Wednesday, September 3, 2014

What’s in Store for Natural Gas and Crude Oil Prices

To hear some analysts tell it, geopolitics and the weather are exogenous events when it comes to energy prices.
That is, somehow both natural gas and crude oil prices would operate quite “rationally” if it weren’t for either of them.
According to these guys, supply and demand is what drives the market, and from time to time these “outside elements” only muddle things up.
Well, I hate to break it to them, but there hasn’t been a “normal” market for some time now. (more)

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20 Years Of Charts: Today’s Bond Fund Play


The latest upward revision in second quarter GDP growth tips the balance even more toward a hike in the Federal Funds rate sooner than later. While there’s some debate whether the Federal Reserve starts its march toward rate normalization in the first or second quarter of 2015, the time to adapt your fixed income portfolio is now. As Anthony Valeri, Investment Strategist at LPL Financial recently pointed out, the bond market has a habit of sending yields up about four to six months ahead of the first Fed Funds hike.

Some history in a few charts, starting with the 1994 rate hike. Coming out of the early 1990s recession the Federal Reserve pushed its Federal Funds rate to around 3% where it stayed through 1993.

In early 1994 the Federal Reserve began to ratchet up the Federal Funds rate, but as seen in this chart, the 10-year Treasury had already had a move up of more than 50 basis points before the Federal Reserve kicked into tightening mode. (more)

Strong Dollar finally catches up to Gold

Geopolitical events had been supporting gold of late but those can only carry the metal so far when several fundamental factors were acting as a strong headwind against a further rise in its price.

We have mentioned falling inflationary fears as evidenced by the TIPS spread, falling commodity prices as evidenced by the GSCI and a stronger Dollar, not to mention a stock market than continues to make all time highs. (more)

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Aegerion Pharmaceuticals, Inc. (NASDAQ: AEGR)

Aegerion Pharmaceuticals, Inc., a biopharmaceutical company, develops and commercializes therapies for patients with debilitating rare diseases in the United States. The company’s products include JUXTAPID (lomitapide) and LOJUXTA (lomitapide) hard capsules, an adjunct to a low-fat diet and other lipid-lowering treatments in patients with homozygous familial hypercholesterolemia. It also has the right to use lomitapide in the field of monotherapy or in combination with other dyslipidemic therapies for treatment of patients with other severe forms of hypercholesterolemia. The company distributes its products directly to patients and other purchasers through a specialty pharmacy.
Take a look at the 1-year chart of Aegerion (NASDAQ: AEGR) below with my added notations:
1-year chart of Aegerion (NASDAQ: AEGR)
AEGR has trended consistently lower for the entire last year. Over the last four months the stock seems to be forming an inverse head and shoulders pattern (gray). I have noted the head (H) and the shoulders (s) to make the pattern more visible. AEGR’s neckline resistance is at the $35 level (blue) and the stock would confirm its H&S pattern if it breaks up through that resistance.
Lastly, keep in mind that simple is usually better. Had I never pointed out this inverse H&S pattern, one would still think this stock is moving higher simply if it breaks through the $35 resistance. In short, whether you noticed the pattern or not, the trade would still be the same: On the break above the key $35 level.

The Tale of the Tape: AEGR seems to be forming an inverse head & shoulders pattern. A long trade could be entered on a break above the $35 level with a stop placed under that level. A break below the common $30 support most likely means much lower prices, thus the opportunity to enter a short trade.
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