekingalpha.com/article/136091/comments?source=feed#comment-493781 493781
2. Before the wireless revolution what you call the obscure was the more common idiomatic use of the word
www.thefreedictionary....


On May 07 10:36 AM Kenny Sullivan wrote:

> Ever hear of spell check? Poor spelling, poor grammar and an obscure,
> if not wrong, use of of the word tether are unprofessional. I began
> looking for errors in the article, rather than looking for content.
>
> Kenny Sullivan]]> Thu, 07 May 2009 10:55:03 -0400
2. Before the wireless revolution what you call the obscure was the more common idiomatic use of the word
www.thefreedictionary....


On May 07 10:36 AM Kenny Sullivan wrote:

> Ever hear of spell check? Poor spelling, poor grammar and an obscure,
> if not wrong, use of of the word tether are unprofessional. I began
> looking for errors in the article, rather than looking for content.
>
> Kenny Sullivan]]> http://seekingalpha.com/article/134955/comments?source=feed#comment-488444 488444
However your post actually highlights the angst being felt by the investors who missed out this rally. You might be strong in your conviction, but every day which goes by without a correction is weakening the conviction of many. This is especially true of money managers who are paid to invest and have been caught with too much cash in their portfolio.

To see an example, the ES futures continue to trade higher in spite of the leaked reports that BAC, C, WFC, PNC etc. may need tens of billions in additional capital. A few weeks ago, news like this would have meant the futures trading down a few percentage.

There is a change in risk appetite which needs to be respected. Whether and how long the appetite for risk will last is another question. We are no longer in a market where you can buy and hold, or short and hold; it is a trading market where investors have to move in and out of positions, without leaning too strongly towards either side of the market (bullish or bearish).

On May 04 07:42 AM prudentinvestor wrote:

> "There is a lot of money sitting on the side-lines, trying to get
> in to the market. This money sat on the sidelines during the period
> of extreme pessimism ..."
>
> Interesting that those who have gone all-in, and thus have no money
> left on the sidelines, like to speak for those who still have money
> on the sidelines!
>
> I suspect that those who kept money on the sidelines, myself included,
> have done so for a reason, and perhaps their reason is their inability
> to see sound underlying economic fundamentals. The government has
> stabilized the system, but their notion of repairing it is to restore
> speculative lending, and to encourage people to spend by borrowing,
> without having jobs and earning capacity to support their borrowing
> and spending. This model is exactly what caused the current crisis,
> and It should be clear that restoring a failed status quo ante cannot
> lead to a sustainable recovery.
>
> Thus, I'd suggest to the pundits to put their own money where their
> mouth is, and to avoid the arrogant assumption that others who have
> kept money on the sidelines are just waiting to be told when and
> how to commit it to the market.]]> Mon, 04 May 2009 08:57:48 -0400
However your post actually highlights the angst being felt by the investors who missed out this rally. You might be strong in your conviction, but every day which goes by without a correction is weakening the conviction of many. This is especially true of money managers who are paid to invest and have been caught with too much cash in their portfolio.

To see an example, the ES futures continue to trade higher in spite of the leaked reports that BAC, C, WFC, PNC etc. may need tens of billions in additional capital. A few weeks ago, news like this would have meant the futures trading down a few percentage.

There is a change in risk appetite which needs to be respected. Whether and how long the appetite for risk will last is another question. We are no longer in a market where you can buy and hold, or short and hold; it is a trading market where investors have to move in and out of positions, without leaning too strongly towards either side of the market (bullish or bearish).

On May 04 07:42 AM prudentinvestor wrote:

> "There is a lot of money sitting on the side-lines, trying to get
> in to the market. This money sat on the sidelines during the period
> of extreme pessimism ..."
>
> Interesting that those who have gone all-in, and thus have no money
> left on the sidelines, like to speak for those who still have money
> on the sidelines!
>
> I suspect that those who kept money on the sidelines, myself included,
> have done so for a reason, and perhaps their reason is their inability
> to see sound underlying economic fundamentals. The government has
> stabilized the system, but their notion of repairing it is to restore
> speculative lending, and to encourage people to spend by borrowing,
> without having jobs and earning capacity to support their borrowing
> and spending. This model is exactly what caused the current crisis,
> and It should be clear that restoring a failed status quo ante cannot
> lead to a sustainable recovery.
>
> Thus, I'd suggest to the pundits to put their own money where their
> mouth is, and to avoid the arrogant assumption that others who have
> kept money on the sidelines are just waiting to be told when and
> how to commit it to the market.]]> http://seekingalpha.com/article/134633/comments?source=feed#comment-486162 486162 Fri, 01 May 2009 17:14:45 -0400 http://seekingalpha.com/article/130523/comments?source=feed#comment-462028 462028
I was intrigued by your comments so tried out a log scale. This following link shows how that looks on a 6 month and a zoomed in version (3 month).
screencast.com/t/0qxxa...

To me even the log graph clearly shows a W shaped double bottom on the right side of the cup. I have marked it with yellow lines. It is a stronger pattern since the second low was higher than the first low. In fact the log chart tends to de-emphasize the steep fall which would have worked against the pattern.

If you just consider the closing prices (third graph) we can see a V shaped. However this closing low was well (23%) above the intra-day low reached on the capitulation day which had much higher volume. Further the closing prices ignore the true range of the stock especially if the swings are made on high volume. Sure the base is very spiky but we are trading in very volatile times.

Trade smart and enjoy your gains.


]]> Mon, 13 Apr 2009 17:40:13 -0400
I was intrigued by your comments so tried out a log scale. This following link shows how that looks on a 6 month and a zoomed in version (3 month).
screencast.com/t/0qxxa...

To me even the log graph clearly shows a W shaped double bottom on the right side of the cup. I have marked it with yellow lines. It is a stronger pattern since the second low was higher than the first low. In fact the log chart tends to de-emphasize the steep fall which would have worked against the pattern.

If you just consider the closing prices (third graph) we can see a V shaped. However this closing low was well (23%) above the intra-day low reached on the capitulation day which had much higher volume. Further the closing prices ignore the true range of the stock especially if the swings are made on high volume. Sure the base is very spiky but we are trading in very volatile times.

Trade smart and enjoy your gains.


]]> http://seekingalpha.com/article/130523/comments?source=feed#comment-461053 461053
The market has thrown out all rules during the past year. Further the scope of the market decline has matched some of the worst bear markets in history. As a result the ratios which may have worked well in the past can not be applied religiously here since the market is not behaving in a manner when those rules were developed and refined.

As I noted in my article, even if we accommodate for stretched ratios, the pattern is not perfect and has to be traded with a lot of caution. However, there is no denying that the 1st order metrics of the pattern, especially how the volume has behaved during different price periods are close to what Mr. O'Niel suggests (higher green volume bars, rising volume into right side, falling volume during the handle, high volume at capitulation low and breakout days etc.)

One aspect which I disagree with you quite strongly with you is your claim of a V shaped bottom. I see no V here; I do potentially see a W on the right side of the cup. I also would reiterate the fact that in a market with extreme moves like this, some of the basing action is bound to be more spiky and choppy than more normal times . However the handle over the past few weeks has been much better behaved, reflecting a gradual stabilization the market, which is also being reflected by the VIX.

This a period where disciplined traders can make money and BAC is one of the stocks with the potential to do so, as long as you are careful about when and where you enter the position and when you take your losses.]]> Sun, 12 Apr 2009 22:23:02 -0400
The market has thrown out all rules during the past year. Further the scope of the market decline has matched some of the worst bear markets in history. As a result the ratios which may have worked well in the past can not be applied religiously here since the market is not behaving in a manner when those rules were developed and refined.

As I noted in my article, even if we accommodate for stretched ratios, the pattern is not perfect and has to be traded with a lot of caution. However, there is no denying that the 1st order metrics of the pattern, especially how the volume has behaved during different price periods are close to what Mr. O'Niel suggests (higher green volume bars, rising volume into right side, falling volume during the handle, high volume at capitulation low and breakout days etc.)

One aspect which I disagree with you quite strongly with you is your claim of a V shaped bottom. I see no V here; I do potentially see a W on the right side of the cup. I also would reiterate the fact that in a market with extreme moves like this, some of the basing action is bound to be more spiky and choppy than more normal times . However the handle over the past few weeks has been much better behaved, reflecting a gradual stabilization the market, which is also being reflected by the VIX.

This a period where disciplined traders can make money and BAC is one of the stocks with the potential to do so, as long as you are careful about when and where you enter the position and when you take your losses.]]> http://seekingalpha.com/instablog/141279-vikram-saxena/458-is-bank-of-america-poised-for-a-major-leg-up?source=feed#comment-458774 458774
As I wrote in the article, any major move which happens during a holiday week is suspect. However you can not ignore the fact that on Thursday BAC traded more than a Billion shares, even more that the number traded when it made its capitulation bottom in February. One explanation might be that a large number of day traders focussed on BAC stock since the volume across the market was low.

My advise right now is to sit on hands and let the stock prove itself. This is not a breakout I will chase; it is also not something I will short.]]> Fri, 10 Apr 2009 10:02:47 -0400
As I wrote in the article, any major move which happens during a holiday week is suspect. However you can not ignore the fact that on Thursday BAC traded more than a Billion shares, even more that the number traded when it made its capitulation bottom in February. One explanation might be that a large number of day traders focussed on BAC stock since the volume across the market was low.

My advise right now is to sit on hands and let the stock prove itself. This is not a breakout I will chase; it is also not something I will short.]]> http://seekingalpha.com/article/130248/comments?source=feed#comment-458366 458366
I did a quick analysis of historical SPX data from Yahoo and a five week up streak is followed by another Up week 52.3% times (since 1950).

The market is in a bull run; whether it is a bear market rally or a true bull market does not matter much. A disciplined trading approach with appropriate stop loss levels will work in this market
]]> Thu, 09 Apr 2009 23:15:41 -0400
I did a quick analysis of historical SPX data from Yahoo and a five week up streak is followed by another Up week 52.3% times (since 1950).

The market is in a bull run; whether it is a bear market rally or a true bull market does not matter much. A disciplined trading approach with appropriate stop loss levels will work in this market
]]> http://seekingalpha.com/article/127796/comments?source=feed#comment-440486 440486
What I wanted to highlight was that on trend days with large moves, the 3x ETFs are not to be bought in anticipation of a reversal. Any continuation of the move results in significantly large percentage losses which can not be made up by a reversal the next day in the underlying index to the original purchase point. These distortion exist everyday but their amplitude gets magnified on a day when the underlying index makes a 15% move, cutting the value of the opposing 3x ETF by 45%. A trader who started buying FAZ towards the close of Monday had to endure a much larger percentage loss in his capital for every equivalent move in the index, To profit from the the reversal,the index will have to make a much larger move to break even. on Tueasday.]]> Wed, 25 Mar 2009 23:38:31 -0400
What I wanted to highlight was that on trend days with large moves, the 3x ETFs are not to be bought in anticipation of a reversal. Any continuation of the move results in significantly large percentage losses which can not be made up by a reversal the next day in the underlying index to the original purchase point. These distortion exist everyday but their amplitude gets magnified on a day when the underlying index makes a 15% move, cutting the value of the opposing 3x ETF by 45%. A trader who started buying FAZ towards the close of Monday had to endure a much larger percentage loss in his capital for every equivalent move in the index, To profit from the the reversal,the index will have to make a much larger move to break even. on Tueasday.]]> http://seekingalpha.com/article/127049/comments?source=feed#comment-439269 439269
i) The size of the debt compared to the total size of the economies both of the debtor nations and the bond holders; think Iceland.
www.investorsinsight.c...

ii) Currency Issue: A large amount of the debt is issued in Euros and not in local currencies. Investments in Eastern Europe were made in the hope that it will be the China for the Europe. With the slowdown, the exports have dried up, and the currencies have fallen. As a result not only have the assets underlying the debt have become less (or even non producing) but their real ability to service a debt in Euros has gone down.
www.investorsinsight.c...

iii) Legacy Issues: Some of the Eastern European countries also suffer from the challenge of their communist/socialist past. For example Hungary has a huge pension obligation which lies at the heart of its problem.
online.wsj.com/article...
]]> Wed, 25 Mar 2009 07:38:16 -0400
i) The size of the debt compared to the total size of the economies both of the debtor nations and the bond holders; think Iceland.
www.investorsinsight.c...

ii) Currency Issue: A large amount of the debt is issued in Euros and not in local currencies. Investments in Eastern Europe were made in the hope that it will be the China for the Europe. With the slowdown, the exports have dried up, and the currencies have fallen. As a result not only have the assets underlying the debt have become less (or even non producing) but their real ability to service a debt in Euros has gone down.
www.investorsinsight.c...

iii) Legacy Issues: Some of the Eastern European countries also suffer from the challenge of their communist/socialist past. For example Hungary has a huge pension obligation which lies at the heart of its problem.
online.wsj.com/article...
]]> http://seekingalpha.com/article/127049/comments?source=feed#comment-436102 436102
1. I also wanted to add the Norwegian Krone (NOK) as one of the key currency to go long against the Euro. The Krone has a strong commodity link and the Norwegian economy is one of the best when it comes to fiscal discipline.

2. Among the long currencies I will under-weigh the Canadian Dollar with relation to the AUD, NZD and the NOK. The Canadian economy is too closely linked to the US, a correlation I would like to reduce in this trade.]]> Mon, 23 Mar 2009 01:33:11 -0400
1. I also wanted to add the Norwegian Krone (NOK) as one of the key currency to go long against the Euro. The Krone has a strong commodity link and the Norwegian economy is one of the best when it comes to fiscal discipline.

2. Among the long currencies I will under-weigh the Canadian Dollar with relation to the AUD, NZD and the NOK. The Canadian economy is too closely linked to the US, a correlation I would like to reduce in this trade.]]> http://seekingalpha.com/article/127049/comments?source=feed#comment-434871 434871
Imagine, a dozen Treasury Secretaries, all with different political and economic compulsions, trying to come to a consensus. The ECB was clearly wrong last spring when they could not get off the inflation band-wagon leading to the rapid decline of the Dollar and the subsequent oil bubble, which weakened of the US consumer-base.The Germans, who are typically against bail-outs were the first in Europe to bail-out a major corporation!

The global economic picture will either worsen or get better. However the Euro is not positioned to benefit from either scenario.

In the positive scenario, the currencies which are likely to gain are the once which do not carry the baggage of a damaged financial system, have some organic domestically driven growth capability, and can participate in any upswing in the world economy. The commodity sensitive currencies fit the bill best.

In the negative scenario, where the global economy continues to worsen, major new shocks are much more likely to come from Europe than the US. If risk appetite decreases further, the bias will be to head towards the safest bets where the uncertainty element is the least. This includes the USDollar, and perhaps the Japanese Yen. The Euro will not be the safe-haven of choice, when it is not clear who is in control, what their plan is, which nations are next in line to join the union, or in some cases even thinking about leaving the Union.

And in times of crisis, the psychological significance of military strength should not be discounted. Europe has been getting a free-ride on the US Taxpayers via the NATO umbrella, when it comes to defense spending. If that situation changes, it will have a negative impact on European economies.]]> Sun, 22 Mar 2009 01:49:03 -0400
Imagine, a dozen Treasury Secretaries, all with different political and economic compulsions, trying to come to a consensus. The ECB was clearly wrong last spring when they could not get off the inflation band-wagon leading to the rapid decline of the Dollar and the subsequent oil bubble, which weakened of the US consumer-base.The Germans, who are typically against bail-outs were the first in Europe to bail-out a major corporation!

The global economic picture will either worsen or get better. However the Euro is not positioned to benefit from either scenario.

In the positive scenario, the currencies which are likely to gain are the once which do not carry the baggage of a damaged financial system, have some organic domestically driven growth capability, and can participate in any upswing in the world economy. The commodity sensitive currencies fit the bill best.

In the negative scenario, where the global economy continues to worsen, major new shocks are much more likely to come from Europe than the US. If risk appetite decreases further, the bias will be to head towards the safest bets where the uncertainty element is the least. This includes the USDollar, and perhaps the Japanese Yen. The Euro will not be the safe-haven of choice, when it is not clear who is in control, what their plan is, which nations are next in line to join the union, or in some cases even thinking about leaving the Union.

And in times of crisis, the psychological significance of military strength should not be discounted. Europe has been getting a free-ride on the US Taxpayers via the NATO umbrella, when it comes to defense spending. If that situation changes, it will have a negative impact on European economies.]]> http://seekingalpha.com/article/119928/comments?source=feed#comment-406923 406923 There is a big difference between Pension Fund Assets going to zero (or negative) and the over-funding going to negative. With stock prices cut in half in six months it is not a surprise that the excess in Pension Funds is no longer available.

What would have really helped is an analysis of how the damage to balance sheet might force Boeing to raise capital at significantly depressed equity price levels. Further is there any indication that Boeing's ability to raise debt is impaired (CDS spreads widening, ratings falling etc.)?]]> Sat, 28 Feb 2009 10:08:57 -0500 There is a big difference between Pension Fund Assets going to zero (or negative) and the over-funding going to negative. With stock prices cut in half in six months it is not a surprise that the excess in Pension Funds is no longer available.

What would have really helped is an analysis of how the damage to balance sheet might force Boeing to raise capital at significantly depressed equity price levels. Further is there any indication that Boeing's ability to raise debt is impaired (CDS spreads widening, ratings falling etc.)?]]> http://seekingalpha.com/article/120724/comments?source=feed#comment-393208 393208 The issue is the amount which each fund rolls over versus the magnitude of the contango. USO rolls over all contracts; USL rolls over only 1/12th. So the impact of the contango is more on USO than USL. Note that since USL rolls out to the contract one year out, the size of the contango can be significantly higher than the contango on with the next month which USO rolls into. But unless the annual contango is 12x higher than the monthly contango, USL will outperform USO around the roll time.]]> Wed, 18 Feb 2009 08:41:50 -0500 The issue is the amount which each fund rolls over versus the magnitude of the contango. USO rolls over all contracts; USL rolls over only 1/12th. So the impact of the contango is more on USO than USL. Note that since USL rolls out to the contract one year out, the size of the contango can be significantly higher than the contango on with the next month which USO rolls into. But unless the annual contango is 12x higher than the monthly contango, USL will outperform USO around the roll time.]]> http://seekingalpha.com/article/120627/comments?source=feed#comment-389548 389548 Sun, 15 Feb 2009 14:32:06 -0500 http://seekingalpha.com/article/116221/comments?source=feed#comment-364908 364908 Sat, 24 Jan 2009 10:28:23 -0500 http://seekingalpha.com/article/115425/comments?source=feed#comment-362882 362882 Thu, 22 Jan 2009 09:25:57 -0500