Dr. Joe Duarte's Market I.Q.
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TTHQ Staff
, May 16 2011 03:47 PM
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Posted 16 May 2011 - 03:47 PM
 | May 16, 2011, 08:00 EST |  |   |
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U.S. stock index futures were lower on Monday. Crudeoil, gold, and silver were also falling. Today'sEconomic Calendar
SEC: Rotten to the core? According toCNBC.com: "Spencer Barasch, former head of enforcement for the U.S.Securities and Exchange Commission in Fort Worth, Texas, is beingprobed by the U.S. Attorney's Office and Federal Bureau ofInvestigation, SEC enforcement director Robert Khuzami and SECInspector General David Kotz told lawmakers on Friday." CNBC reporterScott Cohn, who has covered high profile securities cases for sometime, including the Stanford case, further adds: "The criminal probefollows SEC internal findings that Barasch made numerous requests afterhe left the SEC to represent Stanford and was turned down each time.Barasch persisted in his requests even though he directly dealt withStanford matters while at the SEC and was partly responsible forignoring repeated red flags SEC examiners raised about Stanford asearly as 1997, Kotz found in a 2010 report. He later eventually didprovide some legal counsel to Stanford in 2006, the report found." Shameless hedge fund cynics: "Raj will run." Hedgefund managers and traders bet that convicted hedge fund manager andinsider trader Raj Rajaratnam "will attempt to flee before he isjailed," according to CNBC. Common advice given to Raj, via the networkand "off the record" was to buy a "modest" sized boat and just stay onthe sea traveling while tapping into your offshore billions. Anotherperson suggested moving to Vietnam since there is "no extraditiontreaty." Said the latter: "No extradition treaty. I've looked into it." Executive job prospects should expect to be tested.According to The Wall Street Journal: "Management assessments such assimulations and personality tests are booming again as companiesscramble to find the best leaders for the job." |
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| Hedge funds pulled $17 billion from thecommodity markets druing the recent week, based on data by the CFTCreleased on Friday. Yet, it's still not certain what the effect will beon the markets, given the current crosscurrents and the tug of warbetween weather, geopolitics, and extraordinary events all around theworld. The net effect is that 10% of the "speculative" contracts in thecommodity markets have evaporated, with a wide crossection of sellinginvolved. For example, copper suffered the largest decline inspeculative activity as the overall number of bullish active contractsdropped by 6247, while the number of contracts betting that copperwould drop below $4 dropped by 2619. The drop in bullish contractsmarks a 59% reduction in that subsection of bets, which is asignificant amount, and makes us wonder if that isn't some sort ofcapitulation signal, ie. a prelude to some kind of bounce. Silver contracts also fell significantly during the period with netlong positions falling 25%. Corn futures also saw a large exit from thebullish camp with a drop of 25,009 bullish contracts. In corn, the moresignificant sign may be the fact that only some 1800 bearish contractswere bought, and that the number of bullish contracts remains quitelarge large, numbering over 300,000. The total amount of money pulledout of the oil market during the period was an impressive $6.5 billion,or nearly one third of the total pulled out by speculators/hedgefunds/managed accounts. According to Reuters, open interest in oilfutures remains high, and more important, a large number of investors"covered" their short positions during the period marked by the CFTCdata. The CFTC data is important because it encompasses the activity thattook place from May 5, the day of the so called "Flash Crash" in oil,to May 12, which includes the second bout of selling that took place onMay 11. It doesn't include data from the 12th and the 13th, though,which were days in which commodity prices tended to stabilize somewhat.  | Market Moves |
| United States Short Oil ETF (NYSE:DNO) Likely To Be Tested Shares of the United States Short OilETF (NYSE: DNO) are likely to move higher in the early going on Monday. Chart Courtesy of Crude oil seems headed for some weakness on Monday. Of course, it'svery early in the day as we write. And things can change. But the factis that the Obama administration has given in to demands for moredrilling in the U.S., both on and offshore. And yes, none of that oil will make gasoline prices fall today. But theconcept is clear. It's election season and this election may hinge onlittle more than jobs and gasoline prices. So Mr. Obama will doeverything possible to give the people what they want, or at least makeit seem as if that's what he's doing. The issues in Europe continue to weigh on the markets. The arrest ofIMF Chief Strauss Khan may stall progress on E.U. bailouts. In factGreece is not likely to succeed in its bid for meeting criteria of itsbailout. And the continuing tightening of monetary policy in China isanother worry for traders. And that may be what keeps things from unraveling faster for crude. Thebottom line is that we are now in a trading range between $90 and $110.$100 is now short term resistance. $92 is very important support. A failure for crude today could set the stage for more selling in thenext few days. Look for what OIH does with regard to the 150-156 areain the next couple of days. DNO, as of now, seems to be a sensible way to hedge both long stockportfolios and any long energy positions. Dr. Duarte owns shares inDNO. |
