Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Two Ways To Play: Crude Awakening


Strengthen your portfolio in good times and bad.

Crude Oil Short Squeeze

According to Bloomberg, crude oil's record surge to $135 may be due to a short-squeeze: traders covering wrong-way bets that prices would decline. While prices jumped 2.6% in a week, open interest in contracts, the number of outstanding positions, fell 8.1%. Analysts believe this signals that money is moving out of the oil markets and traders are simply buying up contracts to close their short positions. Crude oil has closed at record highs on 27 days so far, prompting oil experts to say that the move has been due to traders and speculators rather than a shortage of supply. See Todd's Oil Of Oy Vey.

From the Bull Pen: Those still bullish on oil can use the oil ETF (USO). A pull-back towards the $100 level might seem a more plausible entry.

From the Bear Cave: Bears believe the move in oil is unjustified and may look to the Ultrashort Oil & Gas ETF (DUG) which corresponds to twice the inverse of DJ Oil & Gas index. Sell-stops can be set below $26.

UBS Raises More Capital

According to the Wall Street Journal, Swiss Bank UBS (UBS) will raise $15.1 billion in new capital. The new shares will be deeply discounted by 31% to yesterday's closing price. The company has already received a capital infusion of about $13 billion this year after suffering approximately $38 billion in writedowns to date. UBS just completed a sale of $15 billion in subprime and Alt-A securities to BlackRock (BLK) as part of an effort to clean up its balance sheet. Yet, investors remain concerned as the company still holds a large amount of these troubled assets. See Bennet Sedacca's Debt, Dilution, Default, And Denial.

From the Bull Pen: Bulls looking for a financial play might see one in New York Community Bancorp (NYB). The stock is trading near its 52 week highs and ended up on painful day for the financials. Sell-stops can be set near the $19 level.

From the Bear Cave: Bears see this UBS story as a sign that the financial sector is still in terrible shape. Bears are using the Ultrashort financials (SKF) which corresponds to twice the inverse of the DJ Financials Index. Sell-stops can be set near $104.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng -1.64%, Nikkei +0.37%, Sensex -1.95%, Taiwan -0.08% and Shanghai -1.65%.

A quick check of Europe finds the CAC -0.54%, DAX -0.48%, FTSE +0.12%

As of 8:40 AM EST, S&P Futures are trading -0.20 points to 1392, and Nasdaq futures are down -3.25 points to 1961.

A Look At Commodities

Commodities are higher. Crude oil is up +1.37 to 134.55. Gold is lower -2.90 to 925.70. Silver is down -0.143 to 17.8555, and copper is higher +1.95 to 377.30.

The dollar index is up +0.033 to 71.966.

On the Radar

Initial Jobless Claims: 365 k vs. 371 k prior.
Continuing Claims: 3073 k vs. 3060 k prior.

10:00 House Price Index (m/m): 0.6% cons.
10:00 House Price Index (q/q): -1.4% cons.

Click here for the full trading radar.

Happy Thursday. Good luck!
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos