However, now that the original up and down shares have terminated MacroShares has launched a new series with a higher termination trigger. The up shares (UOY) and down shares (DOY) just started trading yesterday and surprisingly the volume is fairly low compared to their recently expired siblings. I guess all the gamblers...
They say the smart money is shorting oil. There is a lot of truth to that, but there is reasoning behind it. Much of the smart money people are talking about is long term investors, not many of the traders that are moving the commodity with "hot" money. What the smart money generally will do is make a small position at say $99 a barrel. When this is done, it is accomplished by adding to the ...
Everyone talks mercilessly about Peak Oil, but is it time to introduce the concept of Peak Demand? At least in the United States? The Federal Highway Administration [FHWA], a part of the United States Department of Transportation [DOT], released its monthly "Traffic Volume Trends" report last Friday.
The report showed that estimated vehicle miles traveled [VMT] on all U.S. public roads for March 2008 fell 4.3 percent as compared with March 2007 travel. The report also said it was the first time March travel on public roads fell since 1979.
I want to take a minute and discuss the oil futures situation. It
seems that they continue to rise with no end in sight and that gas
prices at the pump are destined to continue higher. Do you want the
good news or the bad news first?
Well, I'll start with the bad to get it out of the way. The crude oil futures contract
looks like it is in the beginning phases of making a parabolic move of
some sort. Even with all the chatter about a top in oil, structurally,
it is still bullish and continues...
Speculators are not very popular right now. Futures trading in many commodities across the world has been banned. Numerous experts have spoken out that most of crude's price today is due to "speculation" and a "strong inflow of funds". Indeed, I came across this interesting article where an analyst was commenting on the rampant speculation in the oil space:
With the whirlwind of new structured retail investment products being
introduced everyday (e.g. Ultra ProFunds, UltraShort PowerShares), it
seems only inevitable that something is eventually going to blow up.
For example, when MacroShares created
its "Oil Up" and "Oil Down" (UCR) and (DCR) tradable shares back in 2006,
I'm sure they thought it very unlikely that crude oil would be trading
over $126 per barrel. And unfortunately for some unsuspecting
investors, that unlikelihood may prove to be quite painful.
In early April, we pointed out
the DCR/UCR trade to Bespoke readers, noting that if oil closed above
$111 for three consecutive days, the two notes would hit termination at
the end of the quarter at wherever their NAVs were trading. UCR is the
"oil up" note and its NAV is calculated by dividing the price of oil by
three. DCR is the "oil down" note and it is calculated by subtracting
UCR's NAV from 40.
Once oil closed above $111 for three days in a row (seems so...
The Macro's, of course, are the unusual oil ETFs that are issued in pairs and whose values are tied to one another. There is an "Up" oil fund (UCR) and a "Down" oil fund (DCR), and they work like a teeter-totter tied to the price of oil. When the price of oil rises (or falls), assets move from UCR to DCR (or vice-versa).
Surging crude-oil prices vaulted energy-tracking exchange-traded funds to the top of the second-quarter performance list as problems in the housing and credit markets continued to dog portfolios shadowing financial stocks and home builders.
The relentless climb in oil prices has vaulted exchange-traded products indexed to natural gas and the energy sector to the top of the performance lists so far in 2008 as some analysts see crude spiking as high as $200 a barrel.
BOSTON (MarketWatch) -- The record-breaking rally in crude oil has forced the liquidation of a pair of interconnected exchange-traded products linked to futures prices, but the backers are already preparing new funds to replace them.
Sonya Morris, editor of the Morningstar ETF Investor newsletter, said that exchange-traded funds and notes that track specific niches are highly volatile investments that aren’t worth buying unless they are “compellingly cheap.” With that in mind, Morris issued sell recommendations on five energy plays.
Sonya Morris, editor of the Morningstar ETF Investor newsletter, said that exchange-traded funds and notes that track specific niches are highly volatile investments that aren't worth buying unless they are "compellingly cheap" from a valuation standpoint. With that in mind, Morris issued sell recommendations on five energy plays as part of an interview in which she found many funds lacking, but few worth buying now.
BOSTON (MarketWatch) -- Exchange-traded funds and their investors may be straying well outside their comfort zones by wandering into complicated commodities and derivatives markets, judging by concerns swirling around new products designed to track oil prices.
Sonya Morris, editor of the Morningstar ETFInvestor newsletter, says that the new breed of exchange-traded issues focused on niche businesses, built around untested indexes, or constructed to be a trading vehicle in a specialty area probably should be avoided by most investors. In a radio interview with Chuck Jaffe, MarketWatch senior columnist, Morris found far more ETFs to sell than that she said are worth buying; one notable purchase recommendation was the Dow DIAMONDS Trust, which replicates the Dow Jones Industrials Average.
BOSTON (MarketWatch) -- The predictable backslapping at the exchange-traded fund industry's annual confab in Miami applauded another banner year for the fast-growing business, yet beneath this veneer some cracks are beginning to show.
BOSTON (MarketWatch) -- Two exchange-traded fund providers are rolling out new ETFs designed to give individual investors mainstream access to commodities, but these specialized products are being released just when commodity prices are under heavy pressure.
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