Stock In Focus: United State Oil Fund (USO)

This Oil Fund has risen 77% since reaching a low of 22 in February of this year.

Looking at the chart of USO above, it is above its 20 and 40 day moving averages which is bullish for USO. It is also above its 100 day moving average and is close to but not yet above its 200 moving day average. If it does move above its 200 moving day average, USO could continue to move higher since this is an important level for traders and many traders would buy stocks once a stock moves above its 200 moving day average.

ADX is close to 30 which is indicating that a potential strong uptrend is developing for USO.

MACD is at 2 and above its signal which is bullish for USO. MACD is also seen to be trending upwards which is bullish for USO.

Slow Stochastic is at 86 which is at overbought levels so it is possible for a correction to occur sometime this week. However since USO is above its moving day averages and is in an uptrend, even at such high stochastic levels, it could still move higher. However, the US dollar has been badly battered in recent weeks and it is possible that if the US dollar rises, this would have an adverse effect on commodities including oil. So it is possible that USO could experience a correction this week.

USO Fund Profile

The fund seeks to reflect the performance, minus expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund invests in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil items such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil. The fund is nondiversified.

Total Expense Ratio 0.45%
Total Net Assets 2.80Billion USD
Fund Inception Date: 10-Apr-06
Legal Type: Exchange Traded Fund

TOP 10 HOLDINGS of USO ( 50.00% OF TOTAL ASSETS)

F/C Ws Crude (Fut) 3.49% of Assets
F/C Wti Crude (Fut) 20.43% of Assets
Wti Crude (Fut) 26.08% of Assets

The following is Energy Information Administration (EIA) forecast for U.S. Crude Oil (please note that forecasts for energy prices are difficult to determine due to price volatility):

Consumption: Due to the weak economy, total consumption of liquid fuels and other petroleum products is projected to contract by 550,000 bbl/d or barrels per day (2.9 percent) in 2009, including a decline of 220,000 bbl/d (5.5 percent) in distillate fuel consumption and about 100,000 bbl/d (6.9 percent) in jet fuel consumption.

Motor gasoline, however, is projected to increase by 30,000 bbl/d (0.3 percent) as a result of the substantial declines in retail prices from last summer and the stabilization of real disposable income. The gradual economic recovery in 2010 is expected to contribute to a 300,000-bbl/d (1.6 percent) increase in total liquid fuels consumption.

Production: Total domestic crude oil production averaged 4.96 million bbl/d in 2008, down from 5.06 million bbl/d in 2007 (U.S. Crude Oil Production Chart). Production is expected to increase to an average of 5.27 million bbl/d in 2009 and 5.32 million bbl/d in 2010, including an estimated expectation, with a wide range of uncertainty, of hurricane‐induced outage of about 4.5 million barrels for the offshore region in 2009.

Prices: WTI crude oil prices, which averaged $99.57 per barrel in 2008 (Crude Oil Prices Chart), are projected to average $58.70 per barrel in 2009 and $67.42 per barrel in 2010. However, energy price forecasts are highly uncertain.

One measure of how the market reflects this uncertainty is the sizable participation in near-term options on crude oil futures contracts at strike prices that are significantly different from current futures market prices. This reflects the tendency for crude oil prices to fluctuate within a wide range in a short period of time.

EIA projects that regular-grade motor gasoline retail prices, which averaged $3.26 per gallon in 2008, will average $2.33 per gallon this year, up 21 cents per gallon from last month’s Outlook projection. These prices are projected to rise to $2.56 per gallon in 2010, 26 cents above that projected in the previous Outlook.

Diesel fuel retail prices, which averaged $3.80 per gallon in 2008, are projected to average $2.40 per gallon in 2009, up 14 cents from the previous Outlook. Diesel fuel retail prices are projected to average $2.67 per gallon in 2010, up 19 cents per gallon from the previous Outlook.



References

Yahoo Finance
Bigcharts.com
Energy Information Administration



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To appreciate beauty; to find the best in others; to leave the world a bit better whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded.

Ralph Waldo Emerson

Weekly Stockmarket Report

Top News as reported by Associated Press:

TV shows were replaced by the hiss of static in perhaps 1 million U.S. homes Friday as stations ended their analog broadcasts and abandoned the transmission technology in use for decades.

The vast majority of households that rely on antennas for their TV signals were prepared for the shutdown, but many people remained vexed by the challenge of setting up digital reception.

Historic anti-smoking legislation sped to final congressional passage on Friday -- after a bitter fight lasting nearly a half-century -- and lawmakers and the White House quickly declared it would save the lives of thousands of smokers of all ages. Even more important, they said, the measure could keep countless young people from starting in the first place.

President Barack Obama, admittedly still struggling with his own nicotine habit, saluted passage of the bill, which he will soon sign.

Specifically, the measure for the first time will give the Food and Drug Administration authority to regulate what goes into tobacco products, demand changes or elimination of toxic substances and block the introduction of new products.

Gas prices rose Friday for the 45th consecutive day as summer travelers hit the highways and refineries hold back on fuel production.

Pump prices added less than a penny overnight to a new national average of $2.639 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Gas is 37.2 cents a gallon more expensive than last month. Yet prices have risen all year after slumping to around $1.60 in December.

Crude prices are surging as well, but not as consistently as gasoline.

Under withering criticism in Congress, General Motors and Chrysler executives on Friday called the closings of hundreds of dealerships painful steps needed to right-size the auto giants. Down-on-their luck dealers said the moves would needlessly devastate their local economies and livelihoods.

GM CEO Fritz Henderson told the House Energy and Commerce Committee's oversight and investigations subcommittee the dealer cuts were "quite painful" but necessary to save over 200,000 jobs at GM's remaining dealers. Chrysler Deputy CEO Jim Press said the cuts were part of the shared sacrifices by the United Auto Workers union, bondholders and others needed to avoid liquidation.

The Energy Department is moving forward on a futuristic coal-burning power plant in Illinois that the Bush administration had declared dead.

Energy Secretary Steven Chu said Friday that reviving the FutureGen plant is an important step that shows the Obama administration's commitment to carbon-capture technology.

The Energy Department will commit more than $1 billion to the project, under the agreement announced on Friday, with the government's contribution drawn almost entirely from federal economic stimulus funds.

GlaxoSmithKline said Thursday after the World Health Organization declared a global flu epidemic that it would be ready within weeks to begin large-scale vaccine production. Sanofi-Aventis also said it had started working on its own version. On Friday, Swiss pharma giant Novartis announced it had created an experimental vaccine that has not been tested in people. Novartis' vaccine was made via a cell-based technology that may prove faster than the traditional way of making vaccines, which relies on chicken eggs.

WHO and others estimate that about 2.4 billion doses of pandemic vaccine could be available in about a year.

China's retail sales, bank lending and industrial output grew in May as the government spent heavily on a stimulus to boost the world's third-largest economy as exports plunged, data showed Friday.

The latest report, on top of figures Thursday showing May investment rising, suggested the stimulus spending was helping to make up for a collapse in demand for exports that wiped out millions of Chinese factory jobs.

Retail sales rose 15.2 percent in May from a year earlier, up from April's 14.8 percent growth, the National Bureau of Statistics reported. Industrial output rose 8.9 percent, rebounding from April's lackluster 7.3 percent and exceeding March's 8.3 percent rate.

Now take a look at the chart of the CBOE Volatility Index or VIX below:





















The CBOE Volatility Index reflects investor sentiment and is typically seen as investors' fear gauge. VIX moves in inverse direction to the overall stockmarket i.e. when investors' fear level rises, VIX rises and stockmarket falls and vice versa.

VIX rose to historically unseen levels in October 2008 when it reached high 80s but since then has been downtrending and is now at more normal level just below 30. So investors are feeling a lot calmer about the U.S. and global economy in general and about the state of the stockmarket.

Investors are expecting some form of a recovery at the end of the year and this has caused a huge rally that has lasted for the previous three months.

At present, VIX is at 28.15 and is below both its 20 and 40 day moving average, which is bearish for VIX.

The ADX is below 20 which shows that VIX is trading within a range and is not in an uptrend or downtrend.

MACD is at -1.577 which is just below 0 and so is close to neutral i.e. it is neutral and neither bullish or bearish for VIX.

Slow Stochastic is at 33.826 which is close to the low threshold of 20, this means that there is a greater possibility of VIX rising rather than falling during this week. However since VIX is still below its moving averages any move upwards for VIX will not be with strong momentum. Investor sentiment remains neutral to calm at the moment.

Please take a look at the chart of the S&P 500 Index below:





















The S&P 500 Index is stagnant around the 950 level but has crucially stayed above the 200 moving day average which is a significant level observed by all serious traders. This is bullish for the market.

The index is above its 20 and 40 day moving averages, which is bullish for the index.

ADX is about 23 which means that the index and the overall stockmarket is trading within a range and is neither in a strong uptrend or downtrend.

MACD is at 17 which is positive and bullish for the index.

Slow Stochastic is at 60 which is near midway between its high and low thresholds and thus this is neutral for the index. This means that the index could either go up or down this week or remain around the 950 level.

These indicators are indicating that the market has stayed resilient and staying above the crucial level indicated by the 200 day moving average. Investors are feeling calmer and are still cautiously optimistic about stocks and the pending economic recovery.

However whether the rally can continue will depend on what investors think about rising energy prices and rising interest rates. If investors think that these costs will impede on the potential economic recovery, then the stockmarket could change course and move downwards. However, if investors think that despite these costs, economic recovery will still be possible, then the market could continue to move upwards.

Overall, investor sentiment still seem to be cautiously bullish about stocks and the economy in general. Whether, the market will continue to be resilient during this week will depend on investor sentiment in the face of new data or news.

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To appreciate beauty; to find the best in others; to leave the world a bit better whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded.

Ralph Waldo Emerson

Stock In Focus: Baidu Inc (BIDU)

Take a look at the chart for BIDU below:





















In the past six months BIDU stock price has increased 200%.

Looking at the chart above, BIDU is above its 20 and 40 day moving averages which is bullish for BIDU. Crucially, it is also above its 200 day moving average which is an extremely bullish signal according to traders.

The ADX is above 50 which shows that BIDU is in a strong uptrend.

The MACD is also positive and far above its signal, both bullish signs for BIDU.

The Slow Stochastic is at 91.944 and is above its signal which is bullish for BIDU. Being at 91.944 means that it is above its high threshold of 80 and is at overbought levels. However, since the stock is in a strong uptrend, the BIDU stock price could still continue to rise with minor corrections from time to time.

So all these indications point to very bullish signals for BIDU.

The following is a company profile of Baidu Inc:

Baidu, Inc. provides Chinese language Internet search services primarily in China and Japan. The company offers a Chinese language search platform that enables users to find online information, such as Web pages, news, images, and multimedia files.

Its products include Baidu Web Search that allows users to locate information, products, and services using Chinese language search terms; Baidu Post Bar and Baidu Knows, which provides users with a query-based searchable community; and Baidu News that provides links to local, national, and international news.

The company also provides Baidu MP3 Search that provides algorithm-generated links to songs and other multimedia files; Baidu Image Search to search various images on the net; Baidu Video Search to search for and access through hyperlinks of online video clips that are hosted on third parties' Web sites; and Baidu Space to create personalized homepages in a query-based searchable community.

In addition, it offers Baidu Hi, an IM service; Baidu Youa, an online C2C platform; Baidu Safety Center for virus scanning, system repair, and online security evaluations; Baidu Desktop Search, a downloadable software that enables users to search various files saved on their computer; Baidu Sobar, which makes search function available on every Web page that a user browses; Baidu Anti-Virus for anti-virus software products and computer virus-related news; and Baidu Internet TV that allows users to search, watch, and download various shows and programs.

Baidu, Inc. serves SMEs and corporations, as well as e-commerce, IT services, consumer products, electronic products, machinery, manufacturing, medical, entertainment, education, franchising, financial services, real estate, ticketing, and tourism industries.

The company was formerly known as Baidu.com, Inc. and changed its name to Baidu, Inc. in December 2008. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, the People's Republic of China.

These are top institutional holders of BIDU stocks:

MORGAN STANLEY 1,729,241 shares 5.01%
JOHO CAPITAL, L.L.C. 1,586,638 shares 4.60%
THORNBURG INVESTMENT MANAGEMENT INC. 1,178,788 shares 3.42%
Edinburgh Partners Limited 1,077,300 shares 3.12%
BAILLIE GIFFORD AND COMPANY 817,972 shares 2.37%
FMR LLC 817,800 shares 2.37%
Calamos Advisors LLC 756,210 shares 2.19%
Credit Suisse/ 746,185 shares 2.16%
WELLINGTON MANAGEMENT COMPANY, LLP 730,072 shares 2.12%
Coatue Management, LLC 544,281 shares 1.58%

Analysts expect earnings for Baidu to increase by 41.5% next year:

Earnings Estimates
Current Qtr Jun-09 Average EPS Estimate 1.43
Next Qtr Sep-09 Average EPS Estimate 1.71
Current Year Dec-09 Average EPS Estimate 5.78
Next Year Dec-10 Average EPS Estimate 8.18

The following are Baidu's first quarter earnings announcement as reported by PRNewswire:


First Quarter 2009 Highlights
-- Total revenues in the first quarter of 2009 were RMB810.7 million
($118.6 million), a 41.1% increase from the corresponding period in
2008.
-- Operating profit in the first quarter of 2009 was RMB198.5 million
($29.1 million), a 34.7% increase from the corresponding period in
2008.
-- Net income in the first quarter of 2009 was RMB181.1 million ($26.5
million), a 23.5% increase from the corresponding period in 2008.
Diluted earnings per share ("EPS") for the first quarter of 2009 was
RMB5.22 ($0.76); diluted EPS excluding share-based compensation
expenses (non-GAAP) for the first quarter of 2009 was RMB5.89
($0.86). Costs and expenses related to Baidu's Japan operations for
the first quarter of 2009 were RMB39.5 million ($5.8 million), which
reduced diluted EPS by RMB1.14 ($0.17).



Reference

Yahoo Finance
Bigcharts.com
PRNewswire Asia


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To appreciate beauty; to find the best in others; to leave the world a bit better whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded.

Ralph Waldo Emerson