Saturday, July 27, 2013

Smart(er) money betting on copper

The terrific Asbury Research recently featured how commercial hedgers have made a huge bet on copper. Although some may disagree, it's generally accepted that in the world of futures, commercial hedgers tend to be the smarter money. Granted, much of their smartness or ability to be more right than wrong comes from simply being on the other side of trades that tend to be more wrong than right. In the zero-sum game of the futures market, commercial hedgers are frequently on the opposing side of an increasingly popular trade, and as we know being contrarian is very often a winning strategy.
I would also emphasize that the timeliness of commercial hedgers greatly improves at extremes, meaning when their position size approaches levels that have rarely been attained over time. And if you read the Asbury Research piece (strongly urged), it's quite evident this is one of those times, with commercial hedgers at "their largest collective net long position for copper in the 30-year history of the contract."
The weekly futures chart of copper further illustrates the ups and downs of contract flow.
Source: Finviz
Note the red circles signifying levels where commercial hedgers established very large net long exposures -- and more often than not these levels have coincided with bottoms for copper. And vice versa, at levels where commercial hedgers have been very net short, as was the case at the start of 2011, copper has tended to be at a peak. I would also point out that the round-number of $3.00 appears to be a meaningful level of longer-term price support.  (more)
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Investing in Real Estate Without Buying Property

History suggests that the home you live in is likely to be the largest investment you will ever make. But because the costs and barriers to get into the real estate market are so high, many investors look no further than their front door.

But as Phil DeMuth of Conservative Wealth Management explains in this installment of Investing 101, REITs (or Real Estate Investment Trusts) make it possible to buy properties you couldn't even dream of owning yourself.

1) What Exactly Is a REIT?

"A Real Estate Investment Trust is a business that buys real estate. Typically they specialize in one particular slice of the commercial market," he explains, pointing out that a REIT buys a series of properties, manages them, collect rents, and then passes that money along to shareholders. (more)

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The Crash of 1929 - FULL DOCUMENTARY (Stock Market Wall Street)

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Has the U.S. Treasury Already Exceeded the Debt Limit?

U.S. federal debt has been stuck at $16,699,396,000,000.00 for 68 straight days, according to the Daily Treasury Statement on July 24. That amount is exactly $25 million less than the legal borrowing limit of $16,699,421,000,000.00 set on May 17, 2013. But that’s only part of the story.

A closer look at the numbers actually shows the U.S. Treasury has already blown past the federal legal borrowing limit! And the mainstream media, as usual, is out to lunch. The table below shows how “Total Public Debt Outstanding” is already $38.82 billion above the statuary debt ceiling and now at $16,738,106,000,000.00.

The yield on 10-year U.S. Treasuries (^TNX) has surged 51% over the past three months and 84.07% over the past year alone. That move has taken the 10-year yield from 1.40% to 2.61%. And bond investors – especially owners of long-term debt - are beginning to see something they haven’t seen in a while; hefty losses.  (more)

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Dow 16,000 finds resistance dating back 90 years, in play now!

Do charts have memories? Could an confluence of support and resistance lines dating back as much as 90 years end up being important to the Dow? What would happen if the Dow breaks above this rare line up?
Some key "Emotipoints" (emotional turning points) dating as far back as the 1920's, line up at one price zone, which comes into play around Dow 16,000. As of last nights close, the Dow is less than 500 points/less than 3% away from this confluence of Emotipoints.
This confluence of Emotipoints becomes all the more important when you look at the chart above ( , which reflects that the Dow hasn't made any gains after subtracting for inflation in 13-years! (see post here)
Odds are high we won't know for a while how the Dow will handle this rare situation. At this time the confluence should be viewed as resistance.  If the Dow can break through this cluster of lines, it would be a very positive technical event!
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Contango 101: What It Means for Your Energy Investments

Sometimes it seems like investors have a language all their own. If you ever tune in to the talking heads on some of the major business stations, they'll use some big words that likely will have you scratching your head. One such word is contango, which has absolutely nothing to do with dancing.

Contango is a term used when a trader is talking about a forward or futures contract. Normally, a forward or futures curve will have an upward slope to it meaning that traders are willing to pay more for the underlying commodity or contract in the future. The market is said to be in contango when traders are willing to pay more today than they are in the future. The following graph helps to display this more visually:
Source: Suicup
This term can come into play when investing in the energy markets. When natural gas or oil is in contango, a producer might want to lock in the price of oil and gas to get a better short-term price to ensure its profits. That's because if a market is in contango it means that the company can earn more money by selling short-term contracts as opposed to a longer-term contract. Let's take a look at a couple of examples of how this can play out with your investments.  (more)
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Incredible chart may have called the exact bottom in gold stocks

Fibonacci, that incredibly insightful mathematician of the 13th century who mysteriously whispered his secret to those of us who reverently pondered my previous post of June 30th, has proven (as usual) to have correctly called the exact bottom in the Amex Gold Bugs Index (HUI) quite literally to the exact day (Thursday June 26). 

Confirmation of this fact came yesterday with the gap opening of the HUI index, as price landed squarely on 'the other side' of the 43 week price down trend line and today included more upside follow through, just for good measure. The weekly chart of the HUI index is giving us the requisite Fourth of July show, as the True Strength Index (TSI) indicator has put together first a positive divergence BUY signal, followed by a trend line break BUY signal, and with the TSI (7,4) reading presently just at ZERO, it appears the third bullish BUY signal (ZERO crossover) will be attained, perhaps as soon as tomorrow.  (more)

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