King Dollar Dominates, Crude Oil and Gold Continues the Free Fall

E-Minis Unfair Advantage....Have You Watch This Yet?

Crude oil closed down $1.23 a barrel at $92.75 today. Prices closed near mid range today and hit a fresh 6 1/2 month low. The bears have the solid overall near term technical advantage. A stronger U.S. dollar index today was again bearish for the crude market.

Natural gas closed up 12 1/2 cents at $2.625 today. Prices closed near the session high again today and hit a fresh 10 week high. More short covering and bargain hunting buying were featured today. The bulls have upside near term technical momentum. The bears do still have the slight overall near term technical advantage, however.

The U.S. dollar index closed up 14 points at 81.52 today. Prices closed near mid range today and hit another fresh four month high. More safe haven buying of the greenback was seen today. Bulls have gained solid upside near term technical momentum and have the solid overall near term technical advantage.

Gold futures closed down $25.20 an ounce at $1,531.70 today. Prices closed nearer the session low today and hit a fresh 10 month low. The key “outside markets” were again in a bearish posture for gold today, as the U.S. dollar index was higher and the crude oil market was lower. Serious near term chart damage has been inflicted recently. Now, gold prices are nearing major psychological support at the $1,500.00 level.

How to Risk Less When You Trade

Petrobras Quarterly Profit Beats Estimates on Export Growth

E-Minis Unfair Advantage....Have You Watch This Yet?

Petroleo Brasileiro SA (PETR4), the world’s biggest oil producer in deep waters, said first quarter profit topped analysts’ expectations because of increased revenue from crude exports and higher fuel prices.

Net income dropped 16 percent to 9.2 billion reais ($4.6 billion), or 71 centavos a share, from 10.99 billion reais, or 84 centavos, a year earlier, Brazil’s state controlled producer said late yesterday. Per share profit beat the 64 centavo average of four analysts’ estimates compiled by Bloomberg.

Petrobras increased prices for gasoline and diesel by 10 percent and 2 percent, respectively, on Nov. 1. The first boost in more than three years reduced the discount to international prices. Oil exports rose 20 percent to 497,000 barrels a day after the company sold inventories it accumulated in late 2011, Petrobras said in a regulatory filing.

“The company’s increase in oil exports and its use of inventories at lower prices mainly explained the better than expected operating performance in the period,” Bradesco SA analysts led by Auro Rozenbaum said in a note to clients distributed today.

Read the entire Bloomberg article




How to Risk Less When You Trade

Exiting an Option Position

From guest blogger Todd Mitchell.......

Once you own options, there are three methods that can be used to make a profit or avoid loss: exercise them, offset them with other options, or let them expire worthless. By exercising what you have purchased, you are choosing to take delivery of (call) or to sell (put) the underlying asset at the option’s strike price. Only buyers have the choice to exercise an option. Sellers, on the other hand, may experience having an option assigned to a holder and subsequently exercised.

Offsetting is a method of reversing the original transaction to exit the trade. If you bought a call, you have to sell the call with the same strike price and expiration. If you sold a call, you have to buy a call with the same strike price and expiration. If you bought a put, you have to sell a put with the same strike price and expiration. If you sold a put you have to buy a put with the same strike price and expiration. If you do not offset your position, then you have not officially exited the trade.

If an option has not been offset or exercised by expiration, it expires worthless. If you originally sold an option, then you want it to expire worthless because then you get to keep the credit you received from the premium. Since a seller wants options to expire worthless, the passage of time is a seller’s friend and a buyer’s enemy. If you bought, the premium is nonrefundable even if you let the it expire worthless. As it gets closer to expiration, it decreases in value.

It is Important to note that most options traded on u.s. exchanges are American style. In essence, they differ from European options in one main way. American style options can be exercised at any time up until expiration. In contrast, European style options can be exercised only on the day they expire. All the options of one type (put or call) which have the same underlying security are called a class of options. For example, all the calls on ibm constitute a class. All the options that are in one class and have the same strike price are called a series. For example, all ibm calls with a strike price of 130 (and various expiration dates) constitute a series.

Check out Todds latest program "How to Risk Less When You Trade"

Crude Oil and Gold Continue Strong Down Trend, Natural Gas Enjoys the Stronger Dollar

Rags to riches, don't miss this short cut!

Crude oil closed down $1.70 a barrel at $93.08 today. Prices closed near the session low today and hit a fresh 6 1/2 month low. The bears have the solid overall near term technical advantage and gained still more power today. A stronger U.S. dollar index today was bearish for the crude market. With a Trade Triangle Technology Score of -100, this market is in a strong downtrend. All traders should be in short positions in crude oil with appropriate money management stops.

Natural gas closed up 7.0 cents at $2.501 today benefiting from the U.S. Dollars solid upside and near term momentum and overall near term advantage over other currencies. Natural gas prices closed near the session high today and saw short covering. And while the nat gas bulls still have some upside "near term" technical momentum, the nat gas bears do still have the overall near term technical advantage, however.

Gold futures closed down $4.20 an ounce at $1,556.80 today. Prices closed near mid-range today and hit another fresh 4 1/2 month low. The key “outside markets” were again in a bearish posture for gold today, as the U.S. dollar index was higher and the crude oil market was lower. Serious near term chart damage has been inflicted recently. Gold bears have the solid near term technical advantage. With a Trade Triangle Technology Score of -90, the gold market is in a strong downtrend. All traders should still be in short positions in gold with appropriate money management stops.

How to Risk Less When You Trade

E-Minis Unfair Advantage....Have You Watch This Yet?

So many people are CRUSHING the markets right now and making lots of money!

At the same time, far more traders are gripped with fear and struggling just to break even….

The difference?

Confidence and consistency.

As you know, you build both when you understand the best times of the day to trade and how to avoid the common mistakes and “hidden” pitfalls that prevent consistent profits.

Trading veteran, Todd Mitchell ,just came out with a video training that shows (using his actual charts!) the hurdles holding back most traders from making money!

Watch closely as he uses minimal money to pull predictable profits from the E-minis, while only researching a single chart.

VIDEO > The E-Minis Unfair Advantage

The knowledge he shares will shortcut your learning curve and help you avoid falling victim to shady advice. Please don’t miss out.


P.S. When you watch the video, I’m almost certain you’ll uncover several nuggets of wisdom that will eliminate mistakes costing you profits. This is not just about gain – it’s about acting prudently to prevent and avoid financial pain!

Just click here, every trader must see this video

Monday Brings Solid Downside Move in Crude Oil

Crude oil closed down $1.70 a barrel at $94.43 today. Prices closed near mid range today and hit a fresh 4 1/2 month low. The bears have the solid overall near term technical advantage. Prices today saw a downside “breakout” from a bearish pennant pattern on the daily bar chart.

Natural gas closed down 8.4 cents at $2.425 today. Prices closed nearer the session low today and saw a corrective pullback from recent gains. The bulls still have some upside near term technical momentum. The bears do still have the overall near term technical advantage, however.

Gold futures closed down $20.10 an ounce at $1,563.90 today. Prices closed nearer the session low today and hit a fresh 4 1/2 month low. The key “outside markets” were in a bearish posture for gold today aided by the U.S. dollar index moving higher. Serious near term chart damage has been inflicted recently. Gold bears have the solid near term technical advantage. A 2 1/2 month old downtrend is in place on the daily bar chart.

Seadrill (SDRL) Releases First Quarter 2012 Results

Consolidated revenues for SeaDrill in the first quarter of 2012 amounted to US $1,050 million as compared to US $1,059 million in the fourth quarter 2011. Operating profit for the quarter was US $456 million compared to US $436 million in the preceding quarter.

Net financial items for the quarter showed a gain of US $24 million compared to a loss of US $501 million in the previous quarter. The previous quarter included a US $463 million impairment charge on our 39.9 percent ownership in Archer. While this quarter includes a gain of US $91 million on derivative financial instruments compared to a gain of US$33 million in the previous quarter.

US $63 million of the gain is related to the sale of our holdings in Ensco plc. The rest is related to unrealized gains on currency forward contracts, total return swap arrangements and interest rate swaps. Income taxes for the first quarter were US $41 million unchanged from the fourth quarter. Net income for the quarter was US $439 million or basic earnings per share of US $0.89.

Read the entire SeaDrill 1st Quarter Earnings Report

Gold & Gold Miners Are Closing in on a Major Bottom

Gold & Gold Miners Are Closing in on a Major Bottom

From this mornings Video Traders Playbook.....

Members of my service as well as long time readers know that I do a lot of analysis based on the past. I am constantly looking at long term historical price charts and data. As a trader, I am always looking for an edge.

Obviously the keys to long term success involve proper position sizing, risk management mechanisms, and ultimately leveraging probability. Professional traders are masters of these tenets. These characteristics are what separate successful traders from average traders over the long haul.

Sometimes through my rigorous analysis I come across price charts and oscillators that help put together a picture that helps shape my view of the marketplace. The past few months have been some of the most difficult market conditions that I have seen in some time.

The “wall of worries” permeates the financial landscape as risk at present seems unprecedented. The list of macroeconomic concerns ranges from the European sovereign debt crisis to escalation of military action in the Middle East.....Read the entire article and watch video!

Who Offers the Highest Dividend Among the Offshore Drillers?

It's SeaDrill! As any of our regular readers know SeaDrill is a COT Fund favorite, today the guys at Power Hedge give us an insight into the SDRL business model.....

SeaDrill Ltd. (SDRL) currently offers the highest dividend yield of any major offshore drilling company. At the time of writing, SeaDrill pays an annualized dividend of $3.20 which gives the stock an 8.74% yield. Here is how that compares to other major offshore drilling companies:

click to enlarge images

Source: International Hedges

As we can see, SeaDrill is by far the highest-yielding dividend stock in the group. One reason for this lies with the company's financial model which is somewhat different than its peers. Most dividend-paying companies set their dividends at a level that management expects to be sustainable over an extended period of time. SeaDrill's philosophy, on the other hand, is summed up quite well by a statement given on page 21 of the company's annual report, "Our primary objective is to profitably grow our business to increase long term distributable cash flow per share to our shareholders." In effect, SeaDrill pays out a significant percentage of its operating cash flows to investors and finances its growth through debt.

This business model has worked out quite well for SeaDrill and its stockholders. SeaDrill's fleet has grown rapidly since 2005. In that year, the company's fleet consisted of five rigs. Since that time, the company's fleet has grown to 62 rigs at the end of March 2012.

Investors in the company have also been amply reward for their investment. SeaDrill began trading on the NYSE on April 15, 2010. However, the company began trading on the Oslo Børs exchange well before then. The company was listed on the exchange in 2005. Since that time, it has delivered a rather impressive run.

SeaDrill has also delivered substantial rewards to its shareholders in the form of dividends over the years. The company began paying dividends in the fourth quarter of 2007 according to SeaDrill's website.

The dividend has had significant volatility from year to year and even from quarter to quarter. This is because of the company's dividend philosophy which I mentioned earlier in this article. Essentially, the dividend tends to rise and fall with the company's operating cash flows.

It is because of this dividend philosophy that I believe that SeaDrill will increase its dividend going forward. SeaDrill generates most of its cash flows through the rigs that it manages. The company contracts out the rigs in its fleet to oil and gas companies to perform drilling operations in offshore locations all over the world. In exchange, the oil and gas companies pay a dayrate to SeaDrill for the use of these rigs.

The fundamentals for the offshore drilling industry are quite strong and getting stronger. In a recent article posted here on Seeking Alpha, I stated that dayrates are currently back up to the highest levels that were reached during the previous cycle. There is evidence that dayrates could climb even higher still. SeaDrill has 25 rigs that will be available to be contracted out between now and the end of 2014, excluding newbuilds, according to the company's most recent fleet status report. Nine of these units are ultra-deepwater floaters, per the company's fourth quarter press release. This is important because ultra-deepwater rigs carry the highest dayrates and the highest profits. As these rigs come off of their current contracts, SeaDrill should be able to obtain new contracts for these rigs at higher dayrates due to the prevailing tight market. This should increase the company's revenues and operating cash flows.

In addition to re-contracting out existing rigs, SeaDrill has a large newbuild program that is likely to increase the company's operating cash flows. SeaDrill has been on something of a building spree lately and has ordered four new rigs from shipyards since the beginning of April. The newly ordered rigs consist of one ultra deepwater drillship, one new tender assist rig, and two ultra deepwater semisubmersible rigs, one of which will belong to SeaDrill's 74%-owned subsidiary, North Atlantic Drilling (NATDF.PK). As SeaDrill stated on May 4, the company now has a total of eighteen rigs under construction. These rigs should significantly increase SeaDrill's operating cash flows upon leaving the shipyard. This is because these rigs will greatly increase the number of rigs that SeaDrill has contracted out and thus is able to generate revenues from.

SeaDrill looks very likely to increase its operating cash flows going forward. The combination of re-contracting out existing rigs at higher dayrates and fleet growth through newbuilds should ensure that SeaDrill will see strong growth in its cash flows through the current industry upcycle. As previously discussed, the company's philosophy is to return as much of its operating cash flows to investors as it reasonably can. Therefore, SeaDrill will likely boost its dividend even further going forward.

Get your free trend analysis for SeaDrill today!

20 Survival Skills for the Trader

Weekly Energy Futures Wrap Up

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Energy futures are lower once again today on pessimism concerning the European recession as well as a slowdown in China causing crude oil prices in early trading in New York to be down another $.85 in the June contract trading at $96.22 a barrel also in sympathy with the stock market the rest the commodity markets all lower this morning putting crude oil down nearly $2.00 dollars for the week right at 5 month low after selling off more than $8 dollars last week.

Unleaded gasoline futures are also at a five month low down 250 points at 2.985 in the June contract continuing its bearish momentum on the fact that OPEC came out and said supplies are very excessive at this point and abundant.

Heating oil futures for the June contract are down nearly 200 points also near five month low currently trading at 2.97 a gallon while natural gas futures which have been up four days a row are down slightly trading around 2.47 down around two points for the trading session in real quiet light volume so far this morning.

The U.S dollar is basically unchanged for the trading day not having much impact on energy prices this morning, however with an adequate supply in the market and with the rising dollar and slowing European countries I still think crude oil could break 90 dollars a barrel in the next coming weeks and I’m pessimistic on all of the commodities and as I’ve been stating in many blogs in the last several weeks because demand is slowing down tremendously at this point.

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