Wednesday, February 25, 2009
Do Option Sellers Have a Trading Edge
According to a breakdown by the Chicago Mercantile Exchange Clearing House, more than 85% of all S&P options sold during the last three years expired out of the money and worthless.*
*Source: Chicago Mercantile Exchange Clearing House; Analysis of S&P options sold during the period 2004 through 2007.
asr: note this is recent report that is 2004 to 2007
How does the Time Means Money program use Probability Theory?
A: The Time Means Money program utilizes the fact that options sold near 2 standard deviations from the mean of the market will most likely expire worthless, allowing premium collectors to make money.
:: What is Probability Theory? ::
Probability theory is the branch of mathematics concerned with the analysis of random phenomena. The roll of a die, for example, is a random event. If repeated many times, the sequence of random events will exhibit certain statistical patterns, which can be studied and predicted...
The Time Means Money program first identifies trades that have a potentially high statistical probability of success. We then design suitable credit spreads that will limit risk while allowing for potentially maximum profits to be taken. Throughout the life of the trades, entry and exit points are determined, monitored, and with your approval, executed for you. While we do the work, all trade recommendations generated by this program are ultimately yours to take or ignore.
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ASR: the chosen period 1997-1999 is bull market , so even 75% CALL options expired ( PUTS 82% ) options sellers have edge as they are professionals.
Based on data obtained from the CME, I analyzed five major CME option markets - the S&P 500, eurodollars, Japanese yen, live cattle and Nasdaq 100 - and discovered that three out of every four options expired worthless. In fact, of put options alone, 82.6% expired worthless for these five markets.
This study analyzes data compiled by the Chicago Mercantile Exchange (CME) for a special options report prepared for this my book, Options on Futures: New Trading Strategies (Wiley & Sons), co-authored by Jonathan Lubow, vice-president of Trader's Edge, Inc., a futures and options brokerage based in Madison, NJ.
Three key patterns emerge from this study: (1) on average, three out of every four options held to expiration end up worthless; (2) the share of puts and calls that expired worthless is influenced by the primary trend of the underlying; and (3) option sellers still come out ahead even when the seller is going against the trend.
CME Data
Based on a CME study of expiring and exercised options covering a period of three years (1997, 1998 and 1999), an average of 76.5% of all options held to expiration at the Chicago Mercantile Exchange expired worthless (out of the money). This average remained consistent for the three-year period: 76.3%, 75.8% and 77.5% respectively, as shown in figure 1. From this general level, therefore, we can conclude that for every option exercised in the money at expiration, there were three options contracts that expired out of the money and thus worthless, meaning option sellers had better odds than option buyers for positions held until expiration.
This bias in favor of put sellers can be attributed to the strong bullish bias of the stock indexes during this period, despite some sharp but short-lived market declines. Data for 2001-2003, however, may show a shift toward more calls expiring worthless, reflecting the change to a primary bear market trend since early 2000
Saturday, February 21, 2009
Range-Bound Price Action Favors Range Trading Strategies
Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near quarterly lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s quarterly range.
Range High – 90-day closing high.
Range Low – 90-day closing low.
Last – Current market price.
Strategy – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy.
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Just the other day I thought of the idea of combining Foresight A.I. with Vantagepoint. I have been experimenting with Vantagepoint since around March 06 when I bought it. What I have been backtesting recently is the idea of using Vantagepoint's Predicted Next Day Highs & Lows and plotting them on Foresight's prediction. The results have been quite promising. Below are two examples....
The first example is from the EUR/USD 12/28/06 Foresight A.I. prediction. Vantagepoint predicted a high of 1.3159 which was already blown out of the water by the beginning of the Foresight forecast which could then recommend to stay out of the EUR/USD for that trading day.
The second example is from the USD/JPY 12/20/06 Foresight A.I. prediction. Vantagepoint predicted a high of 118.56 and a low of 117.56. In this example, the price in the beginning of the Foresight prediction is well below the predicted high of Vantagepoint and well above the predicted low. Foresight is projecting a pretty solid trend for the trading day from the start, signaling a possible buy opportunity since both indictators are in somewhat of an alignment.
Again these are really basic examples with a lot more research and testing to be done. And as I'm sure you all know, Vantagepoint's forecasts are far from perfect but they do give a pretty good general idea of where the market is going and will be the next day. I currently do not own Foresight A.I. and am interested in meeting up with some Foresight users online who currently use the software. Thoughts?
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Range High – 90-day closing high.
Range Low – 90-day closing low.
Last – Current market price.
Strategy – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy.
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Just the other day I thought of the idea of combining Foresight A.I. with Vantagepoint. I have been experimenting with Vantagepoint since around March 06 when I bought it. What I have been backtesting recently is the idea of using Vantagepoint's Predicted Next Day Highs & Lows and plotting them on Foresight's prediction. The results have been quite promising. Below are two examples....
The first example is from the EUR/USD 12/28/06 Foresight A.I. prediction. Vantagepoint predicted a high of 1.3159 which was already blown out of the water by the beginning of the Foresight forecast which could then recommend to stay out of the EUR/USD for that trading day.
The second example is from the USD/JPY 12/20/06 Foresight A.I. prediction. Vantagepoint predicted a high of 118.56 and a low of 117.56. In this example, the price in the beginning of the Foresight prediction is well below the predicted high of Vantagepoint and well above the predicted low. Foresight is projecting a pretty solid trend for the trading day from the start, signaling a possible buy opportunity since both indictators are in somewhat of an alignment.
Again these are really basic examples with a lot more research and testing to be done. And as I'm sure you all know, Vantagepoint's forecasts are far from perfect but they do give a pretty good general idea of where the market is going and will be the next day. I currently do not own Foresight A.I. and am interested in meeting up with some Foresight users online who currently use the software. Thoughts?
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Forex News letters: Ed ponsi
Ed Ponsi is a globally recognized name as a lecturer and teacher and is the former Chief Trading Instructor for Forex Capital Markets. An experienced professional trader and money manager, Ed has advised hedge funds, institutional traders, and individuals of all levels of skill and experience. Ed has appeared on CNBC, CNN International and TheStreet.com
good amazon blog on forex
article Archives dated back to 2005 to see how Ed Ponsi forecasts worked.
The Four Horsemen, Revisited
No matter which vehicle you choose to trade, a trend is still a trend, a reversal is still a reversal, and a double-top is still a double-top. This also means that if you understand technical analysis and how to apply it correctly, you can trade most financial markets.
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Identifying Trending & Range-Bound Currencies
by Boris Schlossberg,
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http://www.bktraderfx.com/site/members-benefits
2 to 3 Signals a Week ;
asr: this newslette is from BOris guy of investopedia and GFT
asr: said jan 2009 return is 2k , so avg. month must be 1/3 of it that is $700 , our VP dolllar index DX can return this in a week , so forget this $200 month letters , in a year it costs 2500 you can get 3 VP categories
good amazon blog on forex
article Archives dated back to 2005 to see how Ed Ponsi forecasts worked.
The Four Horsemen, Revisited
No matter which vehicle you choose to trade, a trend is still a trend, a reversal is still a reversal, and a double-top is still a double-top. This also means that if you understand technical analysis and how to apply it correctly, you can trade most financial markets.
-------------------
Identifying Trending & Range-Bound Currencies
by Boris Schlossberg,
------------
http://www.bktraderfx.com/site/members-benefits
2 to 3 Signals a Week ;
asr: this newslette is from BOris guy of investopedia and GFT
asr: said jan 2009 return is 2k , so avg. month must be 1/3 of it that is $700 , our VP dolllar index DX can return this in a week , so forget this $200 month letters , in a year it costs 2500 you can get 3 VP categories
Friday, February 20, 2009
Oil price suggesting drop in uptick demand
Oil prices fell all but one day of the short trading week, including Friday, as economists voiced growing concerns about deflation.
Benchmark crude for March delivery fell 54 cents to settle at $38.94, on the New York Mercantile Exchange. That contract expired Friday and there was a very low volume in trades.
Light, sweet crude for April delivery fell 15 cents to $40.03 a barrel.
"People are scared," said Phil Flynn, an analyst at Alaron Trading Corp., who noted that gold prices rose above $1,000 an ounce as investors looked for a safe place to put their money.
While Brent prices fell 10 cents to settle at $41.89 Friday on the ICE Futures exchange in London, it was still trading at a premium to U.S. benchmark crude, which is used to formulate gas in a limited Midwest market.
Investors digested woeful economic news all week including disappointing earnings reports by J.C. Penney and Lowe's to end the week Friday.
J.C. Penney Co. reported a 51 percent drop in fourth-quarter profit as customers sharply cut spending on clothing and other more discretionary items. The department store chain also projected a wider first-quarter loss than analysts had predicted.
Home improvement retailer Lowe's said its fourth-quarter profit dropped 60 percent after customers cut back on spending. Lowe's earnings forecast for this year was worse than expected.
Flynn expects oil prices to eventually drop well below $30 a barrel in coming months as manufacturers cut operations and millions of laid off workers stop commuting to work.
"We're getting ready for a tailspin, but you just don't know what's going to happen," Flynn said. If it weren't for the new federal stimulus package and promises of further OPEC production cuts, "we'd probably already be there."
Trading on the Nymex has been erratic because of a influx of "dumb money" entering the market, analyst Stephen Schork said. Amateur investors are flocking to energy funds that have bet crude prices will eventually spike again.
"They're looking at the fact that crude went to $150 a barrel a year ago, and its in the 30s today," Schork said. "They think it's going back up."
Oil prices jumped briefly on Thursday after the Energy Information Agency reported that crude inventories in U.S. storage houses fell unexpectedly. But Newedge analyst Antoine Halff noted that the drop came mostly from the Atlantic Coast. Oil supplies in other areas continued to build as refineries cut back on gasoline production.
The inventory report "may actually be seen as profoundly bearish," Halff said, noting that demand on the East Coast has been shrinking in recent months.
Rising U.S. joblessness continues to drag on demand amid the worst recession in decades. The Labor Department said Thursday that the number of people receiving unemployment benefits jumped to an all-time high near 5 million, while new jobless claims remain well above 600,000.
The Department of Transportation said motorists drove 3.8 billion fewer miles in December than they did a year earlier. The 1.6 percent fall in driving marks the 14th consecutive monthly decline.
The Organization of Petroleum Exporting Countries has pledged to cut 4.2 million barrels a day from production, and the group's leaders say they may go further when they meet on March 15.
But investors have so far brushed off OPEC supply cuts, sending prices down about 73 percent from a record 147.27 in July.
"What OPEC is encountering is a very significant drop in demand in the last six months," said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. "Another big cut might support prices, but they're mindful that they don't want a surge in prices to slow down a recovery."
In other Nymex trading, gasoline futures fell 2.4 cents to settle at $1.0746 a gallon. Heating oil dropped less than a penny to settle at $1.1967 a gallon, while natural gas for March delivery slid 7.6 cents to settle at $4.01 per 1,000 cubic feet.
Associated Press writers Carlo Piovano in London and Alex Kennedy in Singapore contributed to this report.
Tuesday, February 17, 2009
As prices slump, Nymex oil seen losing relevance
With WTI futures below international prices, are they a 'broken benchmark?'
By Moming Zhou, MarketWatch -- Feb. 17, 2009
NEW YORK (MarketWatch) -- A build-up in inventories at the delivery point for Nymex crude futures has pushed prices of the oil benchmark to an unprecedented discount to a rival futures contract -- which is calling into question Nymex oil's role as an international price-setter.
West Texas Intermediate crude, the oil that the New York Mercantile Exchange uses as a benchmark, is trading at its largest discount ever to Brent crude, the European benchmark.
That's a reversal of the norm: WTI usually trades at a higher price because of its superior quality. Because WTI is lighter and contains less sulfur than many types of crude, it costs less for companies to refine it into oil products, and therefore it usually sells at a higher price.
WTI futures are also cheaper than prices charged by the Organization of Petroleum Exporting Countries, whose oil tends to be lower in quality and thus typically fetches a lower price.
This recent reversal in prices has prompted at least one prominent energy agency and some market analysts and investors to suggest Nymex oil is losing its influence as a global benchmark.
"Volatile WTI is sending mixed and misleading price signals not only to the market but to economic forecasters, government officials and policy makers," the International Energy Agency wrote in a report released last week.
"Further deterioration in the fragile WTI pricing mechanism would only serve to reinforce the view that the crude has become an irrevocably broken benchmark," added the Paris-based energy advisor to developed countries.
WTI's pricing anomalies have upended the crude's value as a basis for setting physical prices, the IEA noted in its report.
On Tuesday, front-month Brent futures closed at $41.03 a barrel on the IntercontinentalExchange, while front-month WTI ended at $34.93 on the Nymex.
The weakness in WTI futures has stemmed from excessive inventories at Cushing, Okla., the delivery point for Nymex futures. WTI has traded lower than Brent before, but this time the gap is particularly wide: It hit more than $10 last month, the most since Brent and WTI began trading in the futures market.
The artificially low WTI prices mean
1) oil users could pay a much higher price than WTI when they trade physical oil with producers.
2) It also means investors putting money in Nymex futures or oil exchange-traded funds linked with Nymex could see prices rally when Cushing inventories wane, as the Nymex contract rises back above levels of Brent and other global contracts.
Broken benchmark
WTI is a type of light, sweet crude with lower gravity and less sulfur than almost all the rest of the 100-plus varieties of oil.
The world currently only produces about 300,000 barrels a day of WTI, a fraction of the total production of about 85 million barrels a day. But since Nymex picked it as the basis for futures trading in late 1983, WTI became the most important pricing benchmark in global oil markets.
asr: so WTI is oil grade name, it can be produced by oil country , it is grade name for quality , low sulfer etc. so 300k out of 85 millions that is 0.5% of total oil/day
That's partly because of the transparency and frequency of data releases and high-volume trading on the Nymex. The U.S.' role as the world's biggest oil consumer and importer also has helped put Nymex's WTI oil contract in the lead.
Producers follow Nymex prices to price their oil, normally at a discount to a front-month WTI futures contract. OPEC members, who control about one third of the world's oil production, also price their oil at a discount to WTI that sometimes widens to more than $10, as their oil tends to be heavier and contain more sulfur.
But the relation has been reversed recently. The OPEC basket price, an index of 12 types of crude produced by the cartel's 12 members, stood at $41.49 dollar a barrel Monday -- more than $6 higher than the Nymex's front-month contract price.
WTI futures have also been trading lower than Brent, which historically tends to be cheaper than WTI. That's because WTI is of higher quality, and the cost of shipping oil across the Atlantic is priced in if the U.S. imports Brent from Europe.
The WTI-Brent price spread, typically positive between $1.50 to $2.50 a barrel, reversed to negative in December. The discount deepened to a historical trough of more than $10 on January 15
The Nymex has Cushing to blame for anomalies in its futures prices.
Covering more than nine square miles, Cushing is the largest oil transportation hub in the U.S. The pipelines transport crude from the Gulf of Mexico in the south and from Canada in the north.
As the Nymex delivery point, Cushing also serves as a key storage place for oil refineries in states such as Oklahoma, Texas and Kansas. As energy demand fell amid the economic downturn, refineries nation-wide sharply cut their petroleum production, leaving more oil sitting in storage.
Demand issues at Cushing "can sometimes influence WTI to the degree that WTI no longer represents world oil market conditions," wrote Mikka Pineda, an energy analyst, at RGE Monitor.
"Though oil demand is indeed collapsing all over the world, it's not necessarily collapsing to the same extent as WTI," he added.
Lacking an outflow pipeline to move oil to the Gulf Coast, Cushing inventories started to consistently increase from late 2008. They have risen for six straight weeks to reach a record high of 34.9 million barrels in the week ended Feb. 6, approaching Cushing's operational capacity of about 36 million barrels.
Excessive stockpiles pressured regional prices and eventually weighed on Nymex crude futures.
"WTI is an international benchmark, but it's based on a local, inland market," said James Williams, an economist at energy research firm WTRG Economics. "Anything happens at Cushing will impact Nymex prices."
Adding more inventories to Cushing, speculators, seeing arbitrage opportunities in a futures trading curve called contango, also piled oil into Cushing.
Contango is a condition whereby prices for nearby delivery are lower than prices for future-month delivery. Under a contango curve, speculators can buy nearby-month oil, store it, and sell it in a certain future month at a higher price.
Contango between a front-month contract and its successive contract increased to the biggest level of $8.49 in December.
Ways to revive the benchmark
To revive Nymex futures' importance as a valid international benchmark, the Nymex needs to pick a second delivery point along the Gulf Coast, analysts said. Building more pipelines linking Cushing to the coast could also alleviate storage pressures.
But both probably will take years. For now, "record stock levels at Cushing, anemic oil demand and plans by refiners to sharply cut throughput rates" will continue adding downward pressure on WTI prices, the IEA said in the report.
The disconnect between WTI and the international oil market could slowly disappear once oil demand rebounds and Cushing inventories starts falling, analysts said.
For the time being, investors probably should look at Brent as a more valid benchmark for the world market, said WTRG's Williams. Unlike WTI, the delivery point for Brent futures sits near the North Sea, a much flexible place for oil shipping. End of Story
By Moming Zhou, MarketWatch -- Feb. 17, 2009
NEW YORK (MarketWatch) -- A build-up in inventories at the delivery point for Nymex crude futures has pushed prices of the oil benchmark to an unprecedented discount to a rival futures contract -- which is calling into question Nymex oil's role as an international price-setter.
West Texas Intermediate crude, the oil that the New York Mercantile Exchange uses as a benchmark, is trading at its largest discount ever to Brent crude, the European benchmark.
That's a reversal of the norm: WTI usually trades at a higher price because of its superior quality. Because WTI is lighter and contains less sulfur than many types of crude, it costs less for companies to refine it into oil products, and therefore it usually sells at a higher price.
WTI futures are also cheaper than prices charged by the Organization of Petroleum Exporting Countries, whose oil tends to be lower in quality and thus typically fetches a lower price.
This recent reversal in prices has prompted at least one prominent energy agency and some market analysts and investors to suggest Nymex oil is losing its influence as a global benchmark.
"Volatile WTI is sending mixed and misleading price signals not only to the market but to economic forecasters, government officials and policy makers," the International Energy Agency wrote in a report released last week.
"Further deterioration in the fragile WTI pricing mechanism would only serve to reinforce the view that the crude has become an irrevocably broken benchmark," added the Paris-based energy advisor to developed countries.
WTI's pricing anomalies have upended the crude's value as a basis for setting physical prices, the IEA noted in its report.
On Tuesday, front-month Brent futures closed at $41.03 a barrel on the IntercontinentalExchange, while front-month WTI ended at $34.93 on the Nymex.
The weakness in WTI futures has stemmed from excessive inventories at Cushing, Okla., the delivery point for Nymex futures. WTI has traded lower than Brent before, but this time the gap is particularly wide: It hit more than $10 last month, the most since Brent and WTI began trading in the futures market.
The artificially low WTI prices mean
1) oil users could pay a much higher price than WTI when they trade physical oil with producers.
2) It also means investors putting money in Nymex futures or oil exchange-traded funds linked with Nymex could see prices rally when Cushing inventories wane, as the Nymex contract rises back above levels of Brent and other global contracts.
Broken benchmark
WTI is a type of light, sweet crude with lower gravity and less sulfur than almost all the rest of the 100-plus varieties of oil.
The world currently only produces about 300,000 barrels a day of WTI, a fraction of the total production of about 85 million barrels a day. But since Nymex picked it as the basis for futures trading in late 1983, WTI became the most important pricing benchmark in global oil markets.
asr: so WTI is oil grade name, it can be produced by oil country , it is grade name for quality , low sulfer etc. so 300k out of 85 millions that is 0.5% of total oil/day
That's partly because of the transparency and frequency of data releases and high-volume trading on the Nymex. The U.S.' role as the world's biggest oil consumer and importer also has helped put Nymex's WTI oil contract in the lead.
Producers follow Nymex prices to price their oil, normally at a discount to a front-month WTI futures contract. OPEC members, who control about one third of the world's oil production, also price their oil at a discount to WTI that sometimes widens to more than $10, as their oil tends to be heavier and contain more sulfur.
But the relation has been reversed recently. The OPEC basket price, an index of 12 types of crude produced by the cartel's 12 members, stood at $41.49 dollar a barrel Monday -- more than $6 higher than the Nymex's front-month contract price.
WTI futures have also been trading lower than Brent, which historically tends to be cheaper than WTI. That's because WTI is of higher quality, and the cost of shipping oil across the Atlantic is priced in if the U.S. imports Brent from Europe.
The WTI-Brent price spread, typically positive between $1.50 to $2.50 a barrel, reversed to negative in December. The discount deepened to a historical trough of more than $10 on January 15
The Nymex has Cushing to blame for anomalies in its futures prices.
Covering more than nine square miles, Cushing is the largest oil transportation hub in the U.S. The pipelines transport crude from the Gulf of Mexico in the south and from Canada in the north.
As the Nymex delivery point, Cushing also serves as a key storage place for oil refineries in states such as Oklahoma, Texas and Kansas. As energy demand fell amid the economic downturn, refineries nation-wide sharply cut their petroleum production, leaving more oil sitting in storage.
Demand issues at Cushing "can sometimes influence WTI to the degree that WTI no longer represents world oil market conditions," wrote Mikka Pineda, an energy analyst, at RGE Monitor.
"Though oil demand is indeed collapsing all over the world, it's not necessarily collapsing to the same extent as WTI," he added.
Lacking an outflow pipeline to move oil to the Gulf Coast, Cushing inventories started to consistently increase from late 2008. They have risen for six straight weeks to reach a record high of 34.9 million barrels in the week ended Feb. 6, approaching Cushing's operational capacity of about 36 million barrels.
Excessive stockpiles pressured regional prices and eventually weighed on Nymex crude futures.
"WTI is an international benchmark, but it's based on a local, inland market," said James Williams, an economist at energy research firm WTRG Economics. "Anything happens at Cushing will impact Nymex prices."
Adding more inventories to Cushing, speculators, seeing arbitrage opportunities in a futures trading curve called contango, also piled oil into Cushing.
Contango is a condition whereby prices for nearby delivery are lower than prices for future-month delivery. Under a contango curve, speculators can buy nearby-month oil, store it, and sell it in a certain future month at a higher price.
Contango between a front-month contract and its successive contract increased to the biggest level of $8.49 in December.
Ways to revive the benchmark
To revive Nymex futures' importance as a valid international benchmark, the Nymex needs to pick a second delivery point along the Gulf Coast, analysts said. Building more pipelines linking Cushing to the coast could also alleviate storage pressures.
But both probably will take years. For now, "record stock levels at Cushing, anemic oil demand and plans by refiners to sharply cut throughput rates" will continue adding downward pressure on WTI prices, the IEA said in the report.
The disconnect between WTI and the international oil market could slowly disappear once oil demand rebounds and Cushing inventories starts falling, analysts said.
For the time being, investors probably should look at Brent as a more valid benchmark for the world market, said WTRG's Williams. Unlike WTI, the delivery point for Brent futures sits near the North Sea, a much flexible place for oil shipping. End of Story
Saturday, February 14, 2009
Oil prices break out of weeklong price slide
The price differential between New York crude and London Brent oil hit a record of more than US$11 last week, which analysts attributed to soaring energy stockpiles in the United States.
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Opportunity Knocks: Has the oil price bottomed?
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'It’s very simply profit-taking going into a three-day holiday,' analyst says
Prices on Thursday closed at their lowest level of the year at $33.98 a barrel, and appeared headed back toward the January and February contract lows of $32.48 and $32.70 as oil inventories continue to soar during the worst recession since at least the 1980s.
Oil broke out of a weeklong slump Friday, soaring 10 percent, as traders prepared for a long Presidents Day weekend.
Light, sweet crude for March delivery rose $3.53 to settle at $37.51 a barrel on the New York Mercantile Exchange. Prices rose as high as $38.25 in afternoon trading.
“It’s very simply profit-taking going into a three-day holiday,” said Phil Flynn at Alaron Trading Corp.
Traders had been selling the March contract all week and buying the April, May, June and July contracts, but that changed Friday, he said.
After opening above $42 a barrel Monday, crude prices have tumbled every day as traders showed little optimism that a $790 billion stimulus package and the Treasury Department’s plan to spend more than $1 trillion to help remove banks’ soured assets from their books would perk up the economy — and oil consumption — anytime soon.
The House on Friday passed the stimulus package 246-183 with no Republican help. It now goes to the Senate where a vote was possible late Friday to meet a deadline of passing the plan before a recess begins next week.
The Energy Information Administration said Wednesday that crude inventories for the week ended Feb. 6 jumped 4.7 million barrels to 350.8 million barrels, surpassing analyst expectations and climbing toward levels last seen in the summer of 1990 when Iraq invaded Kuwait. U.S. oil storage sites, including the main depot in Cushing, Okla., are brimming with crude, reflecting the drop-off in demand.
“During the last week, we have had fresh estimates for oil demand which now forecast the biggest decline in consumption in more than a quarter of a century,” Peter Beutel of Cameron Hanover said in his Friday report. “We have had a merciless unemployment report showing a decline in January of nearly 600,000 jobs, and we have had yet another increase in crude oil stocks, leaving inventories at their highest levels in 15 years, and creating the biggest surplus against the previous year since 1990. These factors have worked together to press crude prices right back against their spine of support.”
Traders did not read much into Friday’s jump in price, noting that markets will be closed because of the holiday Monday.
“I think people are taking some money off the table,” oil analyst and trader Stephen Schork said.
----------
Opportunity Knocks: Has the oil price bottomed?
----------
'It’s very simply profit-taking going into a three-day holiday,' analyst says
Prices on Thursday closed at their lowest level of the year at $33.98 a barrel, and appeared headed back toward the January and February contract lows of $32.48 and $32.70 as oil inventories continue to soar during the worst recession since at least the 1980s.
Oil broke out of a weeklong slump Friday, soaring 10 percent, as traders prepared for a long Presidents Day weekend.
Light, sweet crude for March delivery rose $3.53 to settle at $37.51 a barrel on the New York Mercantile Exchange. Prices rose as high as $38.25 in afternoon trading.
“It’s very simply profit-taking going into a three-day holiday,” said Phil Flynn at Alaron Trading Corp.
Traders had been selling the March contract all week and buying the April, May, June and July contracts, but that changed Friday, he said.
After opening above $42 a barrel Monday, crude prices have tumbled every day as traders showed little optimism that a $790 billion stimulus package and the Treasury Department’s plan to spend more than $1 trillion to help remove banks’ soured assets from their books would perk up the economy — and oil consumption — anytime soon.
The House on Friday passed the stimulus package 246-183 with no Republican help. It now goes to the Senate where a vote was possible late Friday to meet a deadline of passing the plan before a recess begins next week.
The Energy Information Administration said Wednesday that crude inventories for the week ended Feb. 6 jumped 4.7 million barrels to 350.8 million barrels, surpassing analyst expectations and climbing toward levels last seen in the summer of 1990 when Iraq invaded Kuwait. U.S. oil storage sites, including the main depot in Cushing, Okla., are brimming with crude, reflecting the drop-off in demand.
“During the last week, we have had fresh estimates for oil demand which now forecast the biggest decline in consumption in more than a quarter of a century,” Peter Beutel of Cameron Hanover said in his Friday report. “We have had a merciless unemployment report showing a decline in January of nearly 600,000 jobs, and we have had yet another increase in crude oil stocks, leaving inventories at their highest levels in 15 years, and creating the biggest surplus against the previous year since 1990. These factors have worked together to press crude prices right back against their spine of support.”
Traders did not read much into Friday’s jump in price, noting that markets will be closed because of the holiday Monday.
“I think people are taking some money off the table,” oil analyst and trader Stephen Schork said.
Decoding oil price a complex puzzle
By Deborah Yedlin, Calgary HeraldFebruary 14, 2009
Despite evidence that the Organization of Petroleum Exporting Countries has been complying with the stated production cuts, the benchmark West Texas price for oil continues to languish under $40 US per barrel. Of course, it doesn't help that U.S. crude oil inventory numbers released last week showed a build of 7.2 million barrels, when analysts had expected something around 2.9 million barrels, or that there are more signs of slowing global economic growth--and therefore slowing oil consumption.
All this, however, doesn't surprise Philip Verleger, the David Mitchell/EnCana professor of management at the Haskayne School of Business who is suggesting demand is set to fall further.
Verleger sees global oil demand dropping to about 80 mil-lion barrels a day, which would put the world back to 2003 in terms of consumption, before the dramatic increase in Chinese demand.
What's even more interesting is that Goldman Sachs recently came out with a research piece that said non-OPEC producers will have to join the production-cutting party in order for oil prices to strengthen.
- But with not enough money being spent in 2009 to stem the decline rates, let alone find new reserves to offset declines or production, non-OPEC production is going to decline in 2009--no matter what.
- Adding to Goldman's perspective is Bank of America Securities-Merrill Lynch, which predicts that without investment, the non-OPEC production could decline from 50 million barrels a day to about 47 million barrels in the next five years.
The puzzle here is that the OPEC cuts, coupled with falling demand, is creating a situation of excess capacity, which could result in oil prices staying in the $40 range until the impact of the lack of investment is felt. The question is how long will it take.
Oil prices are continuing to sit in a situation economists call "contango."What this means is that today's price is lower than what the future's curve is showing. The consequence of oil prices sitting in contango is that companies will hang on to their barrels as long as possible to take advantage of higher prices, assuming there is sufficient storage. Not only does this put a premium on storage, it says there is money to be made playing the spread. In current terms, the spread is about $9 per barrel, implying a healthy 20 per cent return for anyone wanting to play that game.
"Contango tells you the market is loose; there is not enough demand and too much supply," said Martin King of FirstEnergy Capital Corp.
While there is evidence--especially in overseas markets--that the floating storage is disappearing, Verleger is convinced a number of factors will conspire to keep demand lower than it has been in the last five years, which means prices are going to stay in the $35 to $40 range. He points to the current recession as being one of the reasons demand will stay soft.
"Two years of negative growth in global GDP will decrease energy demand," he said. He also believes the regulatory changes from both the economic and environmental standpoints will also depress demand.
But not everyone agrees with the analysis. Xavier Denis, economist and strategist with the French bank, Societe Generale in Paris, believes there is a supply/demand imbalance. Aside from the current state of affairs, Denis points out that fields are effectively declining at a faster rate than demand, which means when demand does start to recover there won't be enough supply. And this points to higher prices.
Certainly, when statistics such as the numbers showing China's car sales in January exceeding those in the U. S. on an annualized basis, it's clear that the growth in energy consumption is not going to come from North America.
The one possible bright spot in terms of where a price recovery might begin lies with light, sweet, crude.
That's because of proposed environmental regulations limiting the sulphur content in the fuel used for ships.
Verleger's analysis suggests implementing these rules could effectively block the processing of roughly 25 per cent of oil supply. It doesn't take much to realize that if one quarter of supply is shuttered because of environmental regulations, oil prices will rise, with the light stuff leading the recovery.
As to the oilsands? Despite the Alberta government touting the province's oilsands as the key to U.S. energy supply, Verleger, as do others, subscribes to the view that unless oil prices stage a sustainable recovery --or there are big subsidies thrown at the industry to encourage more production-- it's unlikely the number of barrels coming from that resource will rise in any meaningful measure. His view was supported by a recent report from the Canadian Energy Institute warning investment in the oilsands could reach its lowest levels in a decade--matching what was spent when oil was below$20 US per barrel.
Having said that, there was a time not that long ago when energy companies did make money with oil prices in the $20 range, not to mention making big bets on investment in the sector. But that was also a time when credit markets were healthy.
There are a couple of ways to look at the current oil price. Either $40 per barrel is the new$20 of five years ago, or it is a signal of the excess capacity being built in the market as a result of production cuts and drops in demand around the world that will take a long time to work through and stymie new investment in the process.
People in the business who have been through this cycle before say this slump is different because it is the result of a confluence of so many variables at once, not the result of bad management practices. It's about the only thing that makes sense these days.
Despite evidence that the Organization of Petroleum Exporting Countries has been complying with the stated production cuts, the benchmark West Texas price for oil continues to languish under $40 US per barrel. Of course, it doesn't help that U.S. crude oil inventory numbers released last week showed a build of 7.2 million barrels, when analysts had expected something around 2.9 million barrels, or that there are more signs of slowing global economic growth--and therefore slowing oil consumption.
All this, however, doesn't surprise Philip Verleger, the David Mitchell/EnCana professor of management at the Haskayne School of Business who is suggesting demand is set to fall further.
Verleger sees global oil demand dropping to about 80 mil-lion barrels a day, which would put the world back to 2003 in terms of consumption, before the dramatic increase in Chinese demand.
What's even more interesting is that Goldman Sachs recently came out with a research piece that said non-OPEC producers will have to join the production-cutting party in order for oil prices to strengthen.
- But with not enough money being spent in 2009 to stem the decline rates, let alone find new reserves to offset declines or production, non-OPEC production is going to decline in 2009--no matter what.
- Adding to Goldman's perspective is Bank of America Securities-Merrill Lynch, which predicts that without investment, the non-OPEC production could decline from 50 million barrels a day to about 47 million barrels in the next five years.
The puzzle here is that the OPEC cuts, coupled with falling demand, is creating a situation of excess capacity, which could result in oil prices staying in the $40 range until the impact of the lack of investment is felt. The question is how long will it take.
Oil prices are continuing to sit in a situation economists call "contango."What this means is that today's price is lower than what the future's curve is showing. The consequence of oil prices sitting in contango is that companies will hang on to their barrels as long as possible to take advantage of higher prices, assuming there is sufficient storage. Not only does this put a premium on storage, it says there is money to be made playing the spread. In current terms, the spread is about $9 per barrel, implying a healthy 20 per cent return for anyone wanting to play that game.
"Contango tells you the market is loose; there is not enough demand and too much supply," said Martin King of FirstEnergy Capital Corp.
While there is evidence--especially in overseas markets--that the floating storage is disappearing, Verleger is convinced a number of factors will conspire to keep demand lower than it has been in the last five years, which means prices are going to stay in the $35 to $40 range. He points to the current recession as being one of the reasons demand will stay soft.
"Two years of negative growth in global GDP will decrease energy demand," he said. He also believes the regulatory changes from both the economic and environmental standpoints will also depress demand.
But not everyone agrees with the analysis. Xavier Denis, economist and strategist with the French bank, Societe Generale in Paris, believes there is a supply/demand imbalance. Aside from the current state of affairs, Denis points out that fields are effectively declining at a faster rate than demand, which means when demand does start to recover there won't be enough supply. And this points to higher prices.
Certainly, when statistics such as the numbers showing China's car sales in January exceeding those in the U. S. on an annualized basis, it's clear that the growth in energy consumption is not going to come from North America.
The one possible bright spot in terms of where a price recovery might begin lies with light, sweet, crude.
That's because of proposed environmental regulations limiting the sulphur content in the fuel used for ships.
Verleger's analysis suggests implementing these rules could effectively block the processing of roughly 25 per cent of oil supply. It doesn't take much to realize that if one quarter of supply is shuttered because of environmental regulations, oil prices will rise, with the light stuff leading the recovery.
As to the oilsands? Despite the Alberta government touting the province's oilsands as the key to U.S. energy supply, Verleger, as do others, subscribes to the view that unless oil prices stage a sustainable recovery --or there are big subsidies thrown at the industry to encourage more production-- it's unlikely the number of barrels coming from that resource will rise in any meaningful measure. His view was supported by a recent report from the Canadian Energy Institute warning investment in the oilsands could reach its lowest levels in a decade--matching what was spent when oil was below$20 US per barrel.
Having said that, there was a time not that long ago when energy companies did make money with oil prices in the $20 range, not to mention making big bets on investment in the sector. But that was also a time when credit markets were healthy.
There are a couple of ways to look at the current oil price. Either $40 per barrel is the new$20 of five years ago, or it is a signal of the excess capacity being built in the market as a result of production cuts and drops in demand around the world that will take a long time to work through and stymie new investment in the process.
People in the business who have been through this cycle before say this slump is different because it is the result of a confluence of so many variables at once, not the result of bad management practices. It's about the only thing that makes sense these days.
Wednesday, February 11, 2009
Option Idea: Long Call in the Dollar Index
main quote and news page for US DX -
- DX call/put data - click on links
-------------
Option Idea: Long Call in the Dollar Index
the picture shows JULY 31, so October 2007 contract is 2.5 months away , DX is trading at 81 , so 2.5 months away CALL of 250 is very cheap . It seems DX option far out of money are less expensive given time 2.5 months.
asr: we can buy these kind of options for 1 month period ahead , out of money seems for $500 which can be used as insurance.
- 2/10/09 DX traded at 86 , March 85 strike call ( in the money ) is 21.00 as per LInd that is $2100
- seems good since 85 strike call is in the money by $1000 ( 86 -85 ) , so prerium is only $1100
- GBP currently at 1.44 , CALL option is 30 that is $1900 - volume 22
- GBP 1.56 strike ( out of money ) CALL is 19 that is $1300 - volume 87 , highest strike volume as per Lind
- EURO 128 strike ( at money) CALL 300 => $2700
- EURO 136 strike $740
Market: October Dollar Index (DXZ7)
Tick Value: 1 point = $10
Trade Description: Long Call
Option Expiration Date: 11/09/07
Max Risk: approximately $250
Max Profit Potential: Target is 200% of the risk.
Buy an October 2007 Dollar Index 82 call for approximately 25 points ($250) to open a position.
Profit Goal
Or profit goal is to catch a move above 82.50 on the Dec. Futures contract. Break even point is 82.25 assuming a 25 point fill. 100% gross profit would be realized at expiration if the market is at 82.50.
Risk Analysis
Max risk, before commissions and fees, and assuming the above mentioned fill would be $250. The full premium paid for the option is lost at expiration if the market expires below 82.00.
-----------
http://www.tigersharktrading.com/authors/41/Jamie-Saettele
5/11/2008 - DX options sample
Hello Everyone.
Welcome to The J.E.D.I. Trader.
To learn more about my Stocks, Options & Options on Futures Trading Service, click here.
INTERMEDIATE TREND OF THE U.S. DOLLAR MARKET: UP
STOCK/OPTION/FUTURE UNDER ANALYSIS: JUNE 2008 74.00 U.S. DOLLAR INDEX CALL OPTION
TICKER SYMBOL: DXM874.00C (Note: For some firms the ticker symbol may be different)
4/26/2008 ENTRY ALERT: Buy one DXM874.00C (June 2008 74.00 U.S. Dollar Index Call Option)
4/26/2008 CLOSING PRICE OF JUNE 2008 74.00 U.S. DOLLAR INDEX CALL OPTION:
$.555 ($555.00)
5/4/2008 (WEEK 1) CLOSING PRICE OF JUNE 2008 74.00 U.S. DOLLAR INDEX CALL OPTION:
$.680 ($680.00)
5/11/2008 (WEEK 2) CLOSING PRICE OF JUNE 2008 74.00 US. DOLLAR INDEX CALL OPTION:
$.430 ($430.00)
OUR BREAK EVEN OPTIONS POINT: $.585
DOLLAR GAIN/(LOSS) ON JUNE 2008 U.S. DOLLAR INDEX 74.00 CALL OPTION FOR THE FIRST WEEK ENDING MAY 4, 2008:
$95.00
DOLLAR GAIN/(LOSS) ON JUNE 2008 U.S. DOLLAR INDEX 74.00 CALL OPTION FOR THE SECOND WEEK ENDING MAY 11, 2008:
($155.00)
----------------------------
Pricing U.S. Dollar Index Futures Options: An Empirical Investigation
This paper develops a pricing model and empirically tests the pricing efficiency of options on the U.S. Dollar Index (USDX) futures contract. Empirical tests of the model indicate that the market consistently overprices these options relative to the derived model. This overpricing is more pronounced for out-of-the-money options than for in-the-money options and more pronounced for put options than for call options. To validate the above results, delta neutral portfolios are created for one- and two-day holding periods and consistently generate positive arbitrage profits, indicating that on average the market overprices the options on the USDX futures contracts. Copyright 2003 by the Eastern Finance Association.
-------------
asr: for somebody intersted in forex fundamental analysis , you can get this FXCM analyst articles 95 pages see next/prev and see how good he is .
- it seems this site has in general good authors in all categories currencies, options, stocks etc..
Jamie Saettele
Jamie Saettele is a Technical Currency Analyst for Forex Capital Markets (FXCM).
- DX call/put data - click on links
-------------
Option Idea: Long Call in the Dollar Index
the picture shows JULY 31, so October 2007 contract is 2.5 months away , DX is trading at 81 , so 2.5 months away CALL of 250 is very cheap . It seems DX option far out of money are less expensive given time 2.5 months.
asr: we can buy these kind of options for 1 month period ahead , out of money seems for $500 which can be used as insurance.
- 2/10/09 DX traded at 86 , March 85 strike call ( in the money ) is 21.00 as per LInd that is $2100
- seems good since 85 strike call is in the money by $1000 ( 86 -85 ) , so prerium is only $1100
- GBP currently at 1.44 , CALL option is 30 that is $1900 - volume 22
- GBP 1.56 strike ( out of money ) CALL is 19 that is $1300 - volume 87 , highest strike volume as per Lind
- EURO 128 strike ( at money) CALL 300 => $2700
- EURO 136 strike $740
Market: October Dollar Index (DXZ7)
Tick Value: 1 point = $10
Trade Description: Long Call
Option Expiration Date: 11/09/07
Max Risk: approximately $250
Max Profit Potential: Target is 200% of the risk.
Buy an October 2007 Dollar Index 82 call for approximately 25 points ($250) to open a position.
Profit Goal
Or profit goal is to catch a move above 82.50 on the Dec. Futures contract. Break even point is 82.25 assuming a 25 point fill. 100% gross profit would be realized at expiration if the market is at 82.50.
Risk Analysis
Max risk, before commissions and fees, and assuming the above mentioned fill would be $250. The full premium paid for the option is lost at expiration if the market expires below 82.00.
-----------
http://www.tigersharktrading.com/authors/41/Jamie-Saettele
5/11/2008 - DX options sample
Hello Everyone.
Welcome to The J.E.D.I. Trader.
To learn more about my Stocks, Options & Options on Futures Trading Service, click here.
INTERMEDIATE TREND OF THE U.S. DOLLAR MARKET: UP
STOCK/OPTION/FUTURE UNDER ANALYSIS: JUNE 2008 74.00 U.S. DOLLAR INDEX CALL OPTION
TICKER SYMBOL: DXM874.00C (Note: For some firms the ticker symbol may be different)
4/26/2008 ENTRY ALERT: Buy one DXM874.00C (June 2008 74.00 U.S. Dollar Index Call Option)
4/26/2008 CLOSING PRICE OF JUNE 2008 74.00 U.S. DOLLAR INDEX CALL OPTION:
$.555 ($555.00)
5/4/2008 (WEEK 1) CLOSING PRICE OF JUNE 2008 74.00 U.S. DOLLAR INDEX CALL OPTION:
$.680 ($680.00)
5/11/2008 (WEEK 2) CLOSING PRICE OF JUNE 2008 74.00 US. DOLLAR INDEX CALL OPTION:
$.430 ($430.00)
OUR BREAK EVEN OPTIONS POINT: $.585
DOLLAR GAIN/(LOSS) ON JUNE 2008 U.S. DOLLAR INDEX 74.00 CALL OPTION FOR THE FIRST WEEK ENDING MAY 4, 2008:
$95.00
DOLLAR GAIN/(LOSS) ON JUNE 2008 U.S. DOLLAR INDEX 74.00 CALL OPTION FOR THE SECOND WEEK ENDING MAY 11, 2008:
($155.00)
----------------------------
Pricing U.S. Dollar Index Futures Options: An Empirical Investigation
This paper develops a pricing model and empirically tests the pricing efficiency of options on the U.S. Dollar Index (USDX) futures contract. Empirical tests of the model indicate that the market consistently overprices these options relative to the derived model. This overpricing is more pronounced for out-of-the-money options than for in-the-money options and more pronounced for put options than for call options. To validate the above results, delta neutral portfolios are created for one- and two-day holding periods and consistently generate positive arbitrage profits, indicating that on average the market overprices the options on the USDX futures contracts. Copyright 2003 by the Eastern Finance Association.
-------------
asr: for somebody intersted in forex fundamental analysis , you can get this FXCM analyst articles 95 pages see next/prev and see how good he is .
- it seems this site has in general good authors in all categories currencies, options, stocks etc..
Jamie Saettele
Jamie Saettele is a Technical Currency Analyst for Forex Capital Markets (FXCM).
Use the Right Technical Tools When You Trade
By Price Headley | Published 02/9/2006
STOCHASTICS AND MACD MOMENTUM INDICATORS
By now you're wondering how you're supposed to know which indicator to use at any given time.
As I said earlier, there is no holy grail, but this tip comes pretty close to being one - you have to watch price charts as well as indicators. The movement of price bars will tell you what indicator to use.
If you see an index moving back and forth in a narrow range, use an oscillator.
If you see a stock moving an a straight line and breaking above or below previous highs or lows, that's a trend that should be spotted by a momentum indicator.
Now, I'm not advocating a constant waffling between two indicators - there has to be some discipline. As a rule of thumb, when one indicator fails, switch back to the other one. When that one fails, go back to the previous one. Won't that indicator failure lead to a losing trade? Absolutely, but it's better to lose on one trade than it is to continue applying the wrong tool and end up losing on several trades in a row.
Use the right tool at the right time, and you'll have an enormous amount of success. As always, the more you apply this concept, the better you'll become at using it.
----------
A 10-Day Trading System
The 10-day System is probably the simplest one you will ever learn, yet it can be very helpful, especially during choppy markets.
The 10-day lows are, by far, more useful then the 10-day highs. Since 1980, the 10-day lows have been an accurate predictor of short-term gains on the SPX index about 62% percent of the time. Simply buying the morning after a low signal and holding for exactly 5 days each time, as described above, would have yielded a gain of around 120% for the 26 year time period, and that is without reinvesting profits.
While that, in itself, is impressive, it is definitely not the only way that you can use the system. The 10-day System is probably best used to direct your other trades. For example, if you swing trade stocks or options and notice that the 10-day System hits a high signal, you might avoid or cut back on your bullish trades for a few days.
STOCHASTICS AND MACD MOMENTUM INDICATORS
By now you're wondering how you're supposed to know which indicator to use at any given time.
As I said earlier, there is no holy grail, but this tip comes pretty close to being one - you have to watch price charts as well as indicators. The movement of price bars will tell you what indicator to use.
If you see an index moving back and forth in a narrow range, use an oscillator.
If you see a stock moving an a straight line and breaking above or below previous highs or lows, that's a trend that should be spotted by a momentum indicator.
Now, I'm not advocating a constant waffling between two indicators - there has to be some discipline. As a rule of thumb, when one indicator fails, switch back to the other one. When that one fails, go back to the previous one. Won't that indicator failure lead to a losing trade? Absolutely, but it's better to lose on one trade than it is to continue applying the wrong tool and end up losing on several trades in a row.
Use the right tool at the right time, and you'll have an enormous amount of success. As always, the more you apply this concept, the better you'll become at using it.
----------
A 10-Day Trading System
The 10-day System is probably the simplest one you will ever learn, yet it can be very helpful, especially during choppy markets.
The 10-day lows are, by far, more useful then the 10-day highs. Since 1980, the 10-day lows have been an accurate predictor of short-term gains on the SPX index about 62% percent of the time. Simply buying the morning after a low signal and holding for exactly 5 days each time, as described above, would have yielded a gain of around 120% for the 26 year time period, and that is without reinvesting profits.
While that, in itself, is impressive, it is definitely not the only way that you can use the system. The 10-day System is probably best used to direct your other trades. For example, if you swing trade stocks or options and notice that the 10-day System hits a high signal, you might avoid or cut back on your bullish trades for a few days.
Tuesday, February 10, 2009
Dollar, Yen Rise as Geithner’s Plan Spurs Demand for Haven
By Ye Xie and Molly Seltzer
Feb. 10 (Bloomberg) -- The dollar and yen rose versus most of their major counterparts on bets Treasury Secretary Timothy Geithner’s financial recovery plan will fall short of reviving lending, increasing demand for a haven.
The yen advanced more than 6 percent versus the Australian dollar, the biggest intraday gain in more than two months, on speculation investors reduced holdings of higher-yielding assets as Geithner pledged financing for programs that may grow to $2 trillion. The dollar increased for the first time in three days versus a gauge of currencies of six major U.S. trading partners.
“It’s classic risk aversion as the market expresses its disappointment to the Treasury’s plan,” said Adam Boyton, a senior currency strategist in New York at Deutsche Bank AG, the world’s largest foreign-exchange trader. “Geithner’s plan lacks a lot of details.”
The dollar gained 1 percent to $1.2870 per euro at 2:54 p.m. in New York, from $1.3003 yesterday. The yen strengthened versus the euro for the first time in four days, appreciating 2.3 percent to 116.22 per euro from 118.94. Japan’s currency advanced 1.3 percent to 90.31 per dollar from 91.46.
The yen advanced as much as 6.1 percent to 58.50 versus the Australian dollar and 4.5 percent to 130.36 against the pound on speculation losses at financial firms will deepen, encouraging investors to sell higher-yielding assets and pay back low-cost loans in Japan. The Bank of Japan’s 0.1 percent target lending rate compares with 3.25 percent in Australia and 1 percent in the U.K.
Let me understand above paragraph in my terms.
asr: so some UK/AU firm can sell assets in their country and pay back their loan JAPAN. since assets are perceived to decline selling them now is higher prices . Once you have money from asset sales , you wanted to pay back Yen LOAN for that you need to convert AUD->Yen , GBP->yen so everybody is buying YEN so YEN raises against GBP/AUD.
Emerging Markets
Mexico’s peso, Brazil’s real and South Africa’s rand depreciated more than 1 percent against the dollar on reduced demand for emerging-market assets. The peso lost 1.6 percent to 14.4325 versus the dollar, the real declined 1.4 percent to 2.2910 and the rand weakened 2.1 percent to 9.8436.
The ICE’s Dollar Index, which tracks the greenback versus the euro, the yen, the pound, the Canadian dollar, the Swedish krona and the Swiss franc, rose 1.2 percent to 85.76 today. It lost 0.8 percent last week in its first weekly drop this year on speculation the bank-rescue plan would reduce demand for the world’s reserve currency.
The Australian dollar lost 3.6 percent to 65.39 U.S. cents today after gaining 5.9 percent versus the greenback last week, the biggest rally since the end of October.
“The market had been buying risky assets in the past several days in anticipation that we may get some more specifics,” said Steven Englander, chief U.S. currency strategist at Barclays Capital in New York, of Geithner’s plan. “What came out was not consistent with the buying of risky assets. We are back to where we were a week ago.”
Public-Private Fund
The Treasury is creating a Public-Private Investment fund, with an initial capacity of $500 billion that could grow to $1 trillion, to provide financing for private investors to buy distressed securities, Geithner said in a speech in Washington.
The department will also work with the Federal Reserve to finance as much a $1 trillion in new consumer and business loans. The new Consumer and Business Lending Initiative is modeled on an earlier program to support new credit.
“Nothing new,” said Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York. “It’s not meaty in terms of getting lending out there now.”
The U.S. Senate approved a separate $838 billion economic stimulus package today, clearing the way for negotiations with the House over a compromise plan lawmakers said they want to send to President Barack Obama quickly.
Senate Vote
The chamber today voted 61-37 to approve the measure. It provides $293 billion in tax cuts and more than a half trillion dollars in new spending that lawmakers call critical to preventing the economy from sinking deeper into recession.
U.S. stocks plunged today, with the Standard & Poor’s 500 Index losing 4.6 percent, the most since Obama was inaugurated, on concern the government’s bank rescue won’t work.
“There’s still room for equities to decline,” said Dustin Reid, director of currency strategy in Chicago at RBS Global Banking & Markets. “If that’s the case, then the dollar bid will last longer and the yen will also benefit.”
The euro weakened earlier as much as 1.5 percent versus the dollar after the Nikkei newspaper, citing an interview with Russian Association of Regional Banks head Anatoly Aksakov, reported that Russian banks and businesses may ask foreign lenders to reschedule loans worth $400 billion.
asr: what this mean in my terms of above. If russian banks/biz ask to reschedule loans meaning they postpone loan payment ( which is mainly EURO ) so purchase of EURO is delayed ( to payback loan is ) so market perceives less demand for EURO ...
Russian Debt Burden
The 16-nation euro pared its loss against the greenback after Aksakov told Bloomberg News that banks such as London- based HSBC Holdings Plc suggested meetings with Russian companies concerning their ability to meet obligations.
“Several western banks asked about holding discussions,” Aksakov said in an interview with Bloomberg. “It was their initiative to have talks on this topic to look at restructuring the debts of several companies.”
Kazakhstan’s banks may have their ratings cut as the devaluation of the nation’s currency makes it harder for them to repay foreign debt and “substantially increases” credit risk, Moody’s Investors Service said yesterday.
“Central and Eastern Europe, Russia, Turkey and South Africa will underperform for some time, not boding well for the long-term euro outlook,” analysts at BNP Paribas SA led by London-based Hans-Guenter Redeker wrote in a note today. “Bear in mind that most Central and Eastern European countries hold 100 percent of their currency reserves in euros, suggesting a further liquidation of local assets held in foreign accounts implies currency reserves will shrink.”
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Molly Seltzer in New York at mseltzer4@bloomberg.net
Last Updated: February 10, 2009 15:00 EST
Feb. 10 (Bloomberg) -- The dollar and yen rose versus most of their major counterparts on bets Treasury Secretary Timothy Geithner’s financial recovery plan will fall short of reviving lending, increasing demand for a haven.
The yen advanced more than 6 percent versus the Australian dollar, the biggest intraday gain in more than two months, on speculation investors reduced holdings of higher-yielding assets as Geithner pledged financing for programs that may grow to $2 trillion. The dollar increased for the first time in three days versus a gauge of currencies of six major U.S. trading partners.
“It’s classic risk aversion as the market expresses its disappointment to the Treasury’s plan,” said Adam Boyton, a senior currency strategist in New York at Deutsche Bank AG, the world’s largest foreign-exchange trader. “Geithner’s plan lacks a lot of details.”
The dollar gained 1 percent to $1.2870 per euro at 2:54 p.m. in New York, from $1.3003 yesterday. The yen strengthened versus the euro for the first time in four days, appreciating 2.3 percent to 116.22 per euro from 118.94. Japan’s currency advanced 1.3 percent to 90.31 per dollar from 91.46.
The yen advanced as much as 6.1 percent to 58.50 versus the Australian dollar and 4.5 percent to 130.36 against the pound on speculation losses at financial firms will deepen, encouraging investors to sell higher-yielding assets and pay back low-cost loans in Japan. The Bank of Japan’s 0.1 percent target lending rate compares with 3.25 percent in Australia and 1 percent in the U.K.
Let me understand above paragraph in my terms.
asr: so some UK/AU firm can sell assets in their country and pay back their loan JAPAN. since assets are perceived to decline selling them now is higher prices . Once you have money from asset sales , you wanted to pay back Yen LOAN for that you need to convert AUD->Yen , GBP->yen so everybody is buying YEN so YEN raises against GBP/AUD.
Emerging Markets
Mexico’s peso, Brazil’s real and South Africa’s rand depreciated more than 1 percent against the dollar on reduced demand for emerging-market assets. The peso lost 1.6 percent to 14.4325 versus the dollar, the real declined 1.4 percent to 2.2910 and the rand weakened 2.1 percent to 9.8436.
The ICE’s Dollar Index, which tracks the greenback versus the euro, the yen, the pound, the Canadian dollar, the Swedish krona and the Swiss franc, rose 1.2 percent to 85.76 today. It lost 0.8 percent last week in its first weekly drop this year on speculation the bank-rescue plan would reduce demand for the world’s reserve currency.
The Australian dollar lost 3.6 percent to 65.39 U.S. cents today after gaining 5.9 percent versus the greenback last week, the biggest rally since the end of October.
“The market had been buying risky assets in the past several days in anticipation that we may get some more specifics,” said Steven Englander, chief U.S. currency strategist at Barclays Capital in New York, of Geithner’s plan. “What came out was not consistent with the buying of risky assets. We are back to where we were a week ago.”
Public-Private Fund
The Treasury is creating a Public-Private Investment fund, with an initial capacity of $500 billion that could grow to $1 trillion, to provide financing for private investors to buy distressed securities, Geithner said in a speech in Washington.
The department will also work with the Federal Reserve to finance as much a $1 trillion in new consumer and business loans. The new Consumer and Business Lending Initiative is modeled on an earlier program to support new credit.
“Nothing new,” said Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York. “It’s not meaty in terms of getting lending out there now.”
The U.S. Senate approved a separate $838 billion economic stimulus package today, clearing the way for negotiations with the House over a compromise plan lawmakers said they want to send to President Barack Obama quickly.
Senate Vote
The chamber today voted 61-37 to approve the measure. It provides $293 billion in tax cuts and more than a half trillion dollars in new spending that lawmakers call critical to preventing the economy from sinking deeper into recession.
U.S. stocks plunged today, with the Standard & Poor’s 500 Index losing 4.6 percent, the most since Obama was inaugurated, on concern the government’s bank rescue won’t work.
“There’s still room for equities to decline,” said Dustin Reid, director of currency strategy in Chicago at RBS Global Banking & Markets. “If that’s the case, then the dollar bid will last longer and the yen will also benefit.”
The euro weakened earlier as much as 1.5 percent versus the dollar after the Nikkei newspaper, citing an interview with Russian Association of Regional Banks head Anatoly Aksakov, reported that Russian banks and businesses may ask foreign lenders to reschedule loans worth $400 billion.
asr: what this mean in my terms of above. If russian banks/biz ask to reschedule loans meaning they postpone loan payment ( which is mainly EURO ) so purchase of EURO is delayed ( to payback loan is ) so market perceives less demand for EURO ...
Russian Debt Burden
The 16-nation euro pared its loss against the greenback after Aksakov told Bloomberg News that banks such as London- based HSBC Holdings Plc suggested meetings with Russian companies concerning their ability to meet obligations.
“Several western banks asked about holding discussions,” Aksakov said in an interview with Bloomberg. “It was their initiative to have talks on this topic to look at restructuring the debts of several companies.”
Kazakhstan’s banks may have their ratings cut as the devaluation of the nation’s currency makes it harder for them to repay foreign debt and “substantially increases” credit risk, Moody’s Investors Service said yesterday.
“Central and Eastern Europe, Russia, Turkey and South Africa will underperform for some time, not boding well for the long-term euro outlook,” analysts at BNP Paribas SA led by London-based Hans-Guenter Redeker wrote in a note today. “Bear in mind that most Central and Eastern European countries hold 100 percent of their currency reserves in euros, suggesting a further liquidation of local assets held in foreign accounts implies currency reserves will shrink.”
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Molly Seltzer in New York at mseltzer4@bloomberg.net
Last Updated: February 10, 2009 15:00 EST
Thursday, February 5, 2009
Biggest job loss ever for retail sector
Retailing may never recover fully as consumers begin to save again
But this recession is showing America something new: For the first time ever, more private-sector services jobs have been lost than goods-producing jobs have been lost. Since the recession began in December 2007, 1.41 million service jobs have been eliminated compared to 1.36 million in manufacturing, construction and mining.
Many of those lost jobs were in retailing, which has seen its largest job losses since the data collection began in 1939. Through December, more than 500,000 retailing jobs were gone, representing a record 3.4% of retail jobs.
Retail companies have stepped up the pace of layoffs since the horrible holiday sales season ended. More than 50,000 job cuts have been announced since Jan. 1 by major retailers such as Circuit City, Home Depot, and Macy's. On Thursday, the chains reported that sales were weak again in January, results that are likely to prompt even more layoffs. See full story.
On Friday morning, the Labor Department will report on its nonfarm payroll estimate for January. Economists surveyed by MarketWatch are forecasting a seasonally adjusted loss of 525,000 jobs, nearly identical to the 524,000 lost in December and the fifth straight month of losses of more than 400,000. See Economic Calendar.
Some economists say many of those jobs will never come back as Americans wean themselves from the easy credit that's fueled their consumption for the past 25 years.
"A lot of them are gone for good," said Nigel Gault, chief U.S. economist for IHS Global Insight, a major economic consulting firm. "The age of the U.S. and world economy being driven by the U.S. consumer may be in the past."
"It's a structural change," said Neal Soss, chief U.S. economist for Credit Suisse. Consumers have had access to easy credit for years, allowing them to increase their spending faster than their incomes grew. As for saving, consumers relied on the stock market or increases in their home's value to provide the funds for retirement or other purposes.
As a result, the personal savings rate fell from about 10% of disposable incomes in 1980 to just 0.3% in 2005 at the height of the housing boom.
"The bloom is off that rose," said Soss. People who were convinced that a 401(k) and a big house were a golden passport to Easy Street have now been disillusioned. Most investors have now suffered through two market crashes in the past decade that have wiped out most of their gains.
Americans will have to start actually saving again, and that means less spending on consumer goods. Less spending on consumer goods means less money going into retailers' coffers. And that means fewer jobs and fewer stores.
"Americans won't have to wear a hair shirt," Soss said, but they'll probably increase their savings rate to about 5% of disposable incomes. Once the recession is over, they'll increase their spending no faster than their incomes grow.
Instead of relying on unsustainable consumer spending leading the way, the economy will have to be more balanced. Consumer spending has increased in importance in the past decades, growing from about 65% of final domestic sales in the late 1970s to about 69% last year.
"We need to become more of a nation of producers rather than a nation of consumers," Gault said. We'll have to be just a little bit more like the Japanese or the Chinese, and they'll have to become just a little bit more like we've been.
More details on job losses
In the first 12 months of the recession that began in December 2007, 2.6 million jobs were lost, or 1.9% of the positions that were filled at the beginning of the recession.
As is usually the case, the goods-producing side of the economy is hurting the most, with employment in durable-goods manufacturing and construction down more than 10% from the peak of employment nearly three years ago. That makes sense, because the first thing people do when they see the economy weakening is to stop buying homes and durable goods. Businesses stop investing in new equipment.
The services sector has lost 1.5% of its employment since the recession began. That's the largest percentage decline since the sharp and nasty recession in 1958 that cost 2.5% of service workers their jobs. By contrast, in the equally nasty recession of 1973-75, service employment actually increased 0.9% during the downturn.
Almost all major service industries have lost jobs in this recession. The trade industries -- retail, wholesale, transportation and warehousing -- have cut 825,000 jobs, including 522,000 in retail, 163,000 in wholesaling and 72,000 in trucking.
The temp-help industry has eliminated 490,000 jobs. The financial sector, including banks and real estate, has lost 148,000, publishing has lost 45,000 and broadcasting 26,000. The hotel and restaurant industries have reduced employment by 136,000. The big winner has been health care, which has added 440,000 jobs. End of Story
Rex Nutting is Washington bureau chief of MarketWatch.
Oil prices drop close to 40 dollars in New York
2/5/09
LONDON (AFP) — Oil prices fell close to 40 dollars in New York, dragged down by rising inventories in the United States, the biggest crude consuming nation, analysts said.
New York's main futures contract, light sweet crude for delivery in March, eased 11 cents to 40.21 dollars a barrel.
Brent North Sea crude for delivery in March climbed 66 cents to 44.81 dollars a barrel.
"Prices bounced to around the 40-41 dollar-a-barrel range (in New York), being pulled in opposite directions by expectations of OPEC cuts bringing demand and supply into balance on the one hand, and the continuing trend of inventory builds highlighting weakness in demand on the other," said Barclays Capital analyst Kevin Norrish.
The Organization of Petroleum Exporting Countries had last week signalled it would consider more reductions in output as its member countries try to lift prices and in turn their incomes.
OPEC, which pumps about 40 percent of the world's oil, announced production cuts totalling 4.2 million barrels per day late last year as crude futures plunged close to 32 dollars from record highs of above 147 dollars in July.
Oil prices meanwhile traded mixed for a second day running after the US government's Energy Information Administration (EIA) on Wednesday reported a huge rise in crude stockpiles last week, underlining slowing demand in the world's biggest energy consumer.
"The EIA reported yet another astonishing rise in US oil stocks, highlighting lower demand and increasing imports," said VTB Capital analyst Andrey Kryuchenkov.
"However, it was somewhat balanced out by a smaller than expected increase in gasoline inventories and a larger than expected draw in distillate inventories... as seasonal demand continues to influence the market."
The EIA had Wednesday said that crude stockpiles had soared by 7.2 million barrels last week, more than double the 2.9 million barrels forecast by analysts.
It was the fifth consecutive week of gains, and the sharp rise underlined slack demand amid the global financial crisis that has brought the world economy to a near-halt.
Stockpiles of US distillates, which include heating fuel, dropped by 1.4 million barrels last week. The drop beat expectations of a reduction totalling only 600,000 barrels.
Earlier this week, crude prices had won some support from strikes at refineries in Britain and a cold snap in Western Europe, but gains were capped by concern about the impact of the slowdown on oil demand.
LONDON (AFP) — Oil prices fell close to 40 dollars in New York, dragged down by rising inventories in the United States, the biggest crude consuming nation, analysts said.
New York's main futures contract, light sweet crude for delivery in March, eased 11 cents to 40.21 dollars a barrel.
Brent North Sea crude for delivery in March climbed 66 cents to 44.81 dollars a barrel.
"Prices bounced to around the 40-41 dollar-a-barrel range (in New York), being pulled in opposite directions by expectations of OPEC cuts bringing demand and supply into balance on the one hand, and the continuing trend of inventory builds highlighting weakness in demand on the other," said Barclays Capital analyst Kevin Norrish.
The Organization of Petroleum Exporting Countries had last week signalled it would consider more reductions in output as its member countries try to lift prices and in turn their incomes.
OPEC, which pumps about 40 percent of the world's oil, announced production cuts totalling 4.2 million barrels per day late last year as crude futures plunged close to 32 dollars from record highs of above 147 dollars in July.
Oil prices meanwhile traded mixed for a second day running after the US government's Energy Information Administration (EIA) on Wednesday reported a huge rise in crude stockpiles last week, underlining slowing demand in the world's biggest energy consumer.
"The EIA reported yet another astonishing rise in US oil stocks, highlighting lower demand and increasing imports," said VTB Capital analyst Andrey Kryuchenkov.
"However, it was somewhat balanced out by a smaller than expected increase in gasoline inventories and a larger than expected draw in distillate inventories... as seasonal demand continues to influence the market."
The EIA had Wednesday said that crude stockpiles had soared by 7.2 million barrels last week, more than double the 2.9 million barrels forecast by analysts.
It was the fifth consecutive week of gains, and the sharp rise underlined slack demand amid the global financial crisis that has brought the world economy to a near-halt.
Stockpiles of US distillates, which include heating fuel, dropped by 1.4 million barrels last week. The drop beat expectations of a reduction totalling only 600,000 barrels.
Earlier this week, crude prices had won some support from strikes at refineries in Britain and a cold snap in Western Europe, but gains were capped by concern about the impact of the slowdown on oil demand.
2000 to 2002 bear market drawdown 44.12%
when looking at the current drawdown period -- the decline in value of the Dow Jones Wilshire 5000 from its peak to its trough -- the most recent drop is about 41.5%. That's less than the 44.12% drawdown experienced during the 2000 to 2002 bear market, said Krein.
While only time will tell whether the bottom has been hit, a 40%-plus decline is significant, to the degree historical trends hold, said Krein.
Timing is everything
"If we happen to be at the bottom now, maybe history will hold and maybe it won't, but it still takes a multiple of the period of decline to recovery. It's that buildup that investors do not want to miss," said Krein.
Time to jump in?
Housing prices are down, and mortgage rates remain low, but potential buyers should be cognizant of being in it for the long haul, as MarketWatch's Amy Hoak reports.
The market took about three and a half years to recover after the 2002 bear market, yet the market rebounded 14.86% in the year following the trough date.
"If you expand this out to two or three years, the market has rebounded 28.28% and 48.29%, respectively," Krein said.
Historically, the recovery takes about twice as long as the decline. But for those "with the stomach and capital to wade back in," investing at market lows in the past has translated into gains of 40% and more for those who buy and then wait out the bounce back, Krein said.
"If you're a long-term investor, I think stepping in even at this point in time would be a good move. Economies don't stay weak forever, so it makes sense to position for a turnaround that we see happening sometime next year," said Pavlik.
While only time will tell whether the bottom has been hit, a 40%-plus decline is significant, to the degree historical trends hold, said Krein.
Timing is everything
"If we happen to be at the bottom now, maybe history will hold and maybe it won't, but it still takes a multiple of the period of decline to recovery. It's that buildup that investors do not want to miss," said Krein.
Time to jump in?
Housing prices are down, and mortgage rates remain low, but potential buyers should be cognizant of being in it for the long haul, as MarketWatch's Amy Hoak reports.
The market took about three and a half years to recover after the 2002 bear market, yet the market rebounded 14.86% in the year following the trough date.
"If you expand this out to two or three years, the market has rebounded 28.28% and 48.29%, respectively," Krein said.
Historically, the recovery takes about twice as long as the decline. But for those "with the stomach and capital to wade back in," investing at market lows in the past has translated into gains of 40% and more for those who buy and then wait out the bounce back, Krein said.
"If you're a long-term investor, I think stepping in even at this point in time would be a good move. Economies don't stay weak forever, so it makes sense to position for a turnaround that we see happening sometime next year," said Pavlik.
Wednesday, February 4, 2009
GOLD FORECAST
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asr: GOLD vs. silver 5 year return, interesting after losing 30% in 2008 , it gained 50% in 2009 so from DEC 2008 to DEC 2009 the gain is 80% wow.
- see the chart pattern , after out performing GOLD 3 years in a row , it lagged gold 2 years in a row , then again 80% in 2009 .
- good chart patterns to watch in hardassets , it seems in 2009 JAN it is is less risk trade to buy silver given it lagged gold in 3 years in a row
asr: have this kind of charts in JAN and JULY of every year ( once in 6 months ) for all hard asserts like copper, stockindex, GOLD, sivler, crude oil, oil cracks, agri soy bean/oii/meal vs. corn see if you get some good trade ideas like those silver/gold patterns . may find similar in soy/corn , copper vs. xxx
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asr: this is 11/11/09 article
Mr. K reported same, seems got it from Realmoney.com
Gold prices could reach as much as $1,200 a troy ounce by the end of the year if ten-year U.S. Treasury Inflation Protected Securities yields, or TIPS, remain at current weak levels, Goldman Sachs said Tuesday.
The bank noted the continued weakness in real interest rates continues to provide strong support to gold prices over the medium term.
"The yield on the 10-year U.S. TIPS remains under 1.50%, which continues to suggest upside risk to our $960/oz forecast," said the bank, which sees gold at $960/oz on a three-, six- and 12-month basis. "Should 10-year TIPS yields remain at these levels, we would expect gold price to move to $1,150-$1,200/oz."
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Gold Price Won’t Drop Below $1,000 an Ounce Again, Faber Says
asr: this is 11/10/09 while gold is at 1100 , this is bloomberg article , so some credentials for the forecaster. So central banks ( US etc..) are expected to print more so more inflation so he expects to raise.
“We will not see less than the $1,000 level again,” Faber said at a conference today in London. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.”
China will keep buying resources including gold, he said.
“Its demand for commodities will go up and up and up,” he added. “Emerging economies will grow at the fastest pace.
---
Goldman Sachs lifts gold price forecast to $1,000/oz
asr: 2/5/2009 article (see link) , so from 2/5 gold incresed from 900 to 970 ish then maintained at 900 level for some time and reached 1000. so Gold man forecast of 1000 ( from 900 ) in 3 months time is not bad .
SINGAPORE, Feb 5 (Reuters) - Investment bank Goldman Sachs
(GS.N) raised its forecast for the price of gold
reach $1,000 an ounce in the next three months from its
previous forecast of $700 due to rising investor demand for
safe haven assets.
"The gold price rally has been driven by surging demand for
gold in all forms: physical gold, exchange-traded funds (ETFs),
and futures contracts as investors seek 'a safe store of value'
amid the financial distress and inflation risks," it said in a
report.
It also noted that a strong relationship between the price
of gold in U.S. dollars and the exchange rate of the dollar
agsinst other currencies has begun to break down. Gold was
trading at $903.15 an ounce by 0038 GMT, down $1.70 from New
York's notional close.
--------------
Gold was down some 5.5% last week on options expiry, year end profit taking and tentative dollar strength and oil weakness.
asr: this GOld man forecast of SELL GOLD in 12/2007 did not do well , gold raised next 6 months ..
Goldman Sachs Group Inc. is recommending that investors get out of gold and lock in their gains just two months after it suggested they buy. Goldman Sachs recommends in its top 10 trades list for 2008 that investors short gold next year. However, there appears to be dissent in the Goldman camp as only a few days ago another Goldman analyst, Oscar Cabrera, said that the average price of gold will increase to $800 an ounce in 2008, up from $687 in 2007.
asr: good snaptshot to see where prices are in 12/2007
Sunday, February 1, 2009
US Dollar Index USDX
nvestopedia explains U.S. Dollar Index - USDX...
Currently, this index is calculated by factoring in the exchange rates of six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. This index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period.
good forex step by step course
What is US Dollar Indexsup>®?
Just as Dow Jones Industrial Average reflects the general state of American stock market, US Dollar Index (USDXsup>®) reflects the general assessment of US Dollar. USDX does it through exchange rates averaging of US Dollar and six most tradable global currencies.
USDX = 50.14348112 × EURUSD−0.576 × USDJPY0.136 × GBPUSD−0.119 × USDCAD0.091 × USDSEK0.042 × USDCHF0.036
Those 20 countries (15 eurozone countries and five other countries, whose currencies are represented in USDX) make up the basis of global trade with the USA, have highly developed currency markets with the quotes which are independently determined by market participants. Besides, many currencies not included into USDX, are traded in close correlation with the currencies included in USDX. USDX value is calculated 24-hours a day, seven days a week.
Currencies and weights used in USDX calculation match the currencies and weights used in calculation of trade weighted US Dollar index by US Fed.
As USDX is based on indicative values of quotes, it can vary depending on quote source used.
----------
US Dollar Index
- symbols: DX
- months: HMUZ
- .01 of a U.S. Dollar Index
- point = $10.00/contract index points, expressed to three decimals
size: $1,000 times the U.S. Dollar Index
- minimum change : .01 pt($10)
- margin: $1,064 $800
Date:01/30/09 chart
H=86.60 L=85.90 ( between high/low .70 points => $700 , huge with less margin of 1000 if you get it right percent 87% )
Future Contracts specificaiton
All future contract specs
-------------
Trading Hours (All times are New York Time)
Open outcry trading is conducted from 9:00 AM until 2:30 PM.
Electronic trading is conducted from 6:00 PM until 5:15 PM via the CME Globex® trading platform, Sunday through Friday. There is a 45-minute break each day between 5:15PM (current trade date) and 6:00 PM (next trade date).
Heating Oil Futures Contracts:
Ticker Symbol: HO
Exchange: NYMEX
Trading Hours: 9:00 AM until 2:30 PM EST.
Contract Size: 42,000 U.S. gallons (1,000 barrels)
Contract Months: all months(Jan. - Dec.)
Price Quote: U.S. dollars and cents per gallon. Ex $2.15 per gallon
Tick Size: $0.0001 (0.01¢) per gallon ($4.20 per contract).
Last Trading Day: close of business on the last business day of the month preceding the delivery month.
asr: so from 1.4600 to 1.3795 ( 1/30/09 to 2/2/09 ) is 805 tics move => 805 x $4.25 => $3300 move
-----
Heating Oil Emini Nymex: QH
Trading Unit
21,000 gallons.
Price Quotation
U.S. cents per gallon.
Trading Hours (All times are New York time)
The contract is available for trading on the CME Globex® trading platform from 6:00 PM Sundays through 5:15 PM Fridays, with a 45-minute break each day between 5:15 PM and 6:00 PM.
Trading Months
Eighteen (18) consecutive months.
Minimum Price Fluctuation
$0.001 (0.1¢) per gallon ($21.00 per contract).
--------
Heating Oil Futures - Fundamentals :
Heating oil is also called a distillate or Number 2 oil.
When crude oil is refined, about 25 percent of the oil becomes heating oil and about 50 percent becomes gasoline. Heating oil is primarily used to heat homes in the Northeast.
The United States produces about 85 percent of its heating oil, while the remainder is imported from Canada, the Virgin Islands and Venezuela.
Oil companies begin to ramp up production of heating oil before the winter season begins to ensure ample supplies of heating oil to meet the winter demand.
Heating Oil prices typically follow crude oil.
- The biggest opportunities for a quick rise in price occurs during the winter months. Unexpected or prolonged periods of extreme cold in the Northeast will typically cause sharp rallies in the price of heating oil futures.
- Simply buying heating oil futures in the winter is not a "no-brainer" trade. It gets cold every winter; the catch is that the weather has to be colder than expected and more heating oil needs to be consumed than anticipated for the season.
------------
Canola
Canola on ICE (Canadian exchange), this future prices are also in C$
https://www.theice.com/productguide/productDetails.action?specId=251
Soybeans
- What is meant by the term soybean complex?
price chart
A - The term refers to the soybean, its two principal by-products: soybean oil and meal, and their special interrelationship throughout the production, processing, and marketing processes.
Soybean oil remains the most widely used edible oil in the United States, with consumption exceeding that of all other fats and oils combined. It is a major ingredient in cooking oil, margarine, mayonnaise, salad dressing, and shortening. Lecithin is a natural emulsifier derived from soybean oil and, without it; chocolate would separate from cocoa butter and spoil many sweet moments.
Soybean meal is the dominant protein supplement used in U.S. livestock and poultry feeds. Soy products are also used to make baby food, diet-food products, beer and ale, and noodles. Technical uses include adhesives, cleansing materials, polyesters, and other textiles.
Soybean futures, soyoil futures, and soybean futures markets supply the mechanism for long-term business planning, which can lead to operational profitability for farmers, processors, livestock producers, and food manufacturers.
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Soybean Oil (CBOT) (07) - Margins Init/maintanance
Speculative - Old Crop $2,025 $1,500
Hedge/Member - Old Crop $1,500 $1,500
Speculative - New Crop $2,025 $1,500
Hedge/Member - New Crop $1,500 $1,500
ALL future contract specifications
http://futures.tradingcharts.com/specs/summary.html
Soybean Oil Futures contract specification
Trading Hours
Electronic: 6:00 p.m. - 6:00 a.m. and 9:30 a.m. - 1:15 p.m. Central Time, Sun.-Fri.
Open Auction: 9:30 a.m. - 1:15 p.m. Central Time, Mon-Fri.
Ticker Symbols
Open Auction: BO
Electronic: ZL
Daily Price Limit
2.5 cents per pound ($1,500/contract) above or below the previous day's settlement price. No limit in the spot month (limits are lifted beginning on First Position Day).
Contract Size
60,000 lbs
Tick Size
1/100 cent ($0.0001)/lb ($6/contract)
Price Quote: Cents/lb
Contract Months
Oct, Dec, Jan, Mar, May, Jul, Aug, Sep
Last Trading Day
The business day prior to the 15th calendar day of the contract month.
-----
Trading example: If you were to purchase 1 contract of BO at 60.00, and the next day it moves to 60.50, you would have a profit of $300. Inversely, if it were to move to 59.50 you would have a loss of $300.
that is => 50 points x $6 = $300
price chart
on 1/30/09 daily chart day change : at close up +.36 for day (36 x 6) that is $200/contract of $2000 margin that is 10% not bad if forecast is good 90%.
Open 32.28
High 32.86
Low 32.16
Close 32.73
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