Guide to Investing

Matthew Bradbard submits:

Based on the last two days’ action Crude oil appears to be making attempts at higher ground. We will be late to this move because I do not trust it and need further confirmation before getting bullish exposure for clients. A settlement above $79.50 would be the first hurdle. Natural gas will close 8% higher this week at a fresh one month high. We’re suggesting trailing stops on futures just below the 50 day MA and to purchase October and November 50 cent call spreads.

The Dow bounced off the 200 day MA at 10275 and could revisit the week’s highs early next week closer to 10550. We would still suggest selling rallies, thinking a weak jobs number next week could be the nail in the coffin for the bulls. Likewise the S&P pared losses today, but as long as prices settle below 1104, the 200 day MA, we think it remains a sell rallies market. For now clients will be fading rallies and purchasing September puts in the ES.

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Ted Kavadas submits:

On July 8 I wrote my latest post concerning the U.S. Dollar. In the last line of that post I said "…I continue to believe the U.S. Dollar is highly vulnerable to a substantial decline."

As "substantial decline" is somewhat open to interpretation, I would like to clarify what I meant.

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Andrew Wilkinson submits:

The end of July has traders on edge after a month of remarkable weakness for the dollar, while they cautiously await August PMI data due next week for the latest health check on the state of economic health. Comments from St. Louis Fed President James Bullard sounded the deflationary bell once more, causing a further flow of refugees into the Japanese yen, which raced to its highest level for 2010 at ¥86.16. The yen rose against the euro, which also looks set to close the month with a substantial eight cent gain against the dollar.

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ETF Database submits:

As the stock market continues to trade range bound despite solid earnings reports from a variety of companies, economic data is beginning to weigh more heavily on the markets. With durable goods orders down 1% since last month and unemployment levels still above 9.5%, the economic outlook remains gloomy for most Americans. This leaves many economists to worry that we could sink back into a dreaded double-dip recession. While the U.S. situation remains uncertain, economic activity may be picking up in other developed markets which have seen positive developments lately.

Earlier this week, quality data came out of a variety of developed markets suggesting that the economic condition may be bottoming out in many advanced economies. In Europe, unemployment declined to 7.6% and economic confidence rose more than expected to top 101.3 compared to expectations of a ten basis point rise from 99.0 last month. Australia also reported good news when it released better-than-expected CPI numbers which showed growth of just 0.6% this quarter compared to a forecast of 1.0% while their neighbors in New Zealand raised rates by 25 basis points to 3%.

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ETF Database submits:

After a disappointing GDP growth number sent the markets lower to start the day, equities surged back in afternoon trading to finish the day at breakeven, with only the Nasdaq registering a measurable gain posting an increase of 0.1%. This came as a result of the U.S. reporting Q2 GDP growth of just 2.4%, slightly less than the expected reading of 2.5%. This news sent traditional safe-havens such as T-Bills and gold into higher demand; 10 Year yields fell to 2.9% while gold gained 1.1% to finish the day at the $1,181/oz. mark. However, traders were boosted by two unexpectedly higher reports later in the day which helped the markets to make up much of their losses in the final day of July trading. The University of Michigan/Reuters consumer sentiment index for July rose slightly more than expected to 67.8 from a preliminary reading of 66.5. Meanwhile, the manufacturing sectors saw a boost from the Chicago PMI which rose to 62.3 this month from a 59.1 reading in June. This was especially bullish since economists had predicted a drop to 56.5 which helped to leave stocks on a level footing heading into August trading next week.

One of the biggest winners in the ETFdb 60 was the United States Natural Gas Fund (UNG) which extended its winning streak by posting a gain of 1.9% on the day. This boost came after traders continued to buy the commodity on a hot August outlook and concerns over Gulf hurricane activity. Traders were also buoyed by robust profits from several large oil companies who are seeing increased dependence on natural gas to generate revenues. This trend looks likely to continue in the near future and could lead to more production and utilization of the fuel which would be bullish for UNG. “We are already seeing international and national oil companies buying US gas assets – and this is a trend we expect to continue,” predicts Mark Lacey, manager of Investec’s global energy fund. “The rationale for this spate of activity is that US gas is extremely cheap. It is priced at the equivalent oil price of less than $30 per barrel. Gas is also a much cleaner source of energy relative to coal and fuel oil, and these assets have a resource life of over 20 years.”

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Tom Lydon submits:

ETFs are cheap, but that doesn’t mean they’re not getting cheaper. One gold fund provider is engaging in a good old-fashioned price war to entice gold traders to its side of the camp, and it appears to be working.

On July 1, BlackRock lowered the annual expenses on its gold ETF the iShares Comex Gold Trust ETF (IAU) to 0.25% from 0.40%, writes William Baldwin for Forbes. Market leader in gold ETFs, State Street-managed SPDR Gold Shares ETF (GLD) is maintaining its 0.40% expense ratio.

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Michael Johnston submits:

By Cathy Carlson

The last few years have seen no shortage of innovations in the ETF space. Opportunistic issuers have capitalized on a shift in investor mentality by rolling out ETFs offering never-before-seen levels of granularity in emerging markets. IndexIQ introduced hedge fund replication ETFs, a line of products that initially drew skepticism but has now been embraced by investors looking to add non-correlated assets to their portfolios. Geary Advisors rolled out the first state-specific ETFs, two products that have turned in rather impressive performances.

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ETF Database submits:

Fresh off the successful launch of their Lithium Fund (LIT), Global X unveiled the newest addition to its lineup yesterday, the Brazil Financials ETF (BRAF). This fund makes 14 ETFs in total for the New York City based issuer which has a heavy focus on international funds including China sector ETFs and a fund tracking equities in Colombia. The fund is also the third a series of Brazilian ETFs from the company, coming after earlier launches in the consumer sector (BRAQ) and a Mid Cap ETF (BRAZ). These funds offer exposure to the dynamic Brazilian economy which is currently a $2 trillion force which is poised to double by 2018 and eventually surpass Britain and France to become the fifth largest economy in the world.

Due to these trends, Brazil makes for an interesting choice for investors seeking exposure to financials in Latin America and emerging markets in general. Although greatly troubled in the past, the country has become an economic powerhouse under the direction of President Luiz Inácio Lula da Silva who oversaw high growth levels and moderating inflation throughout most of his tenure. However, the real catalyst for Brazil’s rise in finance came in 1995 when the government revolutionized its financial system under the Proper Restructuring Program.

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Tom Lydon submits:

After a year in the doldrums, the IPO market is making a comeback, with new multi-million dollar deals hitting the scene. As with almost anything else, there’s an ETF for that (FPX).

The IPO market has kicked into high gear recently, with deals ranging from $90 million to more than $600 million covering everything from technology companies to coal producers, writes Debra Borchardt for TheStreet.

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Tom Lydon submits:

No matter what you do in today’s world, you are using the goods and services provided by your local utility provider. As the country grows, greater demand for energy will likely provide a great opportunity for growth in utility ETFs, too.

Powered by coal, natural gas, nuclear energy and hydroelectric generators, the utilities sector is made up of electric power generation, transmission and distribution industries, according to the Bureau of Labor Statistics. Renewable sources is expanding, but electricity generated by renewables only makes up a small proportion.

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