The Hedge Fund Industry has benefited greatly from the 5 year bull run off the March 2009 lows. As the saying goes, "A rising tide lifts all boats." Hedge funds can leverage their capital 10, 20 even 30 times, and this leverage can create large returns when the times are good. This is what happened in 2006 and 2007, when every institution was clambering to buy Mortgage Backed Securities, Housing Stocks and Bank stocks. We all know what happened when Bear Stearns and Lehman Brothers collapsed, causing the Great Recession. Well, history is repeating itself once again as big institutions are heavily leveraged with the Yen carry trade; where they are short the Japanese Yen and long US stocks and futures contracts. Over the past month we have seen the volatility kick in as this trade begins to unwind. If everyone runs for the exit door at the same time, then you get intense selling pressure. Over the next few weeks I wouldn't be surprised to hear of an institution going bust from being long the market at the highs and now being forced to liquidate its positions. As Nick Santiago often quotes Mark Twain, these words apply quite well today, "history doesn't repeat itself, but it does rhyme." The one thing we do know is there will always be a trade on one side of the market or the other, our only job is to read the charts correctly and enter trades at the highest probability of times!
Evan Poechman [more]
This morning, the leading defense and aerospace company Lockheed Martin Corporation (NYSE:LMT) is trading lower by $1.74 to $177.44 a share. Today, the stock seems to be under pressure ahead of its earnings report which is tomorrow. Short term day traders should note that Lockheed Martin Corp stock will have intra-day chart support around the $173.17 level. This was level where the stock surged higher on October 16, 2014. This support area will likely be defended again if tested today. [more]
Lakeland Industries, Inc. (NASDAQ:LAKE) has fallen from a 52 week high of $29.55 to a low today of $13.66. All this in five trading days as Ebola fears have subsided. There have been no new cases of the deadly virus reported and Lakeland Industries had soared too close to the sun (was too overbought). A fall was obvious in the cards and has taken place. However, as it has fallen, the value has started to get attractive, especially on a technical level. The daily 20 moving average is almost at hand and this could cause a very short term bounce in the stock. The bounce could be 20-30% on a technical retrace. The 20 moving average on the daily chart is $13.18. [more]
Today the markets are seeing some ugly declines and there seems to be no bottom in sight. Everyone is looking at Ebola as the culprit that is spooking the markets. While this might be true, I am looking at Energy Select Sector SPDR (ETF) (NYSEARCA:XLE) as the reason this market has seen this dramatic fall recently. While this market might have some more downside to it, I am looking at the weekly chart of Energy Select Sector SPDR (ETF) (NYSEARCA:XLE) and we are into a very good support area here around $77.25. In my opinion this is the chart that will dictate the market direction and not Ebola.
This past weekend Canadians celebrated their Thanksgiving day weekend. The holiday isbasically the same as the American version, just a little earlier in the year. There are manysimilarities that Canadians have with their American cousins and this includes stocks. In Canadathe main index is the TSX, it is where are all the major companies are listed and is consideredCanada's financial HQ. While this index is a great place to find basically any Canadian equity, itis however mainly comprised of the 3 main sectors. Those sectors are: financials, energy andmaterials. These are the three sectors that make up the majority of weighting in the index andbasically limit Canadian investor's ability to diversify their portfolio.
So what is the alternative?
This is where a Canadian investor/trader needs to look south of the border and think aboutopening up a U.S. dollar denominated trading account. How does one go about doing so? This is avery easy process as basically all Canadian brokers have this option available to them. Whetherit's through one of the big banks or some boutique brokerage firm, you will be able to open thistype of account. By opening a USD trading account, an investor will be able to buy and sell anyequity that trades publicly on the U.S. exchanges such as the NYSE and Nasdaq. While thisinformation is nothing groundbreaking or new, it is meant to help inform that person who is notaware of this type of option.