Bear Stearns- Bailed out by JP Morgan and NY Fed-Is there more to come ??

 

After looking like opening to the upside the markets took a nosedive this morning on the news that Bear Stearns is being given 28 days financing from JP Morgan and the NY Fed, there has been rumours for a while in the market about Bear Stearns having liquidity problems and this confirms them to be true.They are looking to put in place some permanent financing to help them with liquidity. If companies the size of Bear Stearns can get in to trouble then we should really start to be concerned about the impact of the Credit Crunch. I have said before that I am steering clear of Financial's and this further keeps me away from them for the time being.The only way to play theses is the same as Jim Rogers, short them or buy puts on any rallies.

 

This news and the drop in the Dow has pushed April Gold Futures up over $1000 currently they are trading at $1003, having hit a high of $1007.There are also rumours(unsubstantiated ) of a possible emergency Rate cut by the Fed-when will they learn !!

 

 

Today 09:13am

Bear Stearns Companies Inc JPMorgan Chase and NY Federal Reserve Bank providing financing for 28 days, working on permanent financing

- JP Morgan in conjunction with the Federal Reserve Bank of New York, has agreed to provide secured funding to the Company for an initial period of up to 28 days. Through its Discount Window, the Fed will provide non-recourse, back-to-back financing to JPMorgan Chase. JPMorgan Chase is working closely with the Company on securing permanent financing or other alternatives for the company.

Trade The News - Live Audio Breaking News Analysis and Futures Calls

 

 

Best Wishes

 

 

Alan

 

Technorati Tags: Fed,Gold,Gold Futures,Bear Stearns,JP Morgan,Credit Crunch

Will Gold reach $1000 ?

Gold nearly made the $1000 mark and I feel it is only a matter of time before we get there.However as we all know in the markets things never go up or down in a straight line.As ever I am always looking to bring you ways to trade that expand the options we have particularly in situations like just now where it may be prudent to step aside from the stock market and let it do its thing for a while. Gold is in the news as we have seen some spectacular moves -up and down.Now there is another ETN that allows you to be able to trade Gold long and short in your account and also with some leverage without having to resort to futures or futures options.

 

Deutsche Bank at the end of February listed the DB Gold Double Short ETN (DZZ), DB Gold Double Long ETN (DGP) and DB Gold Short ETN (DGZ) on the NYSE Arca.( DGP | ETNCenter.com ) For more information see the link  this allows us to  trade Gold in both directions and take advantage of the large movements that we will no doubt see on its way to $1000 any beyond. make no mistake I am a Gold bull but it would be nice to be able to make some money on the pullbacks as well.

 

Best Wishes

 

Alan

 

Technorati Tags: Gold,$1000 Gold,ETN,ETF,Trading,Short ETF

How to Short Commodities using ETF

In my last post we talked about how to make money from  increased food prices and looked at the  impact these prices would have on livestock such as Live cattle and Lean Hogs. I mentioned that for the more adventurous amongst you you might also wish to look at shorting the grains as they have risen very far very quickly.Shorting Commodities has traditionally been very difficult until the recent advent of Contra ETF's.

These ETF's will move higher when the price of the commodity goes lower allowing you to benefit from declining prices by buying the ETF.One of the most forward thinking of the companies involved in these Contra ETF's is ETF Securities   http://www.etfsecurities.com/csl/short/index.asp   ETF Securities will allow you to go short a number of the major traded commodities and since you are buying and not selling they should be  tradable in most accounts.

A major shortcoming of many  brokerage accounts has been the inability to make money when markets are doing anything but going up, now with these new ETC/ETF that is no longer a problem.It also allows for some quite sophisticated trades to be placed-for example if you are bought in to the story of the last two posts of mine and you are an aggressive trader you might consider going long livestock and short grains by buying one of the livestock ETF's such as CATL (Live Cattle) and buying one of the Short ETF such as SWEA (Wheat).

 

The volatility in the stockmarket currently is very difficult to invest in and is being driven back and forward by news and by the manipulations of the big boys, the commodity markets however are more fundamentally driven by supply and demand and so are easier to predict in the medium term.

 

Best Wishes

 

 

Alan

Technorati Tags: Commodities,ETF,Short ETF,Grains,Live Cattle,Trading,ISA,IRA

Bear with me !!

Generally as a rule we all want the stock market to go up, it feels right , it means things are all well with the world at large.However any of you who have been investing for more than a few years will know that sadly markets do not always go up.So what to do when they start to go down or start behaving in a very volatile fashion like they have been doing lately, I guess there are three things you could do:

 

1 If you are a long term investor-hold off and wait for the inevitable good times to come back-I find this hard to do sitting through drawdowns watching your capital disappear drop by drop

2 Move to cash, certainly this makes it easier to sleep at night but unless your timing is immaculate it can mean that you miss out on a lot of money making opportunities

3 Use some form of investments that allow you to make money as stocks go down.

 

I have spoken before about my use of options, however options are not for everyone and in certain accounts(like my ISA in the UK) you cannot use options.Lately there has been a growth in a number of what are being labelled Contra ETF's-basically ETF's that go up when the market declines-they can be on indices such as the Dow, S&P 500 or the Russell or they can also be on certain commodities such as Oil.

I personally like to use Proshares ETF's go here for a list of the short ones that they offer   http://www.proshares.com/funds?products=98616&fundType=   .They offer a vast range but I tend to favour the more liquid ones such as DOG (Short Dow) or DXD (Ultra Short Dow-twice the index).I also use the PSQ and the QID which are the short and the ultra short on the QQQQ index. These are a great way of either hedging some of your longer term positions or trading to take advantage of some of the volatile swings that we have seen of late. I use them for both purposes.

The advantages of being  able to trade the market long and short as well as being able to hedge are immense and can make a real difference to your returns over the short and long term. I urge you to check out the opportunities that are available with using these types of fund.

 

Over the next few weeks I will share with you some of the ETF's that I will be purchasing and using to try to rid out the volatility in the market that we are currently experiencing.

 

All for now

 

Good Trading

 

Alan

How to protect your profits and Portfolio in a downturn.

Well the last week has been interesting.....If you have been following this blog then you will know over the last month or so I have been becoming increasingly nervous about a downturn and we have seen some of the markets teeth in the last week or so.

I dont think it is over and I believe we have more downside to come-increasingly people's appetite for risk is diminishing and we are seeing the Yen Carry trade possibly starting to unwind as people get nervous and start to liquidate their Yen positions.If this happens then it will have ramifications across the globe.

One of the more challenging things to be able to do in a downtrend is trade it-either as a speculator looking for profit or to hedge your longer term holdings.This can be more difficult in certain types of accounts as there may be restrictions in selling short or using options.

If you are in this situation then I urge you to look at some of the Pro Shares at

www.proshares.com

They have a number of Short Proshares which you buy like a stock but they move in the opposite direction i.e. as the index they are related to goes down the Proshare price increases.It allows you to profit from a down market or use them as a hedge to protect your existing positions.

Two of the Proshares I like are the Short Dow 30 (DOG) and the Short S&P 500 (SH), you can also get Ultra Short funds which are double the downside .In this market I urge you all to look at doing one or both of the follwing :

1/ Take Profits off the table and lighten up your exposure

2/ Hedge what is left in your portfolio to reduce your downside

If you cannot or dont want to do either of these then consider going in to cash until the dust settles.

As ever good trading

Alan

Tags: Shorting, Pro Shares, DOG, SH, UltraShort, Hedge

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