MF Global Holdings Bankruptcy: Energy And Oil ETFs Suffer (USO, IYE, XLE, MF)
by ilene - October 31st, 2011 6:49 pm
Courtesy of John Nyaradi.
Energy ETFs such as the United States Oil Fund LP (AMEX:USO), iShares Dow Jones Energy Sector ETF (AMEX:IYE), and Energy Select Sector SPDR (AMEX:XLE), all slumped today on news that MF Global Holdings (NYSE:MF), a large holder of futures positions, filed for bankruptcy earlier today.
(AMEX:USO) lost nearly 1% today as oil closed at $93.19 per barrel. The loss can largely be attributed to news that MF Global Holdings (NYSE:MF), a large holder of commodities positions, filed for Chapter 11 bankruptcy today, and is no longer able to trade its holdings except for sell off purposes. The bankruptcy could trigger a massive sell-off of commodities positions, including oil holdings, which would likely put supply in control and drive down prices. The oil market reacted accordingly today, and (AMEX:USO) followed directly behind with its 1% drop.
Other energy ETFs reacted negatively today, largely due to the oil slip and MF Global Holdings (NYSE:MF) news. The iShares Dow Jones Energy Sector ETF (AMEX:IYE) dropped 4.43% today while the Energy Select Sector SPDR ETF (AMEX:XLE) plummeted 4.71%. The drops in both (AMEX:IYE) and (AMEX:XLE) are likely a reaction to lower prices because oil is such a large staple of the US and Global economies. Any drop in oil is likely to trigger a similar drop in (AMEX:IYE) and (AMEX:XLE), and the MF Global Holdings (NYSE:MF) did not help.
The slump in Energy ETFs today is also largely attributed to the rising US dollar in response to the Japanese Government’s yen intervention to hold back the Yen’s strength. Commodities, and oil in particular, generally go down as dollars go up, and so a combination of the MF Global Holdings (NYSE:MF) failure plus a dollar increase are the likely culprits for oil and energy ETFs decline.
Bottom Line: MF Global Holdings (NYSE:MF) filing for Chapter 11 Bankruptcy is a huge deal for the commodities market. One can expect Oil and Energy ETFs like (AMEX:USO), (AMEX:IYE), and (AMEX:XLE) to respond accordingly until this market irons itself out.
ETF Summary:
United States Oil Fund LP (AMEX:USO): -0.20, -0.80%
iShares Dow Jones Energy Sector ETF (AMEX:IYE): -1.84, -4.43%
Energy Select Sector SPDR (AMEX:XLE): -3.44, -4.71%
Wall Street Sector Selector trades a wide variety of ETFs and positions can change at anytime.
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DiggGold And Silver Slump On News Of MF Global Holdings Bankruptcy (GLD, SLV, MF)
by ilene - October 31st, 2011 5:43 pm
Courtesy of John Nyaradi.
Gold and Silver ETFs (AMEX: GLD), (AMEX: SLV), slumped today on news of MF Global Holdings Bankruptcy (NYSE: MF) and Stock Market Sell-Off.
Gold dropped a total of $22 today to land at $1725.20 per ounce and the SPDR Gold Trust ETF (AMEX: GLD) followed suite by shaving off 1.34% off its record setting October highs.
The sell-of for (AMEX:GLD) can largely be attributed to MF Global Holding’s filing for Bankruptcy earlier today. MF Global Holdings (NYSE:MF) has large stakes in the futures markets, and as of right now any trades made by the bank are for “liquidation” purposes, thus prompting fear that supply will rule over demand for many commodities, indicating lower prices for metals, including (AMEX:GLD).
The US dollar surge sparked by a Japanese yen-intervention today, in addition to renewed hopes that Europe finally has its fiscal house in order, also likely contributed to the drop in (AMEX:GLD) today. Gold and gold ETFs typically track inversely to currencies, and the meteoric rise in (AMEX:GLD) for October can largely be attributed to Euro fears and possible affects of any European outcome on US banks and the US dollar. Since the currencies of the world (US Dollars and Euros) seem to be stable for now, it is not surprising that (AMEX: GLD) took a dive.
Silver also slumped today, with the iShares Silver Trust (AMEX:SLV) dropping nearly 2.3% on news of the MF Global Holdings Bankruptcy and because of the dollar surge via Japanese yen intervention. Although Silver is not as much of a “reserve” currency as Gold, silver typically tracks opposite to currency movement, and thus we saw (AMEX:SLV) drop today.
Bottom Line: the MF Global Holdings (NYSE:MF) Bankruptcy likely fueled the (AMEX:GLD) and (AMEX:SLV) sell-off today because the bank has a very large presence in the commodities markets, and a sell off of these assets would likely drop prices. A US dollar rally caused by a Japanese yen intervention also likely sparked the metals sell-off.
At the end of the day, however, the drop in (AMEX:GLD) and (AMEX:SLV) put just a small dent in the metal’s overall growth for October.
ETF Wrap-Up:
SPDR Gold Trust (AMEX:GLD): -2.28, -1.34%…
Business Activity Reports Are Mixed (DIA, SPY)
by ilene - October 31st, 2011 1:12 pm
Courtesy of John Nyaradi.
Business activity reports from Chicago and Texas are mixed this morning
The October Dallas Federal Reserve Texas Manufacturing Index recorded a substantial gain to +2.3 from last month’s -14.4, indicating improving business and manufacturing activity (AMEX:DIA) in the region. This was the first positive reading in six months with employment also reaching a six month high while new orders declined.
Farther north, the Chicago PMI declined to 58.4 from last month’s 60.4, indicating slower business activity for companies (AMEX:SPY) in the region but still remained above the critical 50 level which indicates the borderline between expansion and contraction.
Tomorrow brings the widely watched national ISM report.
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Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
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The Stock Market’s Monstrous Week (SPY, DIA, EFA, EWI, SLV)
by ilene - October 30th, 2011 4:50 pm
Courtesy of John Nyaradi.
As Halloween rings out a record setting October, the stock market faces a monstrous week of news and data ahead.
October was nothing, if not exciting, and November promises more of the same as this week brings a tidal wave of news and data.
At Wall Street Sector Selector, we were able to participate in last week’s euphoric relief rally and lots of factors will affect the sustainability of this rally as we head for the end of the year.
On My Wall Street Radar
chart courtesy of www.stockcharts.com
In the chart of the S&P 500 above (NYSE:SPY) we can see from the RSI that the major index is approaching overbought levels and significant resistance lies just ahead at the 1300 level. While the “death cross” is still in play, the index has closed above the widely watched 200 Day Moving Average and the 50 Day Moving Average is turning up. Significant support lies at the 1225 level.
Dow Theory (NYSE:DIA) has registered a “buy” signal with breakouts to new highs and seasonality points to the traditional strong finish to the year and the “Santa Rally.”
Overall, technical indicators point to an uptrend going into the end of the year that will depend upond holding the 200 Day Moving Average. At overbought levels, a correction to 1225 or so in the short term is a strong probability.
The Economic View from 35,000 Feet
Last week brought a blizzard of economic news, particularly from Europe, but one significant event went unnoticed behind the scenes and that is the Congressional “super committee” meetings on the budget deficit. Those meetings have continued largely in secret and as the November 23rd deadline comes onto the radar screen, this factor will come to the forefront of our attention. iShares Chief Investment Strategist Russ Koesterich offers an insightful look into what to expect in his article, “The Fatal Flaw of Deficit Reduction Efforts.”
Europe (AMEX:EFA) was the big news, of course, and, in my opinion, last week’s action did nothing more than buy some time for the Euro Zone to work their way out of this debt crisis.
In a nutshell, they boosted the leverage of the EFSF, (European Financial Security Facility) forced a 50% “haircut” on…
Unique ETF Opportunities For Unique Times
by ilene - October 29th, 2011 2:58 pm
Courtesy of John Nyaradi.
Europe has been all the news lately, along with the Euro Dollar, and volatility like this offers quick profit making opportunities in various asset classes that investors might otherwise not consider.
Exchange Traded Funds (ETFs) offer investors the ultimate in flexibility and portfolio construction by making previously unavailable asset classes easily accessible to retail investors. One of these major asset classes is Forex which, until recently, has been the domain of specialists, and traders/investors have been required to open separate accounts and trade forex as a separate segment of their investment portfolio.
However, with the advent of ETFs, investors can now get exposure to the benefits (and risks) of forex trading in traditional brokerage accounts, including IRAs and qualified defined contribution and 401k accounts.
Many investment avenues are available when using currency ETFs. One can go “long” a particular currency with standard currency ETFs or one can “short” a currency, either by shorting the particular ETF or buying an “inverse” ETF that changes value in the opposite direction of the underlying index. One can also leverage positions with ETFs that offer 2X leverage to the underlying currency’s index. Finally, ETFs that simulate the action of currency pairs are available which can replicate the trading action of the underlying forex pairs themselves.
Currency ETFs trade just like a stock and move with the underlying foreign exchange rate and offer a convenient, easy to understand way to participate in this market. While there are differences between currency ETFs and spot forex trading, ETFs offer investors several unique advantages. One example of a common forex ETF is the Currency Shares Euro Trust (AMEX:FXE). In light of the current European situation, (AMEX:FXE) last week provided investors significant gains as policymakers dodged the Greek bullet once more.
chart courtesy of www.stockcharts.com
Furthermore, you can use currency ETFs within the confines of a standard brokerage account and so all of things you’re used to with a standard stock account apply to currency ETFs. ETFs allow margin, short selling, stop loss entry and exit opportunities and reasonable commission structures. Currency ETFs also offer standard stock market margin leverage, and for more aggressive investors, options strategies on currency ETFs are available including covered calls and buying either puts or calls to amplify potential returns.
Beyond single currency ETFs, investors can also use currency pair exchange traded funds that are…
A Calm Day On Wall Street (DIA, SPY, EWI, WHR, HPQ)
by ilene - October 28th, 2011 6:52 pm
Courtesy of John Nyaradi.
A calm day on Wall Street after a week of pyrotechnics and a historic month.
Major stock market indexes were quiet today after yesterday’s fireworks with the Dow Jones Industrial Average (AMEX:DIA) and S&P 500 (AMEX:SPY) nearly flat after yesterday’s Europe induced relief rally.
Major movers were Dow (AMEX:DIA) component Whirlpool (NYSE:WHR) losing 14% on warnings of slowdown in demand and significant job cuts, while Hewlett Packard (NYSE:HPQ) new CEO Meg Whitman had a good day with company stock gaining 3.5% with the announcement that the company was going to stay in the PC busines safter all.
After yesterday’s frenzied response to this round of European crisis management, things were quiet except for in Italy (AMEX:EWI) where yields at a three year bond auction rose to record highs since the establishment of the Euro and demand was lower than expected as investors wondered if yesterday’s new plan will be enough to protect Italy from “contagion.”
Bottom line: The question of the day is, can markets “Keep Calm and Carry On?” Yesterday’s party is over and now investors have to ponder whether the European crisis is really solved or if the can has just been kicked further down the road. For now, technical and fundamental indicators would point to a year end rally, however, Italy and a deadlock in the Congressional “super committee” could be significant speed bumps along the road to the Holidays.
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Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
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Consumers Feel Better, Spend More (XLP, XLY, XLE, DIA, CVX)
by ilene - October 28th, 2011 1:43 pm
Courtesy of John Nyaradi.
Consumers feel better and spend more as sentiment and spending rise
The all important consumer sector (AMEX:XLP) received a boost today as reports showed that October Consumer Sentiment rose to 60.9 from last month’s 57.5 and September spending rose +0.6% compared to last months +0.2%. However, incomes only rose +0.1% for September, indicating that consumers tapped into savings and debt to support the increased levels of spending, and of course, this could prove to be unstainable in months going forward. Consumer giant Whirlpool (NYSE:WHR) was pounded for a double digit loss during the day as it reported softening demand, production cuts and layoffs. Job cuts could exceed 5,000, or 10% of its workforce, says demand in the United States continues to fall more than expected and no growth overseas.
Dow component (AMEX:DIA) Chevron Corporation (NYSE:CVX) reported that 3Q profits doubled as oil prices and production declined and overall results beat analyst estimates and the energy leader took the energy sector (AMEX:XLE) higher.
Bottom line: The energy sector (AMEX:XLE) remains in a significant uptrend as hopes for an improving economy drive oil prices higher. The Consumer Sector (AMEX:XLY) remains in a solid uptrend on both technical and fundamental levels, in spite of the consumer being stressed by lingering high unemployment.
Disclaimer: Wall Street Sector Selector actively trades awwide range of exchange traded funds (ETFs) and positions can change at any time.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
Stock Markets Blast Off (DIA, XLF, BAC, JPM, IEV)
by ilene - October 27th, 2011 7:56 pm
Courtesy of John Nyaradi.
courtesy NASA
Global stock markets blast off on relief over European debt solution
After a dramatic 11th hour agreement in Europe to defuse the Greek debt crisis, the Dow Jones Industrials (AMEX:DIA) responded with a dynamic 339 point gain and all other major indexes followed suit.
Even more impressive performance was logged by the all-important Financial Sector (AMEX:XLF) which soared +5.9% as Bank of America (NYSE:BAC) gained +9.6% and JP Morgan (NYSE:JPM) climbed +8.3%.
The euphoria was generated by an eleventh hour solution in Europe which called for recapitalization of European banks, a leveraged increase of the European Financial Stability Facility (EFSF) and a “haircut” of 50% for private holders of Greek debt. The moves were well taken on the continent as the iShares Europe 350 (AMEX:IEV) gapped higher by 5.9%.
While markets cheered the resolution, many analysts suggest that today’s agreement buys Greece and the Euro Zone some time but does not resolve the underlying problem of too much debt across its member nations.
In news at home, weekly unemployment claims came in above 400,000 yet again, and GDP was revised upwards to +2.3 from a previous estimate of +1.3 as the economy continues to muddle along.
The Dow Jones Industrials (AMEX:DIA) is on track for its best month since 1987 and reclaimed its 200 Day Moving Average and now stands at a three month high.
Bottom line: For now, at least, we have some stability in Europe and with seasonality and technical indicators now positive, we likely can expect higher prices ahead over the medium term.
Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
Euro, U.S. Stock Futures Climb on Europe Deal (FXE, SPY, IEF)
by ilene - October 26th, 2011 11:48 pm
Courtesy of John Nyaradi.
Euro Dollar (AMEX:FXE) and U.S. stock futures (AMEX:SPY) climb on news of Europe deal in the 11th hour.
French President Sarkozy announced a deal tonight at the 11th hour which all parties hope will bring the rolling Greek crisis under control.
Details are sketchy but, apparently, Greek bondholders will take a 50% “haircut” on their holdings and the EFSF (European Financial Stability Facility) will be leveraged to more than 1 Trillion Euros.
The Eurodollar (AMEX:FXE) climbed on the news to 1.394, a gain of +0.37% and U.S. stock futures (NYSE:SPY) gained approximately 1% while Treasury Bonds (AMEX:IEF) declined as “safety” became less popular.
Bottom line: For tonight, at least, it appears that the European Union has dodged yet another bullet. However, it remains to be seen if they can avoid a “credit event” and the resultant global financial chaos with the deal as it currently stands.
Next up come questions about the “credit event” and how markets will interpret this deal in regards to much bigger problems, Spain and Italy.
Wall Street Sector Selector remains offensively positioned, expecting higher prices ahead for the short term.
Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
U.S. Stock Market Eyes Europe (DIA, SPY, IEV, EWI)
by ilene - October 26th, 2011 7:36 pm
Courtesy of John Nyaradi.
U.S. Stock market posted gains in the major indexes (AMEX:DIA) and (NYSE:SPY) on the hopes that the European Union can finally resolve the financial crisis in Europe (AMEX:IEV)
All major U.S. indexes posted gains as European leaders struggled towards a solution for the crisis in Greece. The Dow Jones Industrials (AMEX:DIA) rose +1.4% while the S&P 500 (NYSE:SPY) tacked on +1.0%.
However, it is likely too early to declare victory as disagreements remain with bankers over the severity of the “haircut” that European leaders are looking for, now estimated as high as 50-60%.
The leaders of Europe have now had fourteen summits in twenty one months but today the German Parliament made a giant step forward with their approval of an upgraded EFSF (European Financial Stability Facility) and Italy promised asset sales and changes to retirement and regulations to lower their deficit.
This, to me, seems to be the real problem. Italy (AMEX:EWI) is a much bigger challenge, and if Greece is presenting this kind of heartburn, one can only wonder how they will deal with a similar, but substantially larger, problem in Italy.
Bottom line: The world hangs on Europe and failure here leads to financial Armageddon. We live in critical days.
Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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