Find Out Which ETFs Will Benefit From as a Stronger U.S. Dollar Reacts to Global Market Concerns

The recent news of Hedge Fund and other institutional crisis events has opened many eyes as investors and traders realize the post 2008-09 global market credit bubble has extended well beyond what many people may realize. 

Recent news that China offered a “deferment” for Chinese corporations and state run enterprises content with shadow banking credit/debt issues at a time when China is tightening monetary policy shows that a process, like the 2008 Lehman incident, may be setting up where institutional level credit/debt liabilities ripple through the global markets as global central banks attempt to reign in monetary policies.

This process is not likely to happen suddenly though. If this type of contraction in global monetary policy takes place, resulting in increased pressures to contain excessive credit/debt functions in the markets, then we believe the process may result in an extended 9 to 16+ months of “hit-and-miss” events leading up to a potentially bigger event. 

The Archegos Fund forced unwinding of trades hit the markets recently as a wake-up call. Prior to the Archegos event, the Greensill Capital collapse shocked the global markets because of the size and scope of this failure. Now, we see Credit Suisse issuing warnings that Q1 earnings may have taken a big hit because of exposure to the Greensill and Archegos assets – which is leading to Credit Suisse attempting to put the Gupta Trading Unit into insolvency....Read More Here.

SandRidge Energy [SD] Releases Earnings Report for First Quarter 2012

You may not hear about SandRidge much from the talking heads on TV but SD is one of the darlings of hedge fund managers and oil focused fund managers.

On Friday SandRidge Energy, Inc. (NYSE: SD) announced financial and operational results for the quarter ended March 31, 2012.

Key Financial Results

• Adjusted EBITDA of $185 million for first quarter 2012 compared to $149 million in first quarter 2011.
• Operating cash flow of $153 million for first quarter 2012 compared to $102 million in first quarter 2011.
• Net loss applicable to common stockholders of $232 million, or $0.58 per diluted share, for first quarter 2012 compared to net loss applicable to common stockholders of $316 million, or $0.79 per diluted share, in first quarter 2011.
• Adjusted net income of $21.2 million, or $0.04 per diluted share, for first quarter 2012 compared to adjusted net loss of $7.7 million, or $0.02 per diluted share, in first quarter 2011.

Adjusted net income available (loss applicable) to common stockholders, adjusted EBITDA and operating cash flow are non-GAAP financial measures. Each measure is defined and reconciled to the most directly comparable GAAP measure under "Non-GAAP Financial Measures" beginning on page 9.

Highlights

• Mississippian daily average production grew by 23% quarter over quarter
• Record oil production in first quarter 2012 of 3.4 MMBbls 
• Recent peak production of 99 MBoe per day on April 29, 2012 
• Current Mississippian acreage position of approximately 1.7 million net acres
• Raised $590 million in net proceeds from the IPO of SandRidge Mississippian Trust II in April 2012
• Increased senior credit facility borrowing base to $1.0 billion and extended maturity to 2017
• Current liquidity of $1.6 billion, with cash balance of approximately $600 million and no borrowings outstanding under the senior credit facility

Read the entire earnings report at SandRidge Energy.Com

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Precious Metals – Silver, Gold, Gold Miner Stocks On The Rise?

The past couple months investors have been focusing on the equities market. And rightly so with stocks running higher and higher. Unfortunately most money managers and hedge funds are under performing or negative for the first quarter simply because of the way prices have advanced. New money has not been able to get involved unless some serious trading rules have been bent/broken (buying into an overbought market and chasing prices higher). This type of market is when aggressive/novice traders make a killing cause they cannot do anything wrong, but 9 times out of 10 that money is given back once the market starts trading sideways or reverses.

While everyone is currently focusing on stocks, its important to research areas of the market which are out of favor. The sector I like at the moment is precious metals. Gold and silver have been under pressure for several months falling out of the spot light which they once held for so long. After reviewing the charts it looks as though gold, silver and gold miner stocks are set to move higher for a few weeks or longer.

Below are the charts of gold and silver charts. Each candle stick is 4 hours allowing us to look back 1-2 months while still being able to see all the intraday price action (pivot highs, pivot lows, volume spikes and price patterns).

The 4 hour chart is one time frame most traders overlook but from my experience I find it to be the best one for spotting day trades, momentum trades and swing trades which pack a powerful and quick punch.

As you can see below with the annotated charts gold, silver and gold miner stocks are setting up for higher prices over the next 2-3 weeks. That being said we may see a couple days of weakness first before they start moving up again.

4 Hour Momentum Chart of Gold:

4 Hour Momentum Chart of Silver:

Daily Chart of Gold Miner Stocks:

Gold miner stocks have been under performing precious metals for over a year already. Looking at the daily chart we are starting to see signs that gold miner stocks could move up sharply at the trade down at support, oversold and with price/volume action signaling a possible bottom.

Daily Chart of US Dollar Index:

The US Dollar index has formed a possible large Head & Shoulders pattern meaning the dollar could fall sharply any day. The size of this chart pattern indicates that if the dollar breaks down below its support neckline the we should expect the dollar to fall for 2-3 weeks before finding support.

Keep in mind that a falling dollar typically means higher stock and commodity prices. If this senario plays out then we should see the market top late April which falls inline with the saying “Sell In May and Go Away”.

Precious Metals Conclusion:

Looking forward 2-3 weeks precious metals seem to be setting up for higher prices as we go into earning season and May. Overall the market is close to a top so it could be a bumpy ride as the market works on forming a top in April.

Chris Vermeulen
The Gold and Oil Guy.com

Crude Drifts Lower As Volume Drops Out

Crude futures drifted lower Monday amid light volume as trading was halted for clients of MF Global, one of the market's largest commodity brokers that filed for bankruptcy Monday.

Volume was less than half of normal levels, with fewer than 300,000 contracts traded compared with the 200 day moving average of nearly 660,000, as exchanges informed clients of MF that they would be limited to liquidating positions and otherwise unable to trade until they moved their accounts to other brokerages.

Brokerage firms such as MF provide vital "clearing" services for the markets, acting as escrow agents of sorts to match orders, handle payments, and execute and settle trades. The firm counted many major hedge funds and commercial hedging clients among its customers. The chaotic process got under way shortly after the opening of the market in New York on Monday, frustrating traders with untold delays as they processed papers to move accounts and positions elsewhere.

"I'm unable to trade," one trader and client of MF said, on the condition he not be identified. "Nothing can go in or out of your account until it moves over to another clearinghouse, and that is a function of paperwork, begun during the trading day, which is not the way to do it".......Read the entire Rigzone article.

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What Are Hedge Fund Managers Buying Amid Falling Prices.....Ensco and Schlumberger

Hedge funds bought $1.6 billion of shares in two oil-services companies in the second quarter as analysts said a drilling boom in the U.S. may spread overseas, helping reverse a slump in the companies’ stock prices.
Ensco Plc (ESV) and Schlumberger Ltd. (SLB) received the most new investment by hedge funds of all energy companies, beating producers such as Marathon Oil Corp. (MRO), according to calculations by Bloomberg from regulatory filings this week. MHR Fund Management LLC, Vinik Asset Management LP and SAC Capital Advisors LP topped the list of buyers.

Oil companies have to boost drilling in expanding areas of the world such as in Asia and off the coasts of Brazil and West Africa to meet growing energy demand. Drilling for crude and natural gas in North America increased at five times the pace of the rest of the world in the past year.

“International has yet to really inflect, but we’re beginning to see some progress on that front,” said Bill Herbert, an analyst at Simmons & Co. in Houston, who has an “overweight” rating on Schlumberger and Ensco. “You’re going to see meaningful growth on international, deepwater and exploration-related activity.”
New York based MHR acquired $325 million of Ensco stock based on June 30 prices, and Vinik of Boston added $137 million of Schlumberger shares, the filings at the Securities and Exchange Commission in Washington show.

MHR Managing Principal Hal Goldstein didn’t respond to a phone message seeking comment. An executive at Vinik who asked not to be named said the firm never comments to the media......Read the entire article.

Apple and Goldman Crash, But is the High Still Coming?

On Wednesday the equities market poured out a sea of red candles. Leaving most traders and investors feeling that most all of their recent gains had disappeared in one short session. And we have warned repeatedly that strong selling volume sessions like this is typically an early warning that distribution selling is starting to enter the market.

Distribution selling is when the big money players start unloading large positions in anticipation of a market top. They do try to hide it by selling into good news or earnings when the average investors are buying into all the hype of better than expected earnings on the news. As average investors jump into the market because of the good news, this extra liquidity helps the big money players (banks, hedge funds, etc..) sell large amounts of their positions to the eager buyers. This is why the “buy on rumor and sell on the news” saying is kicked around wall street.....

To me, panic selling is typically seen as a bullish sign to enter the market simply because if everyone is/has rushed to the door to sell what they own, then really most of the down side risk has been taken out of the market. That being said after an extended multi month rally and higher than selling volume I look at it more like distribution selling and a shift in momentum.

I feel the precious metals sector will be starting something like this in the near futures, and possibly it has already started as seen in the rising volume on the down days.

Let’s take a look at the charts…

AAPL – Apple Stock 10 Minute Chart
Two days ago AAPL shares took big hit because of some medical issues with the CEO, the shares did float back up. But what is important here is the distribution selling which took place after Apple came out with much better than expected earnings. The general public loves to buy good news especially when it’s for a famous company. But large sellers stepped in unloading as much of their position as they could before making it look to obvious.

The average investor listening on the radio or catching snippets on the news do not pick up on these things which is why the big money players can get away with this over and over again.

GS – Goldman Sachs 10 Minute Chart
Goldman came out with average earnings being just above estimates and the share price took a beating with very strong volume.

Distribution selling looks to be entering the market and this is a bearish sign. I would not be surprised if we see the market top out in the next 5-10 trading sessions.

SPY – SP500 10 Minute Chart
Here you can see my green panic selling indicator spiking up much higher than normal dwarfing the past sell off spikes. This makes me think the big money is now starting to unload which will shift the current upward momentum to more of a sideways whipsaw type of price action. Eventually it will roll over and a new down trend will start.

As you can see from this chart the SP500 is trading down at a support level so a bounce is likely going to take place. If in fact today was the first distribution day then the big money should let the price inflate back up to the recent highs and possibly make a new high to help keep investors bullish before the hit their SELL BUTTON again… They like to play these games and understanding them is a key part of trading. Expect choppy price action for a week or two…...

Silver Daily Chart – The Next Wave of Selling?
I look at silver and gold as one… so what I show here is the exact same for gold.

As you can see silver is trading under 3 of its key moving averages and Wednesdays bounce was sold into after testing the 14 and 20 period moving averages.

Take a looking at the bottom of the chart and you can see distribution selling volume as the spikes are all down days. If silver breaks below the $28 level then we could easily and quickly see the $26 and maybe even the $24 level.

The Mid-Week Market & Metals Trading Conclusion:
In short, the financial power players are pulling out all the tricks to shake traders out of their positions. A lot of people shorted the market in the past 2 weeks only to get hung out to dry and most likely stopped out of their short positions for a loss. Fortunately we did the opposite taking another long position in the SP500 ETFS because my market internal indicators, market breadth and simple trading strategy clearly pointed out that the average investor was trying to pick a top by shorting the market. As we all know, the market is designed to hurt the masses which is why I focus on the underlying trends, price action, volume and market sentiment for timing trend changes.

That being said, I still think the market could grind higher and make another new high. But any rally or new high will most likely get stepped on with heavy selling. Expect strong selling days followed by a couple days of light volume sessions where the price drifts back up into resistance levels. This could take a week or two to unfold so don’t jump the gun and short yet. It’s best to see more distribution selling before picking a top.

If you like these trading reports or if you would like to get my daily pre-market trading videos, intraday charts, updates and trade alerts be sure to join my newsletter. Visit The Gold and Oil Guy.Com

Chris Vermeulen


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Hedge Funds Appear to be on Board the Crude Oil Bull Bus

It appears the crude oil rally and the pain being felt by some oil companies could be getting some support from the Obama administrations delay in approving the resumption of drilling for rigs in the gulf region. While the public hears "we have lifted the ban" coming out of Washington. The fact remains that no operator has been given the green light to resume drilling. Costing some companies $100,000's per day in rig expenses while the rigs sit idle waiting for word out of Washington.

And the smart money is paying attention. Bloomberg News reports this morning that hedge funds and other large speculators increased their net long positions, or wagers on rising prices, by 4.6 percent in the seven days ended Dec. 28, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the biggest total in records going back to June 2006.

We always put a lot into the "smart money", these funds take up such a large percentage of the money that is on the table at any given time that you have to. And these funds tend to be the slow moving indicator in the market, not the fast moving commercial traders that also make up 50% of the market. But we are sticking by our correction outlook that focuses on the middle of January as there is just to many bulls in this market right now. That is never healthy. Show me a rallying market with plenty of bulls and bears on each side of the trade and I'll show you a sustainable rally. But as always we will trade the numbers given to us today, and here they are.......

Crude oil was higher overnight as it extends the rally off August's low. Stochastics and the RSI are diverging but are turning bullish signaling that sideways to higher prices are possible near term. If February extends the rally off August's low, May's high crossing at 93.87 is the next upside target. Closes below last Thursday's low crossing at 89.02 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 92.58. Second resistance is May's high crossing at 93.87. First support is the 10 day moving average crossing at 91.00. Second support is last Thursday's low crossing at 89.94. Crude oil pivot point for Tuesday morning is 91.78.

Natural gas was higher overnight as it extends the rally off December's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term. If February extends the aforementioned rally, the 50% retracement level of the June-October decline crossing at 4.876 is the next upside target. Closes below the 10 day moving average crossing at 4.321 would confirm that a short term top has been posted. First resistance is the overnight high crossing at 4.688. Second resistance is the 50% retracement level of the June-October decline crossing at 4.876. First support is Monday's gap crossing at 4.454. Second support is the 10 day moving average crossing at 4.321. Natural gas pivot point for Tuesday morning is 4.610.

Gold was lower due to profit taking overnight as it consolidates some of last week's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If March extends last week's rally, December's high crossing at 1432.50 is the next upside target. Closes below the reaction low crossing at 1372.70 would confirm that a short term top has been posted. First resistance is Monday's high crossing at 1424.40. Second resistance is December's high crossing at 1432.50. First support is the 20 day moving average crossing at 1395.50. Second support is the reaction low crossing at 1372.70. Gold pivot point for Tuesday morning is 1420.10.


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Bloomberg: Hedge Funds Cut Oil Bets as Ireland, China Sap QE2 Gains

Hedge funds cut bullish bets on oil by the most in almost three months amid speculation fallout from the Irish debt crisis and China’s efforts to curb inflation will slow economic growth, sapping demand for fuel. The funds and other large speculators reduced so called long positions, or wagers on rising prices, by 15 percent in the seven days ended Nov. 16, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report, released Nov. 19. It was the first drop in four weeks and the largest decline since the seven days ended Aug. 24.

Bets on gains in oil prices climbed to the highest level in at least four years in the week before the Federal Reserve announced it would spend $600 billion buying Treasuries through the second round of so called quantitative easing, or QE2, to keep the economic recovery on track.
Crude rose to a two year high of $87.81 a barrel on Nov. 11 in New York. It has since lost 7.8 percent as Ireland moved closer to a European Union bailout and China, the world’s biggest energy consumer, took steps to curb bank lending.

“The drop from extremely high levels makes perfectly valid sense, given the uncertainty now of QE2 and renewed concern regarding a European banking situation, namely Ireland,” said Kyle Cooper, director of research at IAF Advisors in Houston. “This has led to uneasiness regarding oil demand, and the liquidation occurred in that very large speculative position.” Net long positions dropped by 30,518 futures and options combined to 178,397 the week ended Nov. 16, according to the commission report. These are held by what the CFTC categorizes as managed money, including hedge funds, commodity pools and commodity trading advisers......Read the entire article.



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The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It

“Beware of geeks bearing formulas”....Warren Buffett

In March of 2006, the world’s richest men sipped champagne in an opulent New York hotel. They were preparing to compete in a poker tournament with million dollar stakes, but those numbers meant nothing to them. They were accustomed to risking billions.

At the card table that night was Peter Muller, an eccentric, whip smart whiz kid who’d studied theoretical mathematics at Princeton and now managed a fabulously successful hedge fund called PDT…when he wasn’t playing his keyboard for morning commuters on the New York subway. With him was Ken Griffin, who as an undergraduate trading convertible bonds out of his Harvard dorm room had outsmarted the Wall Street pros and made money in one of the worst bear markets of all time. Now he was the tough as nails head of Citadel Investment Group, one of the most powerful money machines on earth. There too were Cliff Asness, the sharp tongued, mercurial founder of the hedge fund AQR, a man as famous for his computer-smashing rages as for his brilliance, and Boaz Weinstein, chess life master and king of the credit default swap, who while juggling $30 billion worth of positions for Deutsche Bank found time for frequent visits to Las Vegas with the famed MIT card counting team.

On that night in 2006, these four men and their cohorts were the new kings of Wall Street. Muller, Griffin, Asness, and Weinstein were among the best and brightest of a new breed, the quants. Over the prior twenty years, this species of math whiz technocrats who make billions not with gut calls or fundamental analysis but with formulas and high-speed computers, had usurped the testosterone fueled, kill or be killed risk takers who’d long been the alpha males the world’s largest casino. The quants believed that a dizzying, indecipherable to mere mortals cocktail of differential calculus, quantum physics, and advanced geometry held the key to reaping riches from the financial markets. And they helped create a digitized money trading machine that could shift billions around the globe with the click of a mouse.

Few realized that night, though, that in creating this unprecedented machine, men like Muller, Griffin, Asness and Weinstein had sowed the seeds for history’s greatest financial disaster.

Drawing on unprecedented access to these four number crunching titans, The Quants tells the inside story of what they thought and felt in the days and weeks when they helplessly watched much of their net worth vaporize and wondered just how their mind bending formulas and genius level IQ’s had led them so wrong, so fast. Had their years of success been dumb luck, fool’s gold, a good run that could come to an end on any given day? What if The Truth they sought, the secret of the markets, wasn’t knowable? Worse, what if there wasn’t any Truth?

In The Quants, Scott Patterson tells the story not just of these men, but of Jim Simons, the reclusive founder of the most successful hedge fund in history; Aaron Brown, the quant who used his math skills to humiliate Wall Street’s old guard at their trademark game of Liar’s Poker, and years later found himself with a front row seat to the rapid emergence of mortgage backed securities; and gadflies and dissenters such as Paul Wilmott, Nassim Taleb, and Benoit Mandelbrot.

With the immediacy of today’s NASDAQ close and the timeless power of a Greek tragedy, The Quants is at once a masterpiece of explanatory journalism, a gripping tale of ambition and hubris…and an ominous warning about Wall Street’s future.

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Crude Oil and Energy Headlines For Sunday Evening Oct. 10th

Crude Oil Rises a Second Day Amid Speculation Fed May Buy Debt to Boost Economy

Crude Oil advanced for a second day in New York as the dollar fell against the euro after bigger than expected U.S. job losses spurred speculation that the Federal Reserve will buy more debt to boost the economy. Futures rose 1.2 percent on Oct. 8 after the Labor Department said that employers cut 95,000 workers in September following a revised 57,000 decrease in August. The median estimate of economists surveyed by Bloomberg News was for a drop of 5,000. A weaker U.S. currency increases the appeal of commodities as an alternative investment.

“The market is pricing in a high probability of quantitative easing and so the U.S. dollar has come off,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “A lot of it seems to be because of the weaker non-farm payrolls number.” Crude for November delivery gained as much as 76 cents, or 0.9 percent, to $83.42 a barrel in electronic trading on the New York Mercantile Exchange, and was at $83.13 at 12:43 p.m. Sydney time. Futures climbed 99 cents to $82.66 on Oct 8. Prices are up 4.8 percent this year.

The dollar lost 0.3 percent to $1.3978 per euro, after closing at $1.3939 on Oct. 8 in New York. The Fed may purchase bonds in a strategy known as quantitative easing, weakening the U.S. currency and boosting dollar denominated commodities. Brent crude for November settlement climbed as much as 53 cents, or 0.6 percent, to $84.56 a barrel on the ICE Futures Europe exchange in London. It jumped 60 cents, or 0.7 percent, to $84.03 on Oct. 8.......Read the entire article.

OPEC May Maintain Oil Output in Vienna on Uneven Economic Growth

OPEC may leave oil production unchanged when it meets in three days’ time because signs of a recovery in demand have yet to emerge among the world’s developed economies. The oil market is “a little oversupplied,” Mohamed al- Hamli, the oil minister of the United Arab Emirates, the third- biggest producer in the Organization of Petroleum Exporting Countries, said Oct. 9. OPEC members are all exceeding their allotted quotas after prices surged 78 percent in 2009 and a further 4 percent this year.

Fuel demand in the U.S., the world’s biggest oil consumer, dropped 6.4 percent to 18.5 million barrels a day, according to the U.S. Energy Department, the biggest weekly decline since 2004. Oil prices are forecast to slide this week, according to an Oct. 8 survey of 33 analysts by Bloomberg. “I don’t think there will be any shift” in quotas by OPEC, Qatari Oil Minister Abdullah al-Attiyah said in a phone interview yesterday after meeting in Kuwait with ministers from Saudi Arabia and other Persian Gulf nations. “Producers and consumers are happy” with current oil prices, he said.

Crude oil closed at $82.66 a barrel in New York last week, about the same level as when the group last met on March 17. Growth in oil demand will be uneven next year, with the International Energy Agency forecasting a 4.3 percent increase in China and a 0.8 percent retraction in Europe’s five biggest countries. OPEC members, which supply 40 percent of the world’s oil, meet Oct. 14 at the group’s headquarters in Vienna........Read the entire article.

Hedge Funds Raise Bullish Bets on Oil to Five Month High

Hedge funds raised bullish bets on oil to the highest level in more than five months amid speculation that the Federal Reserve will enact further stimulus measures to keep the economic recovery on track. Hedge funds and other large speculators increased wagers on rising crude prices by 44 percent in the seven days ended Oct. 5, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the highest level since April 23.

“The writing has been on the wall for the rally in crude oil for the last few weeks,” said Hamza Khan, an analyst with Schork Group Inc., a consulting company in Villanova, Pennsylvania. Crude has rallied 12 percent since Sept. 17 amid growing evidence that the Fed will need to start debt purchases to prevent the world’s biggest economy from sliding back into a recession, weakening the U.S. currency and boosting dollar denominated commodities. The dollar depreciated 1.1 percent last week, while crude advanced 1.3 percent.

Oil for November delivery rallied 99 cents to settle at $82.66 a barrel on Oct. 8 on the New York Mercantile Exchange after the Labor Department said U.S. employers cut hiring more than forecast in September, trimming 95,000 workers. The median estimate of 87 economists surveyed by Bloomberg News was for a decline of 5,000 jobs........Read the entire article.

Courtesy of Bloomberg News

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When major hedge funds need advice they turn to Dan Gramza for the help they need to turn their financial situation around. Today you have the same access to Dan that the big players pay money for...but you get it complimentary!

I've watched Dan's presentation and it's one that will open your eyes. Dan and INO have teamed up to give you access to Dan and his insights. So if you'd like to learn from one of the best visit INO TV today and check out his material:

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