Mystery Investor Buys a Billion Dollars Worth of European Cocoa
by ilene - July 20th, 2010 2:30 pm
Keep reading, mystery solved. – Ilene
Mystery Investor Buys a Billion Dollars Worth of European Cocoa
Courtesy of Jr. Deputy Accountant
Someone bought ALL the cocoa in Europe, as in a billion dollars worth. Perhaps JP Morgan has finally closed out Bear Stearns’ silver manipulation business and is ready to move on to candy bars and body paint?
The purchase was enough to move the entire global cocoa market, sending the price to the highest level since 1977, and triggering rumours and intrigue in the City.
It is unclear which person, or group of traders, was behind the deal, but it was the largest single cocoa trade for 14 years.
The cocoa beans, which are sitting in warehouses either in The Netherlands, Hamburg, or closer to home in London, Liverpool or Humberside is equivalent to the entire supply of the commodity in Europe, and would fill more than five Titanics. They are worth £658 million.
Analysts said it was very unlikely that a chocolate company, such as Nestle or Kraft, or even their suppliers, would buy such a huge order in one go and that is was probable that one or a number of speculators, possibly hedge funds, had attempted to corner the market. By doing this, they would have control of the entire supply in Europe, forcing the price yet higher.
This is the best part: Andreas Christiansen, president of the German Cocoa Trade Association, said the “hefty” price move was “a mirror of what can be done if people control the physical stock.”
Running out of markets to corner, someone got desperate. On the upside, at least it wasn’t Europe’s entire supply of Swedish album covers.
Update: Turns out it isn’t a mystery after all (h/t Geoff)
When British hedge fund manager Anthony Ward bought about $1-billion (U.S.) worth of cocoa beans last week, there was talk he was trying to corner the cocoa market and fears that chocolate lovers everywhere would face huge price hikes for their favourite treats.
But now it appears that Mr. Ward, dubbed “Choc Finger” by the British press, may have been forced to buy the beans to get out of his own market squeeze.
Analysts believe Mr. Ward ended up on the wrong side of a private hedging arrangement with Swiss chocolate-maker Barry Callebaut AG. As a result, Mr. Ward’s firm, Armajaro Asset
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DiggVIX Futures Contango Bubble
by Chart School - July 10th, 2010 3:30 am
VIX Futures Contango Bubble
Courtesy of Bill Luby at VIX and More
Truth be told, there is no such thing as a “contango bubble,” but I like how the two words look juxtaposed and it is Friday…
Bubble or not, the VIX futures are stretched to an extreme that I do not ever recall seeing and to the extent that the grapevine is whispering to Adam Warner of the Daily Options Report that the differential between the first month and third month VIX futures is at its highest level ever. (Note to self, why doesn’t the grapevine ever whisper to me?)
The chart below, courtesy of FutureSource.com, shows the difference between the VIX third month futures and front month futures (VX V0 – VX N0 in current VIX futures parlance) going back about six months. Personally, I tend to get excited when the third month VIX futures rises more than 2.00 higher than the front month, as this frequently suggests that the VXX negative roll yield contango play is starting to set up.
Some 17 months after its launch, I probably still get more questions about VXX than any other subject. As much confusion as there is about VXX, I think it is probably time to come out with an extended look at this volatility product in the next week or two.
For more on related subjects, readers are encouraged to check out:
- VIX Spike and VIX Futures Contango Means…
- VXX Calculations, VIX Futures and Time Decay
- VIX Term Structure and VIX Forecasts
- VIX:VXV Sell/Short Signal
- Is the Fear Bubble Bursting?
- VIX Futures Starter Kit
Disclosure(s): short VXX at time of writing
Comment by Ben: I don’t understand what this means. Is it a signal to short VXX? Buy it? Or VXZ? Or what?
Bill’s response: It is not a signal to short VXX, though that is the position I currently have on right now. What it means is that the consensus is that the VIX has fallen too far, too fast. The VIX futures indicate that the market believes the VIX will spike back up into the 30s over the course of the next few months.…
Why Futures are Annoying
by ilene - June 3rd, 2010 12:59 pm
Why Futures are Annoying
Courtesy of TraderMark at Fund My Mutual Fund
As I type this the S&P 500 is flat after running into the simple moving average just as the ISM Services report was released. All set up for a "rocket fuel run" based on a "surprise" beat. But alas, not to be.
However a flat session in the first hour is deceptive. We are actually down 0.5% in my book. Why? Because all of today’s gains came in the first minutes as premarket futures were marked up half a percent on essentially no reason.
So a pattern we’ve seen for much of the past year and a half
Premarket move: +0.5%.
Regular session: some sort of loss.
Today they happen to cancel each other out… leading to a flat day. That would be a negative day (at this moment of course) if not for premarket magic.
And this is why the premarket movement the past few years has become beyond annoying. And lest we pin the movement on ‘great news’ in premarket (a) the news was benign and (b) futures were up 0.4% before any news came out in the U.S. – and there was nothing of note overseas. It was just random magic.
There seems to be something unbalanced when a thin market, easily moved by a small slice of money (in the big scheme of things) can affect our day to day action so much.
David’s Five Keys to Identifying a Fundamental Day Trade
by ilene - February 2nd, 2010 11:44 pm
In the Oxen Group section, David recommends a couple day-trades, usually in the morning, often a stock or ETF to buy, and a stock or ETF to sell short. David selects his trading candidates based on his “fundamental day-trade system,” and his analysis of the technical condition of the market. He attempts to choose stocks and ETFs that are likely to move 3-5% during the day, and also to open and close the positions at optimal times.
David selects trades by first examining five key sources of information to help him find "high probability trades." After selecting the trades, he applies several basic trading rules. He has an excellent track record, which is posted in the Oxen Group section and updated every few weeks. Previously, David wrote about the first two of his fundamental keys. Here, David writes about all five of the most important factors he looks at. – Ilene
The Five Keys to Identifying a Fundamental Day Trade
By David at Phil’s Stock World
Identifying the Fundamentals
Stocks move under the influence various factors that we can use to identify stocks that are likely to move 3-5% in a single day. Even the best technicals seldom give you 5% upward (or downward) movements intraday alone, but combined with fundamental factors, we can find stocks that are likely to make these large daily moves.
To begin to seek that perfect stock or ETF, we first need to look for something that can propel a stock or, in the case ETFs, the represented sector. This 3-5% movement is not from the previous day’s close, but between the market’s open and close. We want to identify a stock that can be bought sometime in the morning to give us that significant movement by the end of the day. The first type of information that is prone to easily move stocks is earnings.
For example, if one company announces positive earnings because it had a large profit from a lawsuit, this information does not tell us much about
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IS THIS MARKET RESILIENT OR COMPLACENT?
by ilene - August 13th, 2009 11:20 pm
IS THIS MARKET RESILIENT OR COMPLACENT?
Courtesy of The Pragmatic Capitalist
Today’s market action has been odd to say the least. Futures were up well over 100 points heading into the retail sales and jobless claims data. The strength has been attributed to strong international markets, good GDP figures from Europe, the John Paulson bank purchase and the IEA report of higher demand for oil.
In case you missed it retail sales came in at -0.1% and -0.6% ex-autos. Analysts were expecting 0.8% and 0.1%. When the market learned that retail sales were an utter disaster and that jobless claims jumped up to 558K the market temporarily cratered. Econoday reports:
The rate of layoffs is heavy but steady as first-time jobless claims were little changed in the Aug. 8 week, at 558,000 vs. 554,000 in the prior week. The numbers, in a plus, are a little bit below the four-week average, which is at 565,000. Continuing claims fell steeply, down 141,000 for data in the Aug. 1 week to 6.202 million. But the decline is hard to read, reflecting either new hirings and/or the expiration of benefits. The economy may be in recovery or at least is steady but the outlook for the jobs market, and how far it lags, is a serious concern for the economic outlook and for policy makers.
The futures fell 70 points or so, but remained positive. The market then opened and immediately tanked. S&P futures dropped as far as 998 before rebounding miraculously on no news. If you had told me the retail sales figures would have come in negative I’d tell you that the S&P would have at least retraced all of yesterday’s gains. In an economy that is 70% consumers you have to begin to wonder how long the market can ignore these incredibly weak retail sales figures. And more importantly, is the market resilient or just downright complacent? This late into a rally I am more inclined to side with complacency. This market should be down well over 200 points today on this news that puts a mighty large dent in any v-shaped recovery theories. Efficient market? Keep dreaming….
The 5 Keys to Identifying a Fundamental Day Trade
by ilene - June 28th, 2009 8:23 am
For a free subscription to Phil’s Stock World, click here (it’s easy, no credit card required).
David, at The Oxen Group, has been kindly providing us with day-trading picks before the market opens. He has an excellent track record, which is posted in Oxen Group section and updated every few days. Below is an outline of the factors he considers when identifying high-probability trading opportunities. For more, visit The Oxen Group website and sign up for a free newsletter. - Ilene
The 5 Keys to Identifying a Fundamental Day Trade
One of the main sections of our site is our Oxen Picks. These are day trades that The Oxen Group makes everyday that are ideas for stocks we believe will move up for a single day that investors can make 3-5% on each day. The Oxen Picks have had some significant growth since we started them, making nearly 40% on a $3,000 portfolio. The portfolio has no long-term stocks. Every stock we buy, we sell the same day. And, we only buy one stock every day. The method behind it, however, is sound and continues to foster growth. That method begins with fundamentals and the 5 Keys to Identifying a Fundamental Day Trade.
Today, I am going to lay out for you the five keys to executing the fundamental day trade that will help you become a better day trading investor by identifying 5 signals that can help you select a trade. These signals are easy to understand and they will help transform your trading style into a much more astute investment strategy.
Identifying the Fundamentals
To begin to look for that perfect stock or ETF that will move up 4-5% in a single day, we first need to look for something that can propel the stock. Even the best technicals seldom can give you 5% upward movement intraday alone. This 4-5% movement we are talking about, additionally, is not from yesterday’s close, but it is movement within the day. That means we want to identify a stock that can be bought sometime in the morning and sold later in the day that will give us significant upward movement from our entry.
Stocks do not move on their own, though, therefore there are a number of fundamentally bullish categories that we can use to identify stocks:
1. Earnings
There are multiple ways to play a company’s…
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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