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32 minutes ago, nuckin_futz said:

The mess in the USO ETF continues to unfold as it trades 7.8% above NAV

Mon 20 Apr 2020 23:55:33 GMT

 

This ETF is doomed

A popular take is that the May NYMEX oil contact isn't representative of crude because at this point it's oil for physical delivery while the June contract is a more liquid futures contract.
 
It's the opposite. The May contract represents the real demand for physical crude while the June contract is puffed up by retail money.
 
A full 25% of the June futures contract is now owned by the USO ETF and that will rise above 30% once pending trades are processed. It's an instrument used by retail traders to bet on one-day moves in oil. It's very likely that tourists in the oil market thought they were buying crude at $1 today or at negative prices in the May contract. In reality, they were buying an 80/20 split in the June/July contracts trading at $22/$27 respectively. These can fall much further.
 
Moreover, all the money flooded into the ETF faster than the managers could create new units. As a result, the ETF finished the day at $3.75 but with a net-asset value of $3.46, according to data just released. That's a 7.8% premium.
 
What's happened in the ETF is truly mind-blowing. Look at the massive number of newly-issued shares along with the unprecedented rise in volume today.
This ETF is doomed
The ETF alone now has $4 billion in assets and was the most-traded instrument on Robinhood yesterday.
 
Starting May 5, The June/July contracts will need to be sold and rolled into July/August contracts.
 
In the day or two ahead I expect more retail money to be ploughed into this ETF.
USO
 
It's a similar story in UCO, which is a 2x levered oil ETF. IT closed at $1.35 and its NAV is $1.21 and holds July contracts among other things. Add it all up and we have a retail slaughter in the making.

So in essence unless the feds step in and start buying up USO/UCO they're done.

 

Are they considered large enough for the feds to step in?  If so might be a great buy in for a morning and sale by afternoon

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1 hour ago, Warhippy said:

So in essence unless the feds step in and start buying up USO/UCO they're done.

 

Are they considered large enough for the feds to step in?  If so might be a great buy in for a morning and sale by afternoon

I don't believe the Fed is allowed to buy assets like this.

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2 minutes ago, nuckin_futz said:

I don't believe the Fed is allowed to buy assets like this.

Up until ten days ago I didn't think they were allowed to manipulate the markets the way they have so I'm just curious

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1 minute ago, Warhippy said:

Up until ten days ago I didn't think they were allowed to manipulate the markets the way they have so I'm just curious

They've been manipulating markets for ten years.

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11 minutes ago, nuckin_futz said:

They've been manipulating markets for ten years.

True.

 

But not quite so openly as massive cash injections and tampering with energy.

 

If I recall they were dumping money in to the market and high loss earners as far back as Sept with their massive lines for corps

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34 minutes ago, nuckin_futz said:

I don't believe the Fed is allowed to buy assets like this.

They have purchased HYG and LQD etf. both of whom have large energy components.

I don’t see why not.

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20 minutes ago, Warhippy said:

True.

 

But not quite so openly as massive cash injections and tampering with energy.

 

If I recall they were dumping money in to the market and high loss earners as far back as Sept with their massive lines for corps

4 rounds of QE, TARP program where they basically took responsibility for the troubled entity's toxic assets. Arranging a shotgun wedding between BofA and Merrill Lynch.

 

They have played around with the SPR (Strategic Petroleum Reserve) before. In an effort to manipulate prices.

 

Repo operations are not that unusual. What was unusual about in Sept was when they were doing it (at all time highs) and the amounts.

 

1 minute ago, CBH1926 said:

They have purchased HYG and LQD etf. both of whom have large energy components.

I don’t see why not.

HYG is high grade debt. Unless they have changed the rules they are not allowed to buy crap assets. How do they buy USO when the Russians and Saudi's can come along and pump a zillion barrels and sink the asset?

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17 minutes ago, nuckin_futz said:

4 rounds of QE, TARP program where they basically took responsibility for the troubled entity's toxic assets. Arranging a shotgun wedding between BofA and Merrill Lynch.

 

They have played around with the SPR (Strategic Petroleum Reserve) before. In an effort to manipulate prices.

 

Repo operations are not that unusual. What was unusual about in Sept was when they were doing it (at all time highs) and the amounts.

 

HYG is high grade debt. Unless they have changed the rules they are not allowed to buy crap assets. How do they buy USO when the Russians and Saudi's can come along and pump a zillion barrels and sink the asset?

HYG portfolio includes bonds worth about 1.5b issued to energy companies.

Also if Russians and Saudis pump more oil, it will not be beneficial to them.


https://www.cnbc.com/2020/04/09/fed-fires-an-even-bigger-bazooka-expands-its-shopping-list-to-include-junk-bonds.html

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2 minutes ago, CBH1926 said:

HYG portfolio includes bonds worth about 1.5b issued to energy companies.

Also if Russians and Saudis pump more oil, it will not be beneficial to them.


https://www.cnbc.com/2020/04/09/fed-fires-an-even-bigger-bazooka-expands-its-shopping-list-to-include-junk-bonds.html

Yes but it's high grade debt. If that debt get's downgraded they can't be involved.

 

Not beneficial to them in the long term. In the short term, it's very beneficial to them to bankrupt all the smaller producers.

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3 minutes ago, nuckin_futz said:

Yes but it's high grade debt. If that debt get's downgraded they can't be involved.

 

Not beneficial to them in the long term. In the short term, it's very beneficial to them to bankrupt all the smaller producers.

Most of smaller companies and the ones that are involved in shale drilling will go out business.

The ones that are left will be absorbed by xom and cvx.

 

  • Hydration 1

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I'm curious for people to look into their crystal ball.

 

This was the Dow from 2007-2011. Where I have pinpointed the chart is where I think we are right now in terms of our market and what will happen.

 

Do you think the Dow has bottomed out at 19,100 ?

 

I think we have another huge drop off happening, even lower then 19,100.

 

image.thumb.png.5ae06f7b05a040e4d5b413eceae0afb9.png

 

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16 minutes ago, I.Am.Ironman said:

If we wake up tomorrow and still haven't hear from Kin Jung Un it could make for an interesting day

Just adds to the memories of 2020!

  • Haha 1

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Posted (edited)
13 minutes ago, I.Am.Ironman said:

@HI5 what a crazy year.. we aren't even half way through!

2020, so far ......

 

Coronavirus ( COVID-19)  Out Break 

 

One of the Major incidents of 2020 is the Coronavirus outbreak which is affecting almost all countries of the world.
Coronaviruses are a type of virus. There are many different kinds, and some cause disease. A newly identified type has caused a recent outbreak of respiratory illness now called COVID-19.

 

COVID-19 can be passed from person to person through droplets from coughs and sneezes. COVID-19 has been detected in people all over the world and is considered a pandemic.

Assassination of Iranian General, Qasem Soleimani

There has been tension between Iran and the US for decades, but after the US placed blame on Iranian militia over the death of a US contractor in December 2019, the relationship soured even further. The Baghdad US embassy was attacked, and then on 3rd January 2020, the US launched a drone strike which killed Qasem Soleimani, a senior and influential military figure in Iran.

It has been reported by researchers at theirandeal that Soleimani “made a tactical error becoming too complacent in his travels and communications”. His death was met with mourning and threats of revenge against the US, and on 8th January, Iran launched missiles at bases which were housing the US military in Iraq; however, there were no fatalities.

Ukraine International Airlines Flight PS752

On the same day that Iran launched the airstrikes on the US military housing in Iraq, Ukraine International Airlines flight PS752 crashed in Tehran, killing all 176 people on board. Iran initially blamed technical issues, but soon afterward, it emerged that the plane had been shot down because of ‘human error’. The commercial flight included Iranian citizens as well as passengers from Canada, Ukraine, Sweden, the UK, Afghanistan and Germany.

Harry and Meghan ‘Step Back’ from Royal Family

Another event which took place on 8th January was the controversial, and almost unprecedented, the announcement by Prince Harry and his wife Meghan, the Duke and Duchess of Sussex, that they would be stepping back as senior members of the British Royal Family. The pair intend to become financially independent and to live both in the UK and North America. According to reports in the media, the Royal Family were “disappointed” and “hurt” by the news.

Australian Bushfires

After record-breaking temperatures and extreme drought, Australia has been battling some of the most violent and destructive bushfires in history since June 2019. But by January 2020, the damage had reached catastrophic levels. It is estimated that over 18 million hectares of land and more than 5,900 buildings have been destroyed, with at least 34 fatalities. It is also believed that around 1 billion animals have been killed with the possibility of some endangered species now being extinct. The quality of the air is now also hazardous.

UK’s ‘Brexit’ From the EU

On 31st January 2020, the UK officially left the European Union (EU) — three and half years since the public referendum (vote) of June 2016. In that referendum, 17.4 million people, 52% of voters, chose to leave the EU.

The EU is a political and economic union between 28 European countries. It enables free trade between members without extra fees or checks and free movement of people to live and work in any of the EU countries. The UK had been a member since 1973, and is the first member to leave.

After years of controversy, broken deals and public unrest, the UK left the EU on 31st January, although the country will continue to abide by EU rules until December 31st 2020. This is to allow for the UK and the EU to come to a trade agreement.

Donald Trump Impeachment

After becoming the third US president to be impeached in December 2019, Donald Trump faced his trial in January 2020. The two charges involved abuse of power and obstruction of Congress, relating to the President’s conduct regarding Ukraine. Specifically, it was said that Trump allegedly tried to coerce Ukraine and other foreign countries to provide damaging narratives about Joe Biden, the 2020 Democratic Party presidential primary candidate. This also included information about possible Russian interference in the 2016 US elections.

Had President Trump been found guilty by two-thirds of the Senate, he could have been removed from office and disqualified from ever holding office again. However, on February 5th 2020, the Senate acquitted Trump on both counts — 52 votes to 48.

 

******************

 

Not to mention the Amazon fires, Hockey being cancelled and 2020 taking Neil Peart. :(

 

Did I miss anything?

 

Oh yeah, that sh**head in Nova Scotia.

Edited by nuckin_futz

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Posted (edited)

@nuckin_futz I had forgotten about the Ukraine plane being shot down! The Iran fiasco seems like an eternity ago. I could have sworn that was in november

Edited by I.Am.Ironman
  • Hydration 3

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Does anyone have insight into the renewable energies sector?

 

What about TransAlta (RNW). Has rebounded off its lows however Dividend is around 6%.

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@ Me_

 

You seem well experienced, knowledgeable and a veteran of trading. Curious of your take on how HFT traders and AI bots are handling this. Surely they have to play in it?

1 hour ago, Me_ said:

Decided to share a bit of what I do in the Stock Market.

 

I

 

 

 

 

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Posted (edited)
2 hours ago, wiseupsucker said:

@ Me_

 

You seem well experienced, knowledgeable and a veteran of trading. Curious of your take on how HFT traders and AI bots are handling this. Surely they have to play in it?

 

That’s exactly why I don’t trade during the day. The stocks I get involved with fluctuate 10% to 20% daily on their way up. 
 

Ticker watching during the day would give me a heart attack every time the price went down and a sense of euphoria when the price went up. To me, this is gambling. Emotion cannot compete against computers.
 

The entire stock market is mostly HFT/AI. I’ve already lost in thinking alone. 
 

So when the stock market is closed, the dust has settled and the real price is static. That’s when I can do my work and make sound choices for the next day.

 

I’m not a day trader because I don’t trade nor watch the stock market during the day. But I do my work every night five days a week.

 

I think the best way to fend the potential emotional whims that lead to bad decision and severe losses that come with trading, is to not be involved when the market is open.

 

Nicolas Darvas found that one out the hard way. He was always flying around the world. Early when he finally figured out his own rhythm, he made over $500,000. With that, he felt confident he could get an office in a New York brokers’ firm. He almost went bankrupt.

 

Why? Noise from other investors. 

”Universal is going up and I’m buying”

”Tyocol is sliding I’m getting out of it”

He stopped adhering to his system and started listening to panic.

 

He left that office, almost broke, got himself a hotel room across the street, and told his broker to never call him again whatever bad news he may have to share.

 

He proceeded to make over $2,000,000 in the stock market.

 

That hit me hard. And to this day, it works. Today oil went to negative $40. I have nothing to do with oil in any way because not one oil company is in the 52-week high. Oil doesn’t even get on my radar.

 

But I made money today.

 

Edited by Me_

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