Trends I'm Watching

Best Performing ETFs for the Past Week

Trend: PowerShares DB Crude Oil Dble Short ETN (DTO) led the one week performance (+18%). UltraShort DJ-AIG Crude Oil ProShares (SCO) and Direxion Daily Real Estate Bear 3X Shrs (DRV) were the second and third best performers, respectively.

The 20 ETFs with the best one week performance through 9/25/2009 tracked by Morningstar are shown below.

Source: MSN Money Exchange Traded Funds (ETFs) Performance Tracker

Name	Ticker	Category	Holdings	Morningstar	Last Price*	1-Wk	4-Wks	13-Wks	YTD	52-Wks	3-Yrs	5-Yrs
PowerShares DB Crude Oil Dble Short ETN	DTO	Specialty - Natural Resources			$91.33	18.49	18.73	23.85	-37.46	143.81	N/A	N/A
UltraShort DJ-AIG Crude Oil ProShares	SCO	Specialty - Natural Resources	holdings		$19.09	17.50	16.00	13.12	-39.69	N/A	N/A	N/A
Direxion Daily Real Estate Bear 3X Shrs	DRV	Specialty - Real Estate			$21.03	15.68	-21.94	N/A	N/A	N/A	N/A	N/A
ELEMENTS CS Global Warming ETN	GWO	Specialty - Natural Resources			$7.14	15.46	-0.17	19.00	37.89	-3.38	N/A	N/A
UltraShort MSCI Mexico InvstMt ProShares	SMK	Growth	holdings		$37.98	11.38	6.09	-31.62	N/A	N/A	N/A	N/A
UltraShort Silver ProShares	ZSL	Specialty - Precious Metals	holdings		$5.86	10.98	-24.39	-33.41	-66.54	N/A	N/A	N/A
PowerShares DB Commodity Dble Short ETN	DEE	Specialty - Natural Resources			$70.43	10.62	11.56	19.15	-4.50	142.61	N/A	N/A
UltraShort FTSE/Xinhua China25 Proshares	FXP	Pacific Stock	holdings		$9.64	10.30	-5.95	-22.76	-72.73	-89.06	N/A	N/A
Direxion Daily Financial Bear 3X Shares	FAZ	Specialty - Financial	holdings		$22.25	10.15	-5.72	-53.84	-93.77	N/A	N/A	N/A
PowerShares DB Base Metals Dble Shrt ETN	BOM	Specialty - Natural Resources			$26.65	10.12	1.64	-27.44	-62.81	-14.91	N/A	N/A
PowerShares DB Crude Oil Short ETN	SZO	Specialty - Natural Resources			$56.12	10.02	9.19	11.35	-15.36	80.33	N/A	N/A
UltraShort Real Estate ProShares	SRS	Specialty - Real Estate	holdings		$10.02	9.87	-13.62	-51.00	-80.24	-86.32	N/A	N/A
Direxion Daily Mid Cap Bear 3X Shares	MWN	Growth	holdings		$33.35	9.69	-10.27	-44.66	N/A	N/A	N/A	N/A
UltraShort Basic Materials ProShares	SMN	Specialty - Natural Resources	holdings		$11.29	9.51	-12.28	-39.95	-70.96	-58.27	N/A	N/A
Direxion Daily Small Cap Bear 3X Shares	TZA	Small Company	holdings		$12.50	9.17	-10.14	-45.03	-73.90	N/A	N/A	N/A
Direxion Daily Energy Bear 3X Shares	ERY	Specialty - Natural Resources	holdings		$14.84	7.54	-10.71	-32.91	-60.27	N/A	N/A	N/A
Direxion Daily Dev Mkts Bear 3X Shrs	DPK	World Stock	holdings		$17.98	7.42	-9.50	-43.39	-70.03	N/A	N/A	N/A
Rydex Inverse 2x S&P Select Sector Fincl	RFN	Specialty - Financial	holdings		$6.13	7.36	-2.23	-39.49	-81.28	-79.42	N/A	N/A
UltraShort Financials ProShares	SKF	Specialty - Financial	holdings		$26.19	7.07	-3.00	-38.51	-74.58	-74.21	N/A	N/A
UltraShort MSCI Europe ProShares	EPV	Growth	holdings		$25.11	7.03	-7.03	-36.11	N/A	N/A	N/A	N/A

Disclosure: We may own any EFT above at any time.

Please verify the performance of any ETF before investing,

The Illusion of Dollar Pricing

Trend: The weakening dollar makes the 2009 gains in the S&P 500 look much better.

There are many reasons that the political leaders will let the dollar weaken, even while they say they "favor a strong dollar policy." Many of consequences are subtle and unpublicized.

J.S. Kim at The Underground Investor shows us one of the illusions created by a weaker dollar. Click on the link to see the charts.

Link: A Market Rally in Monopoly Money | The Underground Investor

When priced in US dollars, the US stock market appears to have rallied significantly since the beginning of the year, now up 18.31% since January 1st.

...if we price the behavior of the S&P 500 in terms of gold, the gain in the S&P 500 since the beginning of the year shrivels to a 3.92% rise.

When we price the behavior of the S&P 500 in terms of silver, the gain in the S&P 500 evaporates and becomes a 21.36% loss.

Many Foreclosures May Not Be Legal

Trend: A Kansas Court ruling means foreclose on homes with securitized mortgages in Kansas just got a lot harder, and the ruling could spread to the rest of the nation.

MERS (Mortgage Electronic Registration Systems) is a key component of this issue. Below are excerpts from commentaries by Barry Ritholtz (The Big Picture) and Karl Denninger (The Market Ticker).

Here's the big question: How will this impact home builders, home sales, banks, and mortgage bondholders?

Link: Mortgage Electronic Registration Systems Loses Legal Shield | The Big Picture.

In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. (Other than GlobalResearch.ca, I have yet to see any MSM coverage of the issue). The Court stated that MERS’ relationship is not that of a true party possessing all the rights given a buyer. Hence, the court ruled:

Alternative Weighted ETFs Can Boost Gains

Trend: A S&P 500 index equal weighted ETF (RSP, +29% YTD) has almost doubled the performance of the giant traditional cap-weighted ETF (SPY, +15% YTD) in 2009.

Ron Rowland at Money and Markets provides an excellent overview of the weighting options available to ETF investors. Excerpts below.

Link: Get Creative With Alternative Weighting ETFs | Money and Markets

Weighting is simply the way stocks are distributed in a portfolio. An index is nothing more than a publicly-available list of stocks that are weighted according to some sort of strategy. The S&P 500, for example, consists of 500 large U.S. stocks that are selected by a committee at Standard & Poor’s. Like most indexes, the S&P 500 is “cap-weighted.” Each stock receives an allocation equal to its proportional market capitalization — the total value of all outstanding shares at the latest price.

With hundreds of stocks in the index, it’s obvious that a few large companies dominate the portfolio. The remaining ones get very small allocations — a fraction of a percent in most cases.

This is the drawback to cap-weighted indexing: The bigger companies get an outsize share. That’s great if those companies perform well, but not so great if they run into trouble.

To address this problem — and hopefully attract investors — some ETF sponsors have developed alternative weighting schemes. None are perfect, of course, but they can be very useful at times.

Best Performing ETFs for the Past Week

Trend: Direxion Daily Real Estate Bull 3X Shrs (DRN) led the one week performance (+15%). Direxion Daily Energy Bull 3X Shares (ERX) and Direxion Daily Dev Mkts Bull 3X Shrs (DZK) were the second and third best performers, respectively.

The 20 ETFs with the best one week performance through 9/11/2009 tracked by Morningstar are shown below.

Source: MSN Money Exchange Traded Funds (ETFs) Performance Tracker

Name	Ticker	Category	Holdings	Morningstar	Last Price*	1-Wk	4-Wks	13-Wks	YTD	52-Wks	3-Yrs	5-Yrs
Direxion Daily Real Estate Bull 3X Shrs	DRN	Specialty - Real Estate			$126.71	21.49	11.51	N/A	N/A	N/A	N/A	N/A
Direxion Daily Energy Bull 3X Shares	ERX	Specialty - Natural Resources	holdings		$38.57	14.16	17.27	-6.98	-2.36	N/A	N/A	N/A
Direxion Daily Dev Mkts Bull 3X Shrs	DZK	Foreign Stock	holdings		$85.60	14.11	25.82	44.20	47.30	N/A	N/A	N/A
Ultra Real Estate ProShares	URE	Specialty - Real Estate	holdings		$5.92	13.36	8.74	48.88	-9.61	-80.18	N/A	N/A
First Trust ISE-Revere Natural Gas	FCG	Specialty - Natural Resources	holdings		$16.25	13.32	11.83	6.41	37.66	-22.34	N/A	N/A
Direxion Daily Small Cap Bull 3X Shares	TNA	Small Company	holdings		$44.33	12.59	15.84	38.84	26.09	N/A	N/A	N/A
Direxion Daily Emrg Mkts Bull 3X Shares	EDC	Diversified Emerging Markets	holdings		$123.57	12.24	18.04	28.80	141.35	N/A	N/A	N/A
Direxion Daily Mid Cap Bull 3X Shares	MWJ	Growth			$95.50	12.15	18.05	43.20	N/A	N/A	N/A	N/A
Claymore/MAC Global Solar Energy	TAN	Specialty - Natural Resources	holdings		$9.60	12.15	-1.12	-15.67	10.49	-50.67	N/A	N/A
iPath DJ AIG Natural Gas TR Sub-Idx ETN	GAZ	Specialty - Natural Resources			$15.19	11.85	-3.13	-19.54	-50.26	-66.52	N/A	N/A
United States Natural Gas	UNG	Specialty - Natural Resources	holdings		$10.85	11.01	-17.46	-28.45	-54.29	-68.17	N/A	N/A
Market Vectors Solar Energy ETF	KWT	Specialty - Natural Resources	holdings		$14.52	10.42	-4.00	-15.38	3.32	-53.24	N/A	N/A
Rydex 2x S&P Select Sector Energy	REA	Specialty - Natural Resources	holdings		$18.49	10.31	13.40	-4.26	13.09	-56.83	N/A	N/A
Market Vectors Russia ETF	RSX	Foreign Stock	holdings		$25.77	10.19	13.18	6.95	97.70	-14.33	N/A	N/A
iShares FTSE EPRA/NAREIT North America	IFNA	Specialty - Real Estate	holdings		$29.80	10.11	10.63	22.99	21.24	-32.46	N/A	N/A
Ultra Oil & Gas ProShares	DIG	Specialty - Natural Resources	holdings		$32.02	9.76	12.81	-3.73	10.48	-53.74	N/A	N/A
Ultra Telecommunications ProShares	LTL	Specialty - Communications	holdings		$33.61	9.70	11.52	2.54	21.46	-44.32	N/A	N/A
Ultra Basic Materials ProShares	UYM	Specialty - Natural Resources	holdings		$27.28	9.66	12.79	19.96	85.62	-55.36	N/A	N/A
Claymore/NYSE Arca Airline	FAA	Specialty - Unaligned	holdings		$26.96	9.56	15.75	41.84	N/A	N/A	N/A	N/A
Ultra Russell2000 Value ProShares	UVT	Small Company	holdings		$20.75	9.01	9.75	31.98	13.79	-51.38	N/A	N/A

Disclosure: We may own any EFT above at any time.

Please verify the performance of any ETF before investing,

Best Performing ETFs for the Past Week

Trend: Ultra Silver ProShares (AGQ) led the one week performance (+21%). UltraShort DJ-AIG Crude Oil ProShares (SCO) and PowerShares DB Crude Oil Dble Short ETN (DTO) were the second and third best performers, respectively.

The 20 ETFs with the best one week performance through 9/4/2009 tracked by Morningstar are shown below.

Source: MSN Money Exchange Traded Funds (ETFs) Performance Tracker

Name	Ticker	Category	Holdings	Morningstar	Last Price*	1-Wk	4-Wks	13-Wks	YTD	52-Wks	3-Yrs	5-Yrs
Ultra Silver ProShares	AGQ	Specialty - Precious Metals	holdings		$56.58	20.60	21.10	-0.93	76.03	N/A	N/A	N/A
UltraShort DJ-AIG Crude Oil ProShares	SCO	Specialty - Natural Resources	holdings		$16.61	15.04	16.28	5.43	-41.79	N/A	N/A	N/A
PowerShares DB Crude Oil Dble Short ETN	DTO	Specialty - Natural Resources			$78.18	14.75	16.52	13.70	-41.14	130.70	N/A	N/A
iPath DJ AIG Lead TR Sub-Idx ETN	LD	Specialty - Natural Resources			$65.26	14.58	17.39	42.60	126.73	17.55	N/A	N/A
PowerShares DB Agriculture Dble Shrt ETN	AGA	Specialty - Natural Resources			$44.66	12.18	13.47	27.11	1.69	47.28	N/A	N/A
Market Vectors Gold Miners ETF	GDX	Specialty - Precious Metals	holdings		$45.11	12.05	9.59	3.47	32.88	39.90	3.92	N/A
UltraShort Real Estate ProShares	SRS	Specialty - Real Estate	holdings		$11.50	11.43	-14.60	-31.78	-75.19	-83.34	N/A	N/A
PowerShares DB Silver	DBS	Specialty - Precious Metals	holdings		$29.40	10.36	11.46	2.14	42.08	25.36	N/A	N/A
iShares Silver Trust	SLV	Specialty - Precious Metals	holdings		$16.15	10.14	11.29	2.19	42.59	26.44	7.21	N/A
PowerShares Global Gold & Prec Metals	PSAU	Specialty - Precious Metals	holdings		$36.36	9.93	8.84	3.96	36.99	N/A	N/A	N/A
B2B Internet HOLDRs	BHH	Specialty - Technology	holdings		$0.42	9.27	19.89	15.47	82.43	-23.71	-0.15	-1.32
Direxion Daily Financial Bear 3X Shares	FAZ	Specialty - Financial	holdings		$24.37	9.09	-16.10	-43.42	-93.01	N/A	N/A	N/A
PowerShares DB Commodity Dble Short ETN	DEE	Specialty - Natural Resources			$65.22	8.96	17.95	16.31	-8.30	138.81	N/A	N/A
E-TRACS UBS Bloomberg CMCI Silver ETN	USV	Specialty - Precious Metals			$24.12	8.95	9.00	0.83	47.03	21.37	N/A	N/A
UltraShort Russell2000 Value ProShares	SJH	Small Company	holdings		$33.91	8.76	-2.63	-21.42	-44.72	-33.60	N/A	N/A
UltraPro Short S&P500 ProShares	SPXU	Growth	holdings		$50.08	8.52	-2.27	N/A	N/A	N/A	N/A	N/A
Rydex Inverse 2x S&P Select Sector Engy	REC	Specialty - Natural Resources	holdings		$6.80	8.38	5.93	-3.60	-38.07	-40.43	N/A	N/A
Ultra Gold ProShares	UGL	Specialty - Precious Metals	holdings		$37.62	8.08	5.77	1.26	19.46	N/A	N/A	N/A
UltraShort DJ-AIG Commodity ProShares	CMD	Specialty - Natural Resources	holdings		$19.00	8.06	13.17	1.64	-28.03	N/A	N/A	N/A
PowerShares DB Gold Double Long ETN	DGP	Specialty - Precious Metals			$22.37	7.89	5.65	1.59	23.99	37.02	N/A	N/A

Disclosure: We may own any EFT above at any time.

Please verify the performance of any ETF before investing.

Scarcity Industrialism Gaining Momentum

Trend: China is banning the export of rare earth elements – and they currently produce about 90% of the world’s supply.

John Michael Greer describes what he calls "scarcity industrialism." Companies in countries where scarce resources are available will have a competitive advantage as this trend grows more prevalent (look at Saudi Arabia). Excerpts below.

Link: The Archdruid Report: The Dawn of Scarcity Industrialism.

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...the Chinese government is planning to ban the export of rare earth elements ...these have become crucial to many cutting edge technologies. Lanthanum, for example, is used in high-tech batteries, and neodymium goes into the permanent magnets used in electric motors and wind turbines. The innards of the Prius and other hybrids, to say nothing of the as-yet-imaginary electric cars being hyped by what’s left of the American auto industry, depend on rare earth elements, and China currently produces well over 90% of the world’s supply of most of them. The report thus sparked claims of an imminent shortage in these minerals and, predictably, a flurry of speculative interest in (and hype-ridden articles about) mines outside of China that can produce the same minerals.

Why Are Gold Prices Rising?

Trend: The price of gold is approaching an all-time high, boosted by significant upward moves in the first three days of September.

The explanations for the increase in gold prices vary with the political and economic perspective of the person commenting. While prices "don't lie", there's always the possibility of a push by major players who smell an opportunity for big profits, like the oil price run up in the summer of 2008. Chinese buying gold, Fed policies, a declining dollar, excessive lending and debt, and Wall Street's hold on Washington are all discussed below.