Locke on Stocks

Small Biotech $AVII to Trade Actively Monday on Barron's Spec

2009-10-04T20:49:00.002-04:00

The herd has been summoned.
At $1.56, expect this puppy to surge early on heavy volume.

Boomer Consumer - WSJ

2009-10-04T20:45:00.000-04:00

Pearl Jam - The Fixer

2009-07-22T14:30:00.001-04:00

New 3X Leveraged ETFs for Daily S&P 500 Trades

2009-06-29T18:45:00.002-04:00

ProShares introduced 3X leveraged ETFs today for daily swings in the S&P 500. UPRO is the bullish play, SPXU the bearish. Volumes were light today, but are sure to pick up as word spreads. Use intraday with caution, or just short either one of them and hang on for months. Permalinks in the sidebar.

Even in the best of times, the 401(k) wasn't perfect.

2009-06-21T09:14:00.003-04:00

Fortune Magazine examines 401(k) alternatives.

The Hijacking of Retirement in America: the 401k Flim-Flam: 60 Minutes

2009-04-20T23:56:00.003-04:00

More 3X Leveraged ETFs from Direxion

2009-04-16T21:51:00.002-04:00

Two BULL and two BEAR 3X funds from Direxion for U.S. Treasuries, 10-year and 30-year. Links for the 30-year have been added under 3X ETFs on the sidebar. Unless you're a frenetic day-trader, don't go long either of them. In fact, you could short either one and win in time, due to churn decay. But the no-brainer is shorting the BULL (TMF) as the safety trade unwinds.

Gomez: See The World @ 9:30 Club;Washington, DC March 29, 2009

2009-04-01T07:36:00.001-04:00

You Can Follow LOS on Twitter

2009-02-09T18:35:00.002-05:00

Updates are sporadic at best. I would highly encourage any day-traders to take advantage of StockTwits, a great forum for floating ideas in real time.

Stimulis: Economic Performance Enhancement

2009-02-08T18:15:00.005-05:00

Shoutout to stevenplace for the find.

30-Year Fixed Mortgage Rate Sticks Over 5%

2009-01-26T06:38:00.004-05:00

After flirting with a 4-handle two weeks ago, spurring a spate of refinancing, average national rates have popped back up to 5.42%. According to the Mortgage Bankers Association, refis account for over 80% of all new mortgage applications.

Ruble at Lowest Level Since '98 Crisis

2009-01-19T07:42:00.005-05:00

Jan. 19 (Bloomberg) -- The ruble fell below the weakest level seen in the 1998 Russian crisis after the central bank devalued for the sixth time in seven days to protect reserves.

The currency slid to as little as 33.0455 per dollar today, the lowest since early 1998, before the government defaulted on $40 billion of debt. The ruble has lost 7.3 percent since official trading resumed this year, extending the decline to 29 percent since August.

Prime Minister Vladimir Putin pledged last month to use the nation’s foreign-exchange reserves to avoid “sharp” currency swings, after the 71 percent decline against the dollar in 1998 caused investors to flee and savers to pull bank deposits. Investors have withdrawn $245 billion from Russia since August as a 69 percent drop in oil, Russia’s war with Georgia and the disruption to gas exports exacerbated the effect of the global financial crisis, according to BNP Paribas SA data.

“Fear of another devaluation means nobody wants to buy rubles right now,” said Lars Rasmussen, an emerging markets analyst in Copenhagen at Danske Bank A/S, which rates itself among the five biggest traders of ruble in the world through Finnish subsidiary Samo Bank Plc. “The ruble has begun to look more and more overvalued because of the fall in the oil price.”

Russia’s reserves, the world’s third-largest, have dropped by $171.6 billion to $426.5 billion since August, as policy makers sold currency. The ruble weakened 1.4 percent to 37.8179 against the basket by 1:29 p.m. in Moscow, extending this year’s drop to 6.8 percent.

3-month rubles/$

"We Are One" Concert

2009-01-18T23:05:00.003-05:00

Photo credit: Natasha Perreault

Obama Condoms. Because Hope Is Not a Form of Protection.

2009-01-18T22:55:00.003-05:00

Photo credit: Natasha Perreault

Inauguration Prep

2009-01-17T06:48:00.000-05:00

Photo credit: Natasha Perreault

Escape From It All

2009-01-11T23:08:00.003-05:00

Shoutout to Charles Amadeus for sharing this find.

Direxion Introduces More Triple-Leveraged (3X) Index ETFs

2008-12-28T21:45:00.008-05:00

DirexionShares has already expanded its nascent stable of 3X ETF stallions. The initial crop of triple-levered trading vehicles tied to indices of financials, energy, and large and small cap stocks, have proven to be widely popular, as evidenced by daily trading volumes in the millions. For junkies who need a fix that plain old 200% leverage just can't cure, the doctor now has a larger cabinet of 300% smack. Traders can now get 3X returns bull or bear in technology (TYH, TYP), emerging markets (EDC, EDZ), and developed markets (DZK, DPK). We have seen the future of leveraged ETFs, and it was foreshadowed by the Mach3 razor.

One thing to keep in mind with these ETFs is that they only ATTEMPT to replicate 300% of the move of the underlying index, and through complicated means. The higher the leverage goal, the more the tracking error gets magnified.

ETF vs. ETN: Choosing the Right Leveraged Play on Gold and Oil

2008-12-28T21:04:00.004-05:00

There was an excellent article by Ron DeLegge of ETFguide.com a few weeks ago about the pros and cons of ETFs vs. ETNs. The comparison is topical because if you want to make a leveraged play on gold or crude oil, you now have a choice between Powershares ETNs and ProShares ETFs. Until a few weeks ago, the ETNs were the only way to go. For most, ETFs are the better option because they don't have the credit default risks of ETNs. Manic traders might prefer the increased liquidity and comparable tax advantage (for now) of ETNs. Some of the new ETFs still have very low trading volumes.

The new commodity ETFs linked in the sidebar are the 2X UltraLONG UCO (oil), UGL (gold), and AGQ (silver), and the 2X UltraSHORT SCO (oil), GLL (gold), and ZSL (silver). Keep liquidity in mind.

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ETNs or ETFs?

Up until the ProShares launch, exchange-traded notes (ETNs) were the only way to obtain leveraged and short exposure to commodities. (Of course, without shorting or leveraging them yourself via a futures brokerage account.) The 19 commodities-focused PowerShares/Deutsche Bank ETNs were really the only game in town, but not anymore.

Instead of using the PowerShares DB Crude Oil Double Long ETN (DXO), now investors can use the ProShares Ultra DJ-AIG Crude Oil (UCO). Both investment products have the same investment strategy of trying to double the daily upside performance of crude's move by 200%. However, UCO does not carry any credit default risk like DXO.

The annual fees on the PowerShares/Deutsche Bank ETNs are a lower 0.75% versus the 0.95% for the ProShares leveraged/short commodity ETFs, but don't overlook the other important details.

For an additional 0.20% in annual costs, the ProShares ETFs do not carry any issuer credit risk. The fall of Lehman Brothers and the subsequent collapse of the company's three ETN products was a nasty real-life lesson about the danger of credit default risk. Clearly, all of the other benefits of ETNs like their lack of tracking error and their favorable tax treatment (which is being reviewed by the IRS and could end at any moment) are completely undermined by ETN credit risk. What good are all of these benefits, with the chronic threat of corporate failure? For that reason, we have consistently warned our readers about the danger of ETNs.

The Obscure Product Structures behind Commodity ETFs

Most commodities focused ETFs follow a grantor trust or partnership product structure and are not registered under the Investment Company Act of 1940 like most equity and bond funds. Instead, many are registered under the Securities Act of 1933.

One such example is the SPDR Gold Trust (GLD). With almost $20 billion in assets, GLD is the most popular single commodity ETF. GLD follows a grantor trust product structure and its share price is hinged to one-tenth the ounce price of gold bullion. Also, GLD does not use gold commodity futures, but holds physical gold bars in a secured vault.

Since many commodities ETFs don't own the physical commodities, but instead futures or options on them, their tax treatment is quite different compared to a stock or bond ETF. Gains and losses in commodity ETFs that use futures contracts are taxed as 60% long-term and 40% short-term. This creates a blended tax rate ceiling of 23% for investors in the highest tax bracket.

As we've mentioned before, the ideal place for commodity ETFs is inside a tax sheltered account like an IRA, ROTH IRA, or 401(k) plan. Simply put, they aren't very tax efficient held elsewhere.

Merry Christmas!

2008-12-25T11:04:00.000-05:00

Ruble Getting Whacked on Dollar Bounce, Crude Weakness

2008-12-19T09:26:00.002-05:00

The inexorable decline in oil prices continues to pressure Russia's foreign currency reserves in defense of the ruble. Check the chart in the "Russia Watch" sidebar -->

Nymex 3-2-1 Crack Spreads Widen

2008-12-18T07:49:00.004-05:00

Crude oil has fallen much more than RBOB gasoline and heating oil this week. Refiners had a decent day yesterday as VLO announced further production cuts. Little guys like WNR, TSO, HOC, and ALJ will benefit, not only from less distillates being cracked, but also from the lower borrowing costs associated with cheaper crude, which was killing them on the rise up over $100, despite gasoline reaching record levels.

Obama to Nominate Schapiro for SEC Head; Cox to Be Flayed

2008-12-17T21:15:00.005-05:00

FINRA chief Mary Schapiro will get the nod from President-elect Obama for Chairwoman of the SEC. Outgoing Chairman Christopher Cox was already getting chafed for changing the uptick rule, being soft on naked shorting, and basically lubricating the bear market, but the recent Madoff scandal highlights just how limp the regulatory sinews have become.

30-Year Fixed Mortgage Rate Falls to 5.76%

2008-11-29T16:09:00.003-05:00

30-year fixed mortgage rate (left) vs. 3-month T-bill (right) over 4 years.

Source: Bankrate.com

Turkeys Away: WKRP Classic

2008-11-27T10:01:00.001-05:00

Case-Shiller U.S. Home Price Indices

2008-11-27T08:51:00.010-05:00

The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City

Composite Home Price Indices. The decline in the S&P/Case-Shiller U.S. National Home Price Index –

which covers all nine U.S. census divisions – remained in double digits, posting a record 16.6% decline

in the third quarter of 2008 versus the third quarter of 2007. This has increased from the annual declines

of 15.1% and 14.0%, reported for the 2nd and 1st quarters of the year, respectively. The 10-City and 20-

City Composites continue to set new records, with annual declines of 18.6% and 17.4%, respectively.

“The turmoil in the financial markets is placing further downward pressure on a housing market already

weakened by its own fundamentals.” says David M. Blitzer, Chairman of the Index Committee at

Standard & Poor’s. “All three aggregate indices and 13 of the 20 metro areas are reporting new recordrates

of decline. Looking at the returns of the U.S. National Index, prices are back to where they were in early 2004.

As of September 2008, the 10-City Composite is down 23.4% from its peak, the 20-City Composite is down

21.8% and the National Composite is down 21.0%.”

Phoenix was the weakest market, reporting an annual decline of 31.9%, followed by Las Vegas, down

31.3%, and San Francisco at -29.5%. Miami, Los Angeles, and San Diego did not fair much better with

annual declines of 28.4%, 27.6% and 26.3%, respectively.

Dallas and Charlotte faired the best in September in terms of relative year-over-year returns. While also

in negative territory, their declines remained in single digits of -2.7% and -3.5%, respectively. However,

both are at rates of decline lower than those reported in August’s numbers. In addition, Charlotte also

reported its largest monthly decline on record, down 1.3%. Monthly returns were negative across the

board. Cleveland was the one market that showed any improvement in its year-over-year returns

reporting -6.4% compared to the -6.6% reported for August.

The table below summarizes the results for September 2008.

The S&P/Case-Shiller Home Price Indices are published on the last Tuesday of each month at 9:00 am

ET. They are constructed to accurately track the price path of typical single-family homes located in each

metropolitan area provided. Each index combines matched price pairs for thousands of individual houses

from the available universe of arms-length sales data. The S&P/Case-Shiller National U.S. Home Price

Index tracks the value of single-family housing within the United States. The index is a composite of

single-family home price indices for the nine U.S. Census divisions and is calculated quarterly. The

S&P/Case-Shiller Composite of 10 Home Price Index is a value-weighted average of the 10 original

metro area indices. The S&P/Case-Shiller Composite of 20 Home Price Index is a value-weighted

average of the 20 metro area indices. The indices have a base value of 100 in January 2000; thus,

forexample, a current index value of 150 translates to a 50% appreciation rate since January 2000 for a

typical home located within the subject market.

Source: S&P and Fiserv