It looks like all the Silver ETFs are going to push into the new year at all-time highs! Silver is trading at levels not seen in over 30 years and all the silver ETF contracts are making new record highs today.
Double Silver ETF - AGQ is up over 137% on the year.
The largest ETF - SLV is up almost 65.91% on the year.
SIVR is up 65.80% on the year as well.
Other less active silver funds like DBS and USV were up 65.10% and 64.45% respectively.
Closing the year at new all time highs bodes well for these markets in 2011 as well at least in the beginning of the year. Many market watchers including myself expect silver to explode to new all time highs ($50+) before this bull market is ultimately over. Whether that happens in 2011 remains to be seen.
It should be another interesting year!
Happy New Year!
Friday, December 31
Monday, December 13
Silver ETF Trend Remains Bullish
The short trade in silver using the double short silver etf - ZSL only netted $130 before the silver market found support. This market remains incredibly strong and can't even go through an overdue correction. After watching the action unfold last week I sold ZSL and purchased the silver mining etf - SIL which is the Global X Silver Miners.
The precious metals miners have been outperforming the metals since the rally began in August. During the credit crunch the miners fell much harder than metal prices so they still remain at a substantial discount to the metals on a historical basis. The following chart shows the large cap miners represented by GDX and you can see they have not made up the gap that was created during the decline in 2008. SIL didn't start trading until after the crash so that's why I used GDX for the illustration.
The precious metals miners have been outperforming the metals since the rally began in August. During the credit crunch the miners fell much harder than metal prices so they still remain at a substantial discount to the metals on a historical basis. The following chart shows the large cap miners represented by GDX and you can see they have not made up the gap that was created during the decline in 2008. SIL didn't start trading until after the crash so that's why I used GDX for the illustration.
Tuesday, December 7
Taking Another Shot At ZSL - Short Silver ETF
The silver market blasted to another new high just over $30 per ounce and everyone is bullish so it's time to take a trade on the short side. The lowest risk way to do this is using the double short silver ETF - ZSL. It's so beaten down that I was able to buy it at $10.50 per share and I'm only going to risk it to today's low so it's a pretty small bet.
I don't think the ultimate top is in for silver, but this could easily be a short term top that will lead to a moderate correction. If you look at the chart below, you can see that the Relative Strength Indicator (RSI) failed to make a new high as the Silver ETF - SIVR went to new highs. This is called Divergence and is often a sign that the market is getting over bought and is due for a correction.
The largest Silver ETF - SLV stopped right at the psychological $30 level.
I don't think the ultimate top is in for silver, but this could easily be a short term top that will lead to a moderate correction. If you look at the chart below, you can see that the Relative Strength Indicator (RSI) failed to make a new high as the Silver ETF - SIVR went to new highs. This is called Divergence and is often a sign that the market is getting over bought and is due for a correction.
The largest Silver ETF - SLV stopped right at the psychological $30 level.
Thursday, December 2
Brazil ETF Review - Putting The B In BRIC
The lead country in the emerging market BRIC community is Brazil. Rich in natural resources the Brazilian economy has been growing rapidly this past decade along with commodity prices.
The oldest and most established Brazil ETF is EWZ from iShares. As you can see from the chart below this ETF had a tremendous run from 2003-2008 then came crashing down with the rest of the global markets losing a whopping 70% only to turn around and regain much of that ground in 2009 rising as much as 150%. It's no wonder long term emerging markets investors have to develop nerves of steel in order to not get shaken out of their positions.
For the past year and a half there has been a better performing ETF available and this one is a small cap Brazil ETF that trades under the ticker symbol BRF. You can see by the chart below that BRF has been dramatically outperforming EWZ. When you think about it that makes sense because Small Caps normally outperform Large Caps following a recession. If this is true in developed nations, it's probably even more true for emerging countries. However, it will be interesting to see what happens to these Emerging Country small caps when the next financial crisis hits... I imagine it wont' be pretty.
There are several other newer Brazil ETFs as well, these include:
BRAQ - The Global X Brazil Consumer ETF
BRXX - A Brazil Infrastructure ETF
BRAZ - Global X Brazil Mid Cap ETF which focuses on mid-cap stocks.
The way things are going it's only a matter of time before Brazil will no longer be considered an Emerging Market. It seems to be developing at a rather fast pace!
The oldest and most established Brazil ETF is EWZ from iShares. As you can see from the chart below this ETF had a tremendous run from 2003-2008 then came crashing down with the rest of the global markets losing a whopping 70% only to turn around and regain much of that ground in 2009 rising as much as 150%. It's no wonder long term emerging markets investors have to develop nerves of steel in order to not get shaken out of their positions.
For the past year and a half there has been a better performing ETF available and this one is a small cap Brazil ETF that trades under the ticker symbol BRF. You can see by the chart below that BRF has been dramatically outperforming EWZ. When you think about it that makes sense because Small Caps normally outperform Large Caps following a recession. If this is true in developed nations, it's probably even more true for emerging countries. However, it will be interesting to see what happens to these Emerging Country small caps when the next financial crisis hits... I imagine it wont' be pretty.
There are several other newer Brazil ETFs as well, these include:
BRAQ - The Global X Brazil Consumer ETF
BRXX - A Brazil Infrastructure ETF
BRAZ - Global X Brazil Mid Cap ETF which focuses on mid-cap stocks.
The way things are going it's only a matter of time before Brazil will no longer be considered an Emerging Market. It seems to be developing at a rather fast pace!
Wednesday, December 1
Short Bond ETFs Spike Sharply Higher
Just yesterday long term bonds were rallying on a worsening European debt crisis but what a difference a day makes. Today all the Short Bond ETFs rallied sharply and closed with very strong gains as bond prices collapsed following the latest ADP jobs report.
Active Bond ETF Performance:
The Direxion 3x Leveraged Short Bond ETF - TMV closed up $2.51 or 6.36%
TBT the 2x Leveraged Short Bond ETF closed up $1.46 or 4.20%
TLT - the most actively traded Treasury Bond ETF closed down $2.51 or 2.56% on nearly twice the normal daily volume.
LQD - the investment grade corporate debt held up better losing only .61% as a stronger economy tends to reduce the risk premium between corporate bonds and government treasuries.
Municipal Bond ETF - MUB was down almost 1% ending a rebound rally from the $99 low set a couple weeks ago. It will be interesting to see if it can retest and successfully hold the old lows if the long term bond market continues to unravel.
Active Bond ETF Performance:
The Direxion 3x Leveraged Short Bond ETF - TMV closed up $2.51 or 6.36%
TBT the 2x Leveraged Short Bond ETF closed up $1.46 or 4.20%
TLT - the most actively traded Treasury Bond ETF closed down $2.51 or 2.56% on nearly twice the normal daily volume.
LQD - the investment grade corporate debt held up better losing only .61% as a stronger economy tends to reduce the risk premium between corporate bonds and government treasuries.
Municipal Bond ETF - MUB was down almost 1% ending a rebound rally from the $99 low set a couple weeks ago. It will be interesting to see if it can retest and successfully hold the old lows if the long term bond market continues to unravel.
Gold ETF Funds - Reviewed
With Gold near all time highs there is strong investor demand for all types of Gold ETF products. Initially during the first stages of a bull market people tend to favor the metal and large cap mining stocks.
The top Gold ETF Funds are: GLD, IAU and SGOL
The leading Gold Mining ETF is GDX
Then as speculative fever takes over investors (and especially traders) become more aggressive so they move into Leveraged Gold ETFs such as: DGP and UGL. They also move from the large cap gold stocks into the small cap or "Junior" mining stocks which tend to be much more volatile. The best ETF to capture the movement of these small cap miners is GDXJ which is only a year old but already trades over 2,200,000 shares per day on average.
During strong bull markets you will find that Silver generally outperforms gold as well just as the Nasdaq tends to outperform the S&P500 during strong stock market rallies.
Once the tide turns, which they always do then investors will be looking for ways to play the down side. There are several short gold etf products to choose from:
DGZ is the only one that is an unleveraged short gold etf.
UGL is a double short Gold ETF
DZZ is a double short Gold ETN
If you compare the performance of DZZ and UGL you will see they have very similar characteristics but the actual contract risk in a time of crisis may differ. Some pundits say that ETNs have more contractual risk because of the way they are structured.
The top Gold ETF Funds are: GLD, IAU and SGOL
The leading Gold Mining ETF is GDX
Then as speculative fever takes over investors (and especially traders) become more aggressive so they move into Leveraged Gold ETFs such as: DGP and UGL. They also move from the large cap gold stocks into the small cap or "Junior" mining stocks which tend to be much more volatile. The best ETF to capture the movement of these small cap miners is GDXJ which is only a year old but already trades over 2,200,000 shares per day on average.
During strong bull markets you will find that Silver generally outperforms gold as well just as the Nasdaq tends to outperform the S&P500 during strong stock market rallies.
Once the tide turns, which they always do then investors will be looking for ways to play the down side. There are several short gold etf products to choose from:
DGZ is the only one that is an unleveraged short gold etf.
UGL is a double short Gold ETF
DZZ is a double short Gold ETN
If you compare the performance of DZZ and UGL you will see they have very similar characteristics but the actual contract risk in a time of crisis may differ. Some pundits say that ETNs have more contractual risk because of the way they are structured.
Tuesday, November 30
Palladium ETF Still Top Performer For 2010
Despite the strong rally in silver recently the Palladium ETF remains the top performer since it's inception last January. Up over 60% it has been trading in lock step with SLV lately but still maintains a 10% lead in overall performance this year.
The Platinum ETF remains the weakest of the metal complex barely showing a gain at all since it's inception on the same day as palladium. Platinum was apparently over priced in relation to the other metals and those who have been buying the weakest precious metal hoping for a catch up rally have been disappointed thus far. If this precious metal rally continues from here however, there is little doubt that Platinum should participate going forward.
The Platinum ETF remains the weakest of the metal complex barely showing a gain at all since it's inception on the same day as palladium. Platinum was apparently over priced in relation to the other metals and those who have been buying the weakest precious metal hoping for a catch up rally have been disappointed thus far. If this precious metal rally continues from here however, there is little doubt that Platinum should participate going forward.
Another Big Day For Silver ETFs
The Silver ETF - SLV closed up 89 cents (3.35%) after being up over $1 earlier in the day. In the past few days SLV had retested the 20 day simple moving average and again found support at that level. These $1+ moves are something that metals traders haven't seen in many years but are becoming increasingly common as this bull market wears on.
Junior Gold Stocks - GDXJ was the second strongest non-leveraged ETF up 2.72%
The Silver Miners - SIL was up 1.95% on the day
The Gold ETF - GLD was up 1.42% while the Gold Mining ETF - GDX was up only 1.07%
The Double Silver ETF - AGQ was once again the superstar up a whopping 6.65% today and nearly 120% since the rally began the 3rd week of August.
Junior Gold Stocks - GDXJ was the second strongest non-leveraged ETF up 2.72%
The Silver Miners - SIL was up 1.95% on the day
The Gold ETF - GLD was up 1.42% while the Gold Mining ETF - GDX was up only 1.07%
The Double Silver ETF - AGQ was once again the superstar up a whopping 6.65% today and nearly 120% since the rally began the 3rd week of August.
Junior Gold ETF Continues To Outperform
Ever since the break out in late August the Junior Gold ETF - GDXJ has been strongly outperforming the Gold ETF - GLD. Since inception GDXJ is up about 62% versus a 25% rise in gold over the same period of time (since Nov 2009).
Junior gold stocks tend to perform best after a well established uptrend has already taken place in physical gold prices so many are looking for this out performance to continue for some time. They are extremely volatile however so even though they tend to outperform on the upside they normally under-perform when the market turns south so caution is in order. Since individual companies tend to be risky this explains why the Junior Mining ETF has been so popular, it's an easy way to diversify. Average daily volume has been running in excess of 2.2 million shares so that's incredibly strong for a Gold Mining ETF that's only a year old. It wasn't too long ago that investors would laugh when you mentioned mining stocks.
Here is the price chart for GDXJ since inception:
Junior gold stocks tend to perform best after a well established uptrend has already taken place in physical gold prices so many are looking for this out performance to continue for some time. They are extremely volatile however so even though they tend to outperform on the upside they normally under-perform when the market turns south so caution is in order. Since individual companies tend to be risky this explains why the Junior Mining ETF has been so popular, it's an easy way to diversify. Average daily volume has been running in excess of 2.2 million shares so that's incredibly strong for a Gold Mining ETF that's only a year old. It wasn't too long ago that investors would laugh when you mentioned mining stocks.
Here is the price chart for GDXJ since inception:
Wednesday, November 24
Oil ETFs Rally
This week the Crude Oil complex has been testing support similar to the way gold and silver tested support last week. Crude Oil found support at the 50 day simple moving average the way that gold did and is moving up sharply today.
There are several different ways to play a rise in crude oil prices. You can choose an unleveraged oil etf such as USO, USL or DBO. You can also choose the double oil etf UCO which has traded over 6.5 million shares today.
Yet another way to play is through by using an oil stock etf such as XLE or OIH. Of course the oil stocks also have their versions of Leveraged ETFs as well with the double leveraged - DIG (based on the DJ Oil and Gas Index and the triple leveraged ERX which is based on the Russell 1000 energy index.
So as you can see there are several investment alternatives across the entire risk spectrum for those who want to play a rise in crude oil prices.
There are several different ways to play a rise in crude oil prices. You can choose an unleveraged oil etf such as USO, USL or DBO. You can also choose the double oil etf UCO which has traded over 6.5 million shares today.
Yet another way to play is through by using an oil stock etf such as XLE or OIH. Of course the oil stocks also have their versions of Leveraged ETFs as well with the double leveraged - DIG (based on the DJ Oil and Gas Index and the triple leveraged ERX which is based on the Russell 1000 energy index.
So as you can see there are several investment alternatives across the entire risk spectrum for those who want to play a rise in crude oil prices.
Thursday, November 18
Silver ETFs Explode Higher
Silver ETFs exploded higher today after holding support on a closing basis at the 20 day simple moving average. SLV, the most active Silver ETF has not closed below this level since the uptrend began in late August. Today on the news that Ireland would be bailed out all the precious metals (especially silver) blasted higher with SLV closing $1.35 higher (5.4%) and the Double Silver ETF AGQ up more than 10%. That is a tremendous move and it shows just how volatile the markets have become.
According to the last commitment of traders report, a couple large commercial banks are still holding enormous short positions. Whether or not they are eventually forced to cover those positions is probably the biggest unknown variable in this market. It will be fascinating to watch this unfold.
According to the last commitment of traders report, a couple large commercial banks are still holding enormous short positions. Whether or not they are eventually forced to cover those positions is probably the biggest unknown variable in this market. It will be fascinating to watch this unfold.
Thursday, November 4
Update On Silver Mania 2
A few weeks ago I wrote a couple different pieces talking about the potential for another Silver Mania occurring. Silver had blasted up by 33% without the slightest hesitation along the way, something I hadn't witnessed in my 22 year trading career. Since then we formed a double top in the $25 area and tried to set back yesterday falling to just under $24 before Bernanke started talking.
Once again, Bernanke threw fuel on the fire and today all the gold and silver etfs are going through the roof. Let's face it, Bernanke is trying to use "trickle down" monetary policy to stimulate the job market the same way republicans used fiscal stimulus in the 80s. Whether or not that works one thing is for certain, it is fueling the fire in an already revved up precious metals market.
One thing I'm going to be watching is the latest release of the Commitment of Traders report, specifically the "Bank Participation Report" to see how much of the HUGE short position has been covered. In my opinion that has been the oxygen to go along with the Fed Fuel. The two combined have created an explosive combination.
Here is a reminder of what happened 30 years ago!
Once again, Bernanke threw fuel on the fire and today all the gold and silver etfs are going through the roof. Let's face it, Bernanke is trying to use "trickle down" monetary policy to stimulate the job market the same way republicans used fiscal stimulus in the 80s. Whether or not that works one thing is for certain, it is fueling the fire in an already revved up precious metals market.
One thing I'm going to be watching is the latest release of the Commitment of Traders report, specifically the "Bank Participation Report" to see how much of the HUGE short position has been covered. In my opinion that has been the oxygen to go along with the Fed Fuel. The two combined have created an explosive combination.
Here is a reminder of what happened 30 years ago!
Precious Metals and Emerging Markets ETFs Hit New Highs
Luckily I was smart enough to use the $1 break in silver yesterday to take profits out of ZSL and I actually bought the Global X Silver Miners - SIL . I bought the miners this time instead of silver itself because in the later stages of precious metals rallies it's usually the mining stocks that go crazy. That doesn't mean this time can't be different but history is usually a pretty good guide. So far in this bull market the mining stocks have underperformed the precious metals.
Another area blasting to new highs "Post Bernanke" is the Emerging Markets ETF category. Whether you look at large cap or small caps most are hitting new highs today. The 3x leveraged etf EDC was up over 5% earlier today, quite a move!
Another area blasting to new highs "Post Bernanke" is the Emerging Markets ETF category. Whether you look at large cap or small caps most are hitting new highs today. The 3x leveraged etf EDC was up over 5% earlier today, quite a move!
Tuesday, November 2
Palladium ETF Continues To Outperform
Gold has been in the spotlight for several years and recently attention has turned to silver, but the real superstar of 2010 is actually Palladium.
As of the high yesterday at $65 the Palladium ETF (PALL) was up 50% year to date far out-pacing Gold which was up about 18% and even Silver which was up approximately 33%. The primary driver for this outperformance is the fact that industrial applications have been switching from Platinum to Palladium due to the fact that it's much cheaper.
If you are looking for market direction in the precious metals, keep an eye on palladium since it has been the market leader all year.
As of the high yesterday at $65 the Palladium ETF (PALL) was up 50% year to date far out-pacing Gold which was up about 18% and even Silver which was up approximately 33%. The primary driver for this outperformance is the fact that industrial applications have been switching from Platinum to Palladium due to the fact that it's much cheaper.
If you are looking for market direction in the precious metals, keep an eye on palladium since it has been the market leader all year.
Monday, November 1
Double Top In Silver ETFs
Both of the most active silver etfs SLV and SIVR made a double top today. The high on SLV was 24.42 which was exactly the all time high, same with SIVR which reached 24.88 which was the all time high set a couple weeks ago.
The futures actually went to a new contract high early this morning before failing. When a contract goes to a new all time high and then fails I always called this the "Kiss Of Death Trade" because it is deadly accurate. Paul Tudor Jones used to love this trade where the professionals would push to new contract highs, triggering all the "Buy Stops" and then use that volume to establish short positions.
The way to trade this is to go short with a stop above today's high. If the market takes out the high today, odds are the trade is no good. I'm choosing to use the Short Silver ETF ZSL instead with a sell stop below today's low.
The beauty of the Kiss Of Death type trade is that the risk is normally quite small and if the trade turns out the gains are normally HUGE!
The futures actually went to a new contract high early this morning before failing. When a contract goes to a new all time high and then fails I always called this the "Kiss Of Death Trade" because it is deadly accurate. Paul Tudor Jones used to love this trade where the professionals would push to new contract highs, triggering all the "Buy Stops" and then use that volume to establish short positions.
The way to trade this is to go short with a stop above today's high. If the market takes out the high today, odds are the trade is no good. I'm choosing to use the Short Silver ETF ZSL instead with a sell stop below today's low.
The beauty of the Kiss Of Death type trade is that the risk is normally quite small and if the trade turns out the gains are normally HUGE!
Thursday, October 21
Short Bond ETF Review
With long term interest rates coming off historic lows and the fed pursuing an initiative to bring inflation rates back up to "normal", many people feel that a perfect storm is coming for the bond market. Anyone who has experienced these in the past knows how violent the bond market can retreat when inflation or even "inflation expectations" enter the picture.
If you are wanting to use a Short Bond ETF to capitalize on a collapse in bond prices you have 3 solid choices, it just depends on how much leverage you want to use.
TBF - Inverse Bond ETF (No Leverage)seeks to provide -100% of the daily performance of TLT
TBT - Double Short Bond ETF (2x Inverse) seeks to deliver -200% of the daily performance of TLT
TMV - Triple Short Bond ETF (3x Inverse) seeks to deliver -300% of the daily performance of the NYSE 30 Yr Treasury Index.
If you are not experienced with Short ETF products make sure you do your research before diving in. These ETFs are designed to track the "Daily" performance of the underlying security, so they reset each night after the close. This characteristic makes it a short term trading vehicle but not suitable for long term positions.
If you are expecting a sharp move lower in bonds, one of these could be a good way to play it. Just do your research first!
If you are wanting to use a Short Bond ETF to capitalize on a collapse in bond prices you have 3 solid choices, it just depends on how much leverage you want to use.
TBF - Inverse Bond ETF (No Leverage)seeks to provide -100% of the daily performance of TLT
TBT - Double Short Bond ETF (2x Inverse) seeks to deliver -200% of the daily performance of TLT
TMV - Triple Short Bond ETF (3x Inverse) seeks to deliver -300% of the daily performance of the NYSE 30 Yr Treasury Index.
If you are not experienced with Short ETF products make sure you do your research before diving in. These ETFs are designed to track the "Daily" performance of the underlying security, so they reset each night after the close. This characteristic makes it a short term trading vehicle but not suitable for long term positions.
If you are expecting a sharp move lower in bonds, one of these could be a good way to play it. Just do your research first!
Tuesday, October 19
Big Day For "Beat Up" Leveraged Inverse ETFs
The big winners today were the Leveraged Inverse ETFs all of which have been pounded to death over the last 18 months. The 3 biggest winners were:
DTO (+10.07%) - ProShares Double Short Crude Oil ETN
EDZ (+9.67%) - Direxion 3x Leveraged Short Emerging Markets ETF
ZSL (+9.67%) - ProShares Ultra Short Silver ETF
All of these pops are strong "Counter Trend" reactions to the Chinese raising their key interest rate today which sparked a rally in the U.S. Dollar as well. Crude Oil, Emerging Markets and Silver have all been very strong performers the past 6 weeks in anticipation of the Federal Reserves QE2 Program.
Expect more volatility in the days ahead!
DTO (+10.07%) - ProShares Double Short Crude Oil ETN
EDZ (+9.67%) - Direxion 3x Leveraged Short Emerging Markets ETF
ZSL (+9.67%) - ProShares Ultra Short Silver ETF
All of these pops are strong "Counter Trend" reactions to the Chinese raising their key interest rate today which sparked a rally in the U.S. Dollar as well. Crude Oil, Emerging Markets and Silver have all been very strong performers the past 6 weeks in anticipation of the Federal Reserves QE2 Program.
Expect more volatility in the days ahead!
Friday, October 15
Double Silver ETF Interest Surges
I noticed yesterday lots of people were searching Google looking for a Double Silver ETF as we were getting higher than normal traffic from that keyword phrase. Hopefully they will just do their research and wait for a better entry point as silver has run over 30% in the last 6 weeks. I don't believe silver is done yet, but I've taken profits and will wait for a setback before buying anything!
That said, we have been waiting for a setback the past couple weeks to add to positions and never got it. It appears the major commercial banks that held about 1/3 of all the short positions in Comex Silver have been trying to get out. Could get pretty wild.
AGQ is the ticker symbol for the Double Silver ETF
That said, we have been waiting for a setback the past couple weeks to add to positions and never got it. It appears the major commercial banks that held about 1/3 of all the short positions in Comex Silver have been trying to get out. Could get pretty wild.
AGQ is the ticker symbol for the Double Silver ETF
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