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Market Commentary

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Arrowhead Options Are Pricing In 20%+ Move This Month

Unusual Options Activity

On April 1st, 7,100+ Apr $8 calls traded with the majority purchased for $0.25-$0.60. Prior to this action, the $8 calls already had the largest open interest in the April options expiration. Call activity was 6x the average daily volume, as implied volatility soared 52.4% to 137.44. The jump in IV is significant since it brings the expected move through April options expiration to $1.70, up or down.

Fundamentals

On March 5th, Arrowhead Research acquired Novartis' RNA...

Apr 2, 2015
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Correcting the Distortion In The Picture

I am not sure what to think today, as the news is, well, both conflicting and seemingly positive overall, but, and still, the market is not happy. US manufacturing came in at a five-month high, but the ADP employment report missed its target; yet the manufacturing report from Markit also pointed out that US manufacturers are hiring . Yes, manufacturing employment is a small part of the US economy, but, nevertheless …

What about the “sluggishness” in small business hiring, you might ask? An ar...

Apr 1, 2015
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Oil – A Quick Move To The December Lows

We continue to play the range bound crude-oil markets.  Now, with potential deal with Iran very close to some resolution, we want to try and get back in. I think the initial reaction will be to the downside, with the market thinking the Iran is promising up to 1- million barrels of production per day. 

If there is deal done or not is not really at issue.  The US administration has far too much invested in this process already to walk away without some deal.  But even if they get a deal, it is...

Apr 1, 2015
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Bean Surprise?

We started off the weeks demand with a weekly export sales report.  Bean sales for future shipment were 505-thousand metric tons, up 4% from the previous week and up 54% from the four week average.  Yet prices moved lower off the release of the report, as China our number one bean buyer, was in for only 128-thousand.  

On the surface, the 505 looked friendly to bullish to many, but it only matters what China’s number is because they buy 90% of our exportable soy beans.  China’s purchasing of ...

Apr 1, 2015
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Gap Hunt

The expected range-bound market on Tuesday lasted until the last hour of trading. Once the key 4340 level was taken out, sellers dominated into the closing bell.

During bearish regimes in the futures markets, traders go on gap hunts. On Tuesday the market closed the opening down-gap fairly quickly and then proceeded to thoroughly obliterate Monday’s “China” gap .

The only significant remaining gap in this region is between 4209 and 4221. Mark it on your charts; I suspect that we are headed th...

Apr 1, 2015
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Featured Stories

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Firemen, Retiring Boomers, and Student Debt

Below is a chart that a friend of mine brought to my attention from the Fireman’s Annuity and Benefit Fund of Chicago, which is one of Chicago’s pension funds.   The problem of unfunded liabilities shown in this chart is stark, with liabilities going up and the market value of assets trending slightly lower.  In fact, the market value of assets is below the level of 1999. And these really aren’t small numbers; the gap is nearly $3 billion. 

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Now I don’t mean to say that all pensions are just...

Apr 1, 2015
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Avoid the Wash & Rinse Cycle

I’ve been contributing a daily review and forecast for the S&P or Nasdaq futures for over a month because this is the market I personally trade. However, individuals coming to disintermediated, zero-sum markets such as futures from other “normal” markets such as equities, may not be aware of the critical differences.

Asset markets such as stocks serve institutions and the general public. About 50% of households are invested in the stock market, whereas futures markets have traditionally serve...

Mar 30, 2015
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The Importance Of Follow Through -- Be Patient

Many of us are trained to look for tops and bottoms and game the markets accordingly.  For the most part, this is the way our brains work; yet, intuitively speaking, that is just the wrong approach.  Finding tops and bottoms is generally a loser's game, but following through after seeing a top/bottom take place can be the most lucrative profit opportunity. 

Our minds think in terms of finding the best value, letting prices fall to levels that we are willing to accept.  Wal-Mart is a great exa...

Mar 30, 2015
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Oil-Dollar Breakdown, Higher Prices To Come?

Oil prices have been under pressure as the dollar soars. For many, they believe that the strength in the dollar is a major reason why oil will not be able to rally. Yet the truth is that while in recent years, the dollar-oil inverse correlation has been very tight, throughout history that has not always been the case. In fact, in the oil market, as well as other commodities, we may be at the verge of a total breakdown of what has been considered to be an almost dogmatic truth - which is as th...

Mar 27, 2015
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Las Vegas Sands (LVS) – A Value Play on the Rising Asian Consumer and the U.S. Economic Recovery

Over the last 12 months, Macau casino gaming stocks are down by an average of 50% as the world’s largest casino-gaming market experienced an unprecedented decline in gross gaming revenues . GGR in Macau experienced its first yearly decline since data became publicly available in 2002, falling by 2.6% last year to $44 billion as a result of the Chinese government’s anti-graft movement, Macau’s hotel room constraints, and a slowing Chinese economy.

The first two months of 2015 was more of the s...

Mar 25, 2015
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