• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 3 hours Science: Only correct if it fits the popular narrative
  • 3 hours Crazy Stories From Round The World
  • 6 hours What are the odds of 4 U.S. politicians all having children working for Ukraine Gas Companies?
  • 11 hours EU has already lost the Trump vs. EU Trade War
  • 1 day Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaign to lower expectations, prop up price.
  • 4 hours China's Renewables Boom Hits the Wall
  • 1 day ''Err ... but Trump ...?'' *sniff
  • 6 hours Do The World's Energy Policies Make Sense?
  • 5 hours Forget out-of-date 'dirty oil' smear, Alberta moving to be world's cleanest oil industry
  • 5 hours Impeachment Nonsense
  • 1 day Tesla Launches Faster Third Generation Supercharger
  • 11 hours Water, Trump, and Israel’s National Security
  • 1 day Passerby doused with flammable liquid and set on fire by peaceful protesters

Breaking News:

Russia Plans To Boost Crude Oil Exports

Alt Text

What Beijing’s Retaliation Means For Oil

China has fired back against…

Alt Text

Hated Energy Stocks May Be About To Rebound

Energy stocks are remarkably cheap…

Alt Text

The Billion Dollar Bet On An Oil Price Crash

Mexico’s billion dollar oil hedge…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Premium Content

Trade Alert for the (SSO)

After the Dow’s impressive 250 point blast off to the upside yesterday, my phone started ringing off the hook. Fundamental and technical analysts around the world were screaming at me that a major breakout was at hand, it was off to the races, and the “RISK ON’ trade was back from the dead in all its glory. The train was leaving the station, and if I didn’t jump on now, I would be the one getting post cards from the successful aggressive traders visiting their Swiss bank accounts.

There was more confirming price action than Sarah Palin Bumper stickers at a National Rifle Association rally. The Treasury bond market took a nosedive, my TRADE ALERT yesterday to buy the (TBT) smelling like roses. The Australian dollar (FXA), a hedge fund darling because of its high yield, bounced hard off the AUS$0.9550 level. Crude oil rocketed from $83.90 to $87. Copper popped from $3.79 a pound to $3.94. The equity price action was impressive globally, from Indonesia to China (FXI), Poland (EPOL), Australia (EWA), Chile (ECH), and more. Suddenly, the path to take couldn’t be more clear if it was outlined by high intensity landing lights.

Let me lay out the fundamental case for US stocks here. The American economy is currently enjoying a growth spurt, possible at a 3.5% annualized rate, while Japan and Europe drag. This is what the collapse of the Euro is telling us. One need look no further than US auto sales for November, which grew at a white hot 17% YOY rate, and is a huge driver for the broader economy. This is why I have three auto names in my model portfolio, Nissan (NSANY), Toyota (TM), and Tata Motors (TTM). This is what the collapse of the Euro is telling us. Quantitative easing is benefiting equities more than any other asset class, as its simulative effects are clearly working. The 30% of active managers that are underperforming the index are playing catch up by pouring money into the best performing names. Yesterday’s blistering move is giving traders the trigger they were waiting for.

The best way to participate here is through the ProShares Ultra Index ETF (SSO), a 200% leveraged bet that the broader stock market goes up. Buy a half position at the opening today at $44, or 10% of your total portfolio, and the other half at the opening tomorrow after the release of the November nonfarm payroll figures. If we get a bad number, you’ll buy the second lot lower and cut your average price. A good number will send the market off to the races again and raise your cost, but you will be in the money on you total position. Keep in mind that with a 20% position in a double leveraged instrument, you are 40% long the US market, a decent sized position.

The technical set up is looking great. Look at the chart below and see how hard we bounced off the 50 day moving average. I think a New Year allocation liquidity burst could give this trade a six week life, and could take us as high as 1,348 in the S&P 500, or 12.1% higher than yesterday’s closing price. That should take the (SSO) up 24%. Put a stop below at $41.70, well below the 50 day moving average. That means you are risking 5.2% to make 24%, a ratio of 4.6 to one, which is respectable.

What could go wrong with this trade? Congress fails to compromise on the extension of the Bush tax cuts, putting a double dip recession back on the table. My guess is that the opposite will happen. After much blustering, saber rattling, and threats of gridlock, which will cause brief scares for the market, some type of compromise will be reached. Congress will correctly conclude that the public is sick to death of their antics and do to right thing. The stock market should do hand flips and summersaults when this happens. See you in Zurich.

Proshares Ultra

S&P 500

By. Mad Hedge Fund Trader




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play