Strangling the Energy Market (UNG, USO, DBC)

One of the most profound moves in the market of late is also one that almost no one is talking about. It has taken a back seat to a news cycle that’s all-out hairy with terror stories and war stories and potential war stories, so it’s not a surprise, really. That, coupled with the new highs that the major indexes are posting on a near daily basis, and is it any wonder no one cares or has time to look under the hood and see that the commodities have been chewed up like Robert Shaw in the movie Jaws. We’ll have a look at the commodities chart in a moment, but for now you should know that this is just part of a broader theme that’s unfolding precisely as we’ve predicted for the last several years. It has a number of components, the most prominent of which are – Rising equity prices, particularly in America, Declining prices for fixed income products, particularly U.S. Treasuries, A near abandonment of all other asset classes, including commodities, A strengthening U.S. Dollar, and Inflation, inflation, inflation. And while it’s true that not all of these sub-themes are in evidence as yet, we remain convinced…

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Russian Bear Turns Bull (UNG, RSX)?

There are a lot of folks out there who trade stocks with an eye to geopolitical developments. They’re the people who know that India and Pakistan have just upped the ante in their cross border battle over Jammu and Kashmir, with varying reports of up to 20 people dead and/or injured over the weekend. They’re the ones who’ll tell you that Israel is now considering a full-scale ground invasion of Gaza to halt the rocket fire on its southern cities, and that Russia is on the verge of a genuine recapture of the Ukrainian breadbasket it lost with the disintegration of the U.S.S.R. These are the same folks who know that America is on the verge of bombing ISIS or IS or ISEL – or however the hell you wanna call ‘em – in Syria (!), a move that lends support to the embattled presidency of Bashar al-Assad, a man accused of gassing his own people during the several years long civil war that has claimed over 195,000 lives, according to U.N. estimates. But we’ve got a single piece of news that’s going to be a shocker to nearly all of you who follow the geopolitical angle in stock trading….

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A Trip through History with MBIA (MBI)

We’ve undertaken a number of trades over the last four months using options on bond insurer MBIA Inc. (NYSE:MBI), a company whose stock is prone to some very sharp zig-zags and therefore has great profit-making potential. And as it turns out, we’ve won some, and we’ve lost some. Today, however, we’re not trading shares of MBIA. Today we are making an interim summing up of the matter. We ask for your patience, as it’ll take a minute or two. Indulge us, please, and follow along. We’ll start at the beginning. The first trade in question was opened on the 15th of April in a letter called Banking on a Spain vs. Scotland Trade. There we urged you to open two separate spreads using MBI against the Select sector SPDR Financial ETF (NYSE:XLF), a proxy for the financial sector as a whole. In both cases we were betting on MBI’s inherent volatility making for wilder swings higher and lower than XLF over the next four months. But alas, it didn’t work out the way we planned. With both the PUT spread and the CALL spread we came up short and forfeited $0.33 for every quartet traded. Fast forward, however, to our…

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