Market Inquisitor

Tamen Dubito

Oil (USO) Position & Market Update

Today oil prices collapsed ~5% after a large 8 million barrel inventory build. I have closed half of my position at a ~50% gain before commissions and will likely close the remainder within the next 2 weeks. The move in the oil price was likely an overreaction to the headline, and its time to get constructive on oil prices and E&P equities.

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Short USO (Oil) – A Tempting risk/reward

The end of 2016 markets performance was marked by a strong surge into year end. This of course includes the oil market, which benefited from an OPEC deal to reduce production and strong commitment from Saudi Arabia for further cuts. But now three reasons are creating a favourable risk/reward for shorting oil. Uncertainty regarding OPEC deal and US shale producers, speculator exuberance and complacent option market volatility.

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Volatility rising in China Mainland again

The wild swings of the Chinese mainland market via ASHR CSI 300 China A-Shares ETF in 2015 have reserved a special place on my watch list. In essence, Chinese traders with new access to capital and leverage pushed up valuations of Chinese stocks, followed by 3 major collapses in price and government intervention finally stabilizing markets. This may become interesting again.

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US Election Trade: IShares Mexico ETF

Arguably the best gauge for the outcome of the US election has been the Mexican Peso, trading in lockstep with Trump’s polling results. For investors that don’t trade forex, the iShares MSCI Mexico Capped ETF (EWW), which tracks the MSCI Mexico IMI 25/50 Index, works just as well.

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Gold Positioning shift

With gold treading water above the key $1250, I created some analytics to take a closer look at positioning.

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Deutsche Downtrend

As part of her re-election campaign Angela Merkel, Germany’s chancellor re-affirmed the promise that her government would not bail out Deutsche Bank (DB) in the case of failure.

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