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Metals Update 8.15.2012

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The USD is currently very strong, however that can buckle with hints of QE3, causing an inflow of demand for gold as a tangible currency. Investors flock to gold as the universal reserve currency instead of silver as gold is the benchmark. The metals have been relatively flat this week as they are waiting for the release of the FED minutes due to be released next Wednesday.

Gold----Silver

Investor’s preference for gold is also evident with the currently weak Platinum/Gold ratio. The spread is trading at under 1. The price action of this pair indicates the relative strength of gold as a reserve currency, considering that platinum is roughly 19 times more rare than gold. Whether platinum is underpriced or gold overpriced, I have been looking at selling gold and buying platinum in anticipation of the pair moving above 1.

plat

Front month gold futures were trading at $1607.30, silver futures were at $27.90 and Platinum was $1397.50 as of this morning.

David Cornes holds a degree in economics from the University of Montana.

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VIX Outlook 8.15.2012

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The most unique quality about the current VIX term structure is the December 2013 contract. This could be an arbitrage opportunity for calendar spreaders with the assumption that contango resumes.

VIXTerm

I like to buy charts like the weekly VIX chart below. There is not much room for the VIX to go down further and I am expecting a sharp pullback to the upside once big news hits the screen.

VIX Weekly

VIX Hourly


David Cornes holds a degree in economics from the University of Montana.

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Weekly Crude Update 8.15.2012

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The Israel and Iran geopolitical tension remains a tell tail of where this spread is headed in the short-mid term. Sources say that diplomatic solutions to the tensions are still on the table, and as long as they do the spread will remain in control. I would long the spread in anticipation of a nonviolent solution to the problem. As you can see from the chart below, the spread is much wider than the historical average.

Today’s U.S. crude reserves number should cause a short-term price spike in WTI crude. Right now analysts are expecting high reserves due to lack of demand and increases in supply and crude imports.

CrudeSpread

David Cornes holds a degree in economics from the University of Montana.

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Morning Rage 8.15.2012

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The Hang Seng dropped 1.2% today drug down by China Life Insurance who lost 3.4% today. The
mainland’s biggest insurer was hit by a larger than expected decline in July premium income. Turnover
was down 25% compared to yesterday’s trading. Tencent Holdings slipped .2% ahead of its first half
earnings, which are due out later this week. China Shenhua energy lost 1.6% as spot coal prices declined.

The FTSE 300 is down .6% today after hitting a 4 month closing high yesterday. The Kazakh Group
lost 3.2% after cutting back spending plans. British American Tobacco and Imperial Tobacco are also
suffering today losing 2.5 and 2.2% respectively as Australia’s high court dismissed a case relating to
packaging. Around Europe the DAX, CAC 40 and Madrid index are down 0.5, 0.4 and 0.38% respectively.

The MBA mortgage applications are down 4.5% and the 30 year fixed remains flat at 3.76%.

Nokia is up 5.6% premarket after an announcement of a window’s 8 smartphone in the near future.

Commodities all look similar with crude, natural gas, gold and silver all set to begin the day negative.

Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market.
Comments can be directed to ryghcw19@uww.edu

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Doherty at the Close 8.14.2012

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Michael Kors (KORS) also rose 16.43% after they announced that first quarter earnings nearly tripled.

In Europe, markets were broadly higher with the Stoxx Europe 600 rose 0.7%, closing at the highest level since March, after better-than-expected growth readings from the Continent’s two largest economies. German gross domestic product increased 0.3% in the second quarter, beating expectations. In France, GDP was flat compared with the first quarter but topped forecasts for a slight contraction.

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Trade of the Day (ANF) 8.14.2012

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shutterstock 35457625 2Trade:  Selling the ANF Aug 29-28 Put Spread and 35-36 Call Spread for $.37 total

Risk: $63 per 1 lot

Reward: $37 per 1 lot

Notes:  good risk vs reward that ANF does NOT move the measured move target

UPDATE 9.11.2012  This Spread blew up a little and went to fair value of $1.  Not every Condor will Work.