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Nomura Securities stirred things up recently by
saying that oil prices would spike over $220 a barrel if unrest spread
to Syria and Iran. Some investors are taking that bet.
Bloomberg reports that the open interest for June
200 call options for oil has gone from 1,500 to over 8,000. It might seem
unlikely that oil will go over $200 in just 3 months. But if it does,
these traders will make a lot of money.
It should be pointed out that these sorts of price
targets for oil are based on the possibility of further instability in
the Middle East, along with more supply disruptions.
There is reportedly a “day of rage” scheduled for
March 10 in Saudi Arabia. Government officials have been reminding citizens that
protests are illegal. And a few Shiite clerics have been arrested for
demonstrating. If this “day of rage” brings protestors into the street,
oil will probably rally.
Of course, oil prices briefly spike lower
yesterday morning on a report that Qaddafi was seeking a compromise with
Libyan rebels that would allow him to leave the country. This goes to
show that there is a big fear premium in oil right now.
*****European stocks are getting whacked today
after a ECB member said that rates could rise as much as three-quarters
of a point this year. That would put pressure on the U.S. dollar, for
sure.
*****TradeMaster Daily Stock
Alerts trading strategist Jason Cimpl sent me this note
this morning:
According to Fitch,
China has a better than 60% chance of having a banking crisis by
2013. While that may seem unimportant (and it is) long term investors
should use that data to make long term investment decisions. If Fitch was
calling for a recession, it’s not news, but a crisis. That’s
bold.
You may recall that yesterday I said that
China‘s central
government would eventually fall. And I said it might be inflation that
does it. But a financial crisis might do the trick as well.
In case you missed it, Jason’s video seminar
“How to Trade with the Trend for Maximum Profits” aired
on Friday.
In this 30 minute video, trading strategist
Jason Cimpl shares
some of his techniques for sticking with a rally to generate gains like
40% and 17% on CCME, 50% on ALJ and 55% on HILL.
There’s an “on demand” replay available
HERE if
you’d like to get some trading/investing education from a top-notch
analyst.
*****PIMCO’s bond guru Bill Gross is warning that
Treasury bonds will suffer a large decline when the Fed ends QE2 in June.
Gross says that the Fed has bought around 70% of the Treasuries sold
since QE2 started.
Yes, the Fed is financing the U.S. deficit.
I’ve long felt that the end of QE2 is an important
catalyst for the stock market. And I think it’s safe to say that it
hasn’t been priced in yet.
If unemployment continues to improve, the end of
QE2 could actually be a bullish event. But the Fed would need to show
some confidence that the U.S.
economy is improving and that further stimulus is
not needed. If the Fed simply stated that it ran out of money, that
probably wouldn’t be as good.