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

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

Boomer Consumer - WSJ

Pearl Jam - The Fixer

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

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.

Fortune Magazine examines 401(k) alternatives.

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

More 3X Leveraged ETFs from Direxion

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

You Can Follow LOS on Twitter

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

Shoutout to stevenplace for the find.

30-Year Fixed Mortgage Rate Sticks Over 5%

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

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 Investors have withdrawn $245 billion from Russia since August as a 69 percent drop in oil, Russia’s war with Georgia and the disruption to gas exports exacerbated the effect of the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

Photo credit: Natasha Perreault

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

Photo credit: Natasha Perreault

Inauguration Prep

Photo credit: Natasha Perreault

Escape From It All

Shoutout to Charles Amadeus for sharing this find.

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

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

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.