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four
3,392 posts
msg #129802
Ignore four
7/13/2016 3:03:38 PM



karennma
6,419 posts
msg #129812
Ignore karennma
modified
7/14/2016 9:33:37 AM

four
3,027 posts
msg #129714
- Ignore four
modified 7/10/2016 3:21:18 PM
Look at those reverse splits!

=========

Yep.
They must R/S once the ETF gets into an untradable (price) range.
UWTI, UGAZ, JDST, DUST .. to name a few.
A long ETF could go to zero, when the underlying commodity consistently moves down.
A short ETF could go to zero when the underlying commodity consistently moves up.
The only way to avoid "zero" is to R/S, (i.e., 1:10) thus increasing the price.
For that reason, if I believe that metals are going UP, I would not trade a short ETF on metals (a short ETF that continues trending down and will inevitably decrease into single digits when the underlying consistently continues to go up in value)..
The E-Z money is in the direction of the trend.
JMHO.

Edit:
Posting this article for newbies:

http://www.cnbc.com/2014/11/19/this-nifty-etf-maneuver-is-becoming-more-common.html

four
3,392 posts
msg #130159
Ignore four
7/29/2016 10:59:41 AM

http://wolfstreet.com/2016/07/25/crude-oil-gasoline-glut-slow-demand-fracklog-duc/

Crude Oil Glut

pthomas215
444 posts
msg #130164
Ignore pthomas215
7/29/2016 12:18:58 PM

Thank you four. Just when it seemed oil was at the bottom, not so. negative interest rates and negative oil prices !

karennma
6,419 posts
msg #130199
Ignore karennma
8/1/2016 9:19:05 AM

http://finance.yahoo.com/news/stock-market-earnings-valuation-confusion-000000604.html

"The stock market is making no sense for a lot of investors ..."



pthomas215
444 posts
msg #130212
Ignore pthomas215
8/1/2016 10:18:27 PM

great article karen. something tells me the big drop might not happen until after November 8th.

four
3,392 posts
msg #130215
Ignore four
8/2/2016 2:00:31 AM

Short ?
http://www.barchart.com/headlines/story/106365/south-korea-fines-halts-sales-of-vw-cars-for-forged-tests

karennma
6,419 posts
msg #131616
Ignore karennma
9/30/2016 7:57:08 AM

pthomas215
316 posts
msg #130212
- pthomas215 8/1/2016 10:18:27 PM
great article karen. something tells me the big drop might not happen until after November 8th.
============================

Here we go AGAIN.
Google: Deutsche Bank.
Trump warned everyone months ago.
It's only a matter of time.




pthomas215
444 posts
msg #132058
Ignore pthomas215
10/22/2016 12:57:49 AM

Calm Before Next Financial Market Storm? Oil Market Pointing To Yes

Oct. 20, 2016 2:22 PM ET|32 comments | Includes: AMLP, DIA, ENFR, QQQ, SPY, USO, XLE
Daniel R Moore Daniel R MooreFollow(2,257 followers)
Long only, portfolio strategy, value, research analyst
Send Message|FinancialRelativity.com
Summary

Having recently undergone a correction which bottomed in early, the risk of a follow-on correction so near in time is low in probability.

However, headwinds in the market such as prospects for rising interest rates and slow GDP growth seem to be capping market upside growth.

The question on many investor minds is what circumstances are likely to occur to create the next major follow-on correction?

This article examines the 1987 market breakdown which followed the 1985 oil price collapse, showing similar market downside risk exist today as oil retraces from its recent lows.

It is often said that history never repeats itself, but on many occasions it rhymes. Where is the financial market today relative to years past, and is there anything that investors can learn? It is safe to say that there are no comparisons when it comes to current Western World central bank policy, except possibly the 1940s. Currently the U.S., Japan and the EU are seemingly on a mission to corner the market in their own sovereign nation bonds. The EU and Japan have even crossed over into corporate bond buying. The purpose of this exercise is political, masked in the mathematical jargon of economics.

But regardless of your politics, the fact is that by withdrawing a large supply of seemingly safe assets from the financial system, the central banks have pushed riskier asset values up and interest rates down. The end result, at least in the U.S., has been a stock market resilient to downturns with the exception of the "profit recession" instigated by the oil market plunge and troubles in China that started a minor stock market correction in August of 2015 that bottomed in early 2016.

Is the Stock Market Now Poised to Move Higher?

Having only recently undergone a correction, which many would say was instigated by world markets becoming very risky in the face of oil prices becoming too low, the temptation is to say that the U.S. market (NYSEARCA:SPY) (NYSEARCA:DIA) (NASDAQ:QQQ) has taken its medicine for the time being. It would be a very rare occurrence for the stock market to bottom from a correction, resume an upward trend to a new all-time high, only to plunge into a correction again within such a short period of time.

The market rebound from February 2016, which has held with relatively minor volatility at least through the writing of this article, continues to demonstrate to me that there is a bid in the market which naturally follows an "oil profit recession". The two most recent time periods that correspond most closely to the current market scenario are 1985-87 and 1998-2000. In both scenarios, the oil market broke down with price levels being cut to about 1/3 rd of their recent highs over a very short time span. The plummeting price level resulted in pressure on the U.S. financial market to correct or slow its upward movement as international financial flows into U.S. markets were interrupted and oil company profits suffered. But what is missed by many investors is what happened subsequent to the oil market breakdown as prices began to retrace and escalate once again.

Take a look closely at the history of oil price movements relative to the S&P 500 from 1985 through 1987.

In the case of the 1985 collapse in oil prices, the stock market paused initially as oil prices bottomed, and then continued its torrid pace higher into 1987, only to hit the wall on Black Monday in October of 1987. The stock market broke down in 1987 after a spiking rebound in oil prices. In the 1985 to 1987 instance, oil prices doubled off the lows experienced at the bottom of the plunge in 1986.

The breakdown in the price of oil in 1985 bears a striking resemblance to the recent dramatic plunge in oil prices which began in late summer of 2014.

A doubling off the bottom of prices as happened in 1987 would mean price levels need to be sustained above the $50 per barrel with $60 per barrel being my estimated market break point depending on the value of the dollar. Currently, as I write this article, the price of crude has crossed the $50 threshold as it did back in June of 2016, only to drop back into the $40 range. If the move upward is now sustainable, the parallel to 1987 is becoming much more relevant to investment strategy.

In my opinion, the stock market valuation relative to the oil market is currently in a very similar predicament that was evident in 1987, even though the times are different. For one, there is no precedent for the amount of Central Bank interference in the financial markets world-wide. However, both then and now, the Fed was in the midst of attempting to raise interest rates, although rates were considerably higher in 1987 than 2016. If you begin to witness deterioration in the dollar index (DXY), the two time frames will become even more similar. The lack of real economic growth today versus 1987 is also disconcerting, and may cause the ultimate outcome to be worst for stocks in the current era.

pthomas215
444 posts
msg #132529
Ignore pthomas215
11/15/2016 10:15:07 AM

Volatility may be in the bullpen warming up...

Trump carnage in bonds spells big trouble for stocks
MARKETWATCH 8:12 AM ET 11/15/2016
The stock market must come to reckoning as Treasury yields swing higher, analysts say

Stocks have stormed to record levels on the back of hope that President-elect Donald Trump can make not just America great again, but the stock market as well. But a jarring selloff in bonds is a bad sign for Wall Street and could mean problems for equities, at least in the short term, strategists warn.

Read: MarketWatch's snapshot of the market (http://www.marketwatch.com/story/dow-on-pace-for-7th-straight-up-session- 2016-11-15)

"I'm very confident that this rise in rates is very dangerous in equities as a whole, not just in some sectors," Peter Boockvar, chief market analyst for The Lindsey Group, told MarketWatch on Monday.

Indeed, bond prices have collapsed in recent days, sending bond yields for the 10-year Treasury note shooting some 40 basis points higher since Trump gobsmacked investors by defeating Democratic opponent Hillary Clinton. Those moves have come as the Dow Jones Industrial Average has been registering records, finishing at another all-time closing high Monday and marking its sixth straight finish in positive territory.

Read: President-elect Trump means stocks, bonds, other markets, in for a wild ride (http://www.marketwatch.com/story/ what-trump-victory-means-for-stocks-bonds-and-other-markets-2016-11-11)

Also read: The 'Trump trade' is shaking up markets around the globe (http://www.marketwatch.com/story/the-trump-trade- is-shaking-up-markets-around-the-globe-2016-11-14)

So far, the bulk of the pain being felt in equities has been reserved to the so-called dividend payers. That is, those sectors that offer a yield in addition to giving investors the benefit of share-price gains. Those include the S&P 500 index's telecom, utilities and real-estate sectors. But those areas of the market, which have drawn the heaviest bids over the past year from investors eager to find a proxy for ultralow yielding government bonds, are unraveling as bond yields tick higher.

Over the past month, the telecommunications sector is off 7.5%, real estate is down 4.2% and utilities have lost about 4%, the top three worst performers among the S&P 500's 11 sectors, according to FactSet data.

Trump's promise of loosening regulations, cutting taxes and boosting spending to repair roads, highways and bridges has led to the higher moves in government bond yields, with traders seeing his proposals as supportive to higher economic growth and inflation, anathema to bond investors because inflation erodes the value of interest payments. Bond prices and yields move in the opposite direction.

Meanwhile, industrial stocks and financials have been hopped up on the hope of increased spending, higher rates and a deregulated market. Financials(KBE) (XLF)(KRE) have been steadily climbing over their 50-day moving averages, which market technicians view as the dividing line between short-term and long-term trends (see chart below).

Boockvar said it won't be long before the celerity at which yields have ascended along with stocks comes back to bite equity investors. That's because he thinks, for one, that stocks are rich relative to their earnings and believes values must normalize after years of central-bank-fueled monetary easing.

"We didn't get to 20 times [P/Es] because everything was great. We got here because interest rates were artificially low." Boockvar said, referring to price-to-earnings ratios, one measure of a company's stock value.

"There's no free lunch to the monetary policies that central banks have embarked upon over the past eight years," he said.

"We were in a global bond bubble of epic proportions and that is now starting to leak air," he said.

The strategist also said swiftly climbing yields can be an economic headwind.

In the real world, long-dated Treasurys like the 10-year note which finished at 2.224% on Monday, and the 30-year bond , which ended at 2.983%, are used to price everything from auto loans to mortgages, and higher rates translate to higher borrowing costs for individuals and companies. The five-day climb for yields in the 10-year and 30-year bonds mark the sharpest moves since 2009, according to Dow Jones data, and Trump was only part of the reason for spike, although he represented the lion's share of the move. Gradually shifting growth expectations and increased chances of a rate increase by the Federal Reserve in December helped start the trend.

To be sure, not everyone is worried about the sudden rise in yields and its potential to roil stocks--at least just yet.

Brian Jacobsen, chief portfolio strategist at Wells Fargo Fund Management, said he is paying close attention to the moves in Treasurys but isn't quite freaking out until he sees a more sustained move in yields: "We're not too worried about the increase in yield until we get to a breaking point." Jacobsen defines a breaking point as a "sustained move toward 2.5%" for 10-year Treasurys. At those levels, Jacobsen says investors will be more inclined to buy Treasurys over stocks, which are perceived as riskier. "Worries about [rapidly] rising inflation might dwarf the optimism about growth," he said.

For now, Jacobsen said the market is experiencing a tug of war between the prospects for growth, which have shifted along with expectations for inflation. Over the longer term, Jacobsen said stocks could see a solid uptrend.

Market technician John Kosar at Asbury Research told MarketWatch that he doesn't see Treasurys putting in a bottom yet, but he thinks the breaking point for U.S. government paper is nearing, which could mean a slump in stocks (see chart below).

"There may be another shoe to drop in the stock market," Kosar said, adding that he sees 10-year yields possibly heading back to 2% in the near term, implying that investors will move out of stocks and buy Treasurys at some point before the end of the year.

"Usually when the market is least expecting, it gets whacked. I think the likelihood of us making new all-time highs and staying there for the S&P 500 is not good," he said. But he also sees signs that 2017 could be a good one for stock investors.

Investors also point to strong moves in the Russell 2000 , which closed up 1.3% at a record, as support for the view that the overall market is on the elevator to new heights. The index, which represents the outlook for smaller companies, is up 9% so far in November, compared with a 1.8% rise for the S&P 500. Bullish sentiment in the smallest companies in the U.S. tends to be a statement on the outlook for the economy.

But it is important to note that the average dividend for S&P 500 stocks is 2.1%, according to FactSet data, less than the yield on the 10-year Treasury, highlighting the reason investors might feel compelled to rotate out of stocks and into government bonds at some point in the near future.

How all this plays out is still anyone's guess. But one thing appears to be assured: Trump has ushered in a new level of uncertainty for stock investors. If nothing else, he has the potential to make "volatility great again," as hedge- fund investor Doug Kass of Seabreeze Partners Management put it.

"I am cautiously adding to my short book on any further market advances as the great reset might have a shorter half- life than many presume," Kass wrote in a research note Monday.

-Mark DeCambre; 415-439-6400; AskNewswires@dowjones.com


(END) Dow Jones Newswires
11-15-161012ET
Copyright (c) 2016 Dow Jones & Company, Inc.


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