Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog , anticipating which ETFs will be in play next. This week, among his blogs featured below, he wrote about developments in Human Genome, Ford and Treasury bonds.
With a 1.1% gain in the bag today, the S&P 500 is 0.5% away from its June intraday peak of 956; the Dow Jones Industrial Average needs a 0.6% rally to crack its intraday high.
The fund has done terrifically during 2009 with a 77.52% year-to-date return through July 22. However, the recent trouble in the automotive sector is likely to persist. Investors should be cautious of holding too much of this fund in their portfolios, as volatility is likely to return in the near future.
Higher interest rates are deflationary, bullish for the dollar and bearish for commodities. Lower rates are bearish for the greenback and, if triggered by quantitative easing, they could be extremely bullish for precious metals. It makes sense if you think ahead a few months. A failed auction, or successful one at much higher rates, means the government will have to cut back on its spending plans, mortgage rates will jump (killing any housing recovery) and corporate borrowing rates will rise. A successful auction means the government can spend away, people can borrow to buy homes and corporations can roll their debt. Yesterday, TBT had a near 4% increase, UDN was flat, IAU fell 0.1% and SLV gained 0.7%. Traders who choose to specifically play the short-term changes in the auction market should remember that most investors sold before the auctions completed. Those who want to play the opposite trend can buy iShares Barclays 20+ Year Treasury ( TLT). Direxion does offer triples on the long and intermediate Treasury bonds as well. Finally, there was an interesting divergence again in First Trust ISE-Revere Natural Gas ( FCG) and U.S. Natural Gas ( UNG). FCG popped 3.7% as natural gas stocks rose with the market but UNG sank 6.7% on higher inventories and an overall bearish picture. FCG outperformed UNG during the March-June market rally, but underperformed during the June-July slide. With the market back to form, I expect FCG to gain a leg up on natural gas. For a more detailed argument in favor of FCG, see my article on the two ETFs.