Author Archives: Scalper1

ETFs For Quick Profits From The Oil Rebound

Oil has been showing immense strength in recent weeks with prices bouncing from their recent lows. In fact, the price of oil jumped over 9% last week, with U.S. crude currently hovering above $36 per barrel and Brent oil trading above $39 per barrel at the time of writing. With this, U.S. crude prices are up nearly 33% and Brent oil is up 27% from their 12-year lows hit in mid-February. Inside The Surge The impressive gains came on the back of improving demand/supply dynamics, which are rebuilding investors’ lost confidence in the rebalancing of the oil market. First, talks over a deal by major oil producers to freeze oil output at the January level infused an air of optimism. Second, output from the Organization of the Petroleum Exporting Countries (OPEC) dropped by 79,000 barrels per day last month while U.S. production slipped by 25,000 barrels per day for the week ending February 26. The positive weekly data from oil services firm Baker Hughes (NYSE: BHI ), which showed that the number of rigs fell to the lowest level since December 2009, also supported the rally in oil price as it reflects that U.S. output will continue to decline in the coming weeks. Finally, the International Energy Agency (IEA) projects a sharp decline in oil production to 4.1 million barrels a day over the 2015 through 2021 period from 11 million barrels a day during 2009-2015. This is because a slew of capital spending cuts last year and another round of major cuts this year will continue to curb oil production and reduce global supply, and thereby lead to higher oil prices. On the demand front, the global outlook is looking bright. Abating fears of a recession in the U.S. following the recent encouraging data, and renewed optimism of growth in China, Europe and Japan could drive oil demand in the coming months. Given the fresh round of optimism and signs that the oil market may begin to tighten, many investors have turned bullish on the energy sector and are seeking to tap this opportunity. How to Play? For them, a leveraged play on energy could be an excellent idea as these could lead to huge gains in a very short time frame when compared to the simple products. Below, we have highlighted five leveraged energy ETFs that could be excellent picks for investors seeking to make large profits from the energy space in a short span: Direxion Daily Energy Bull 3x Shares ETF (NYSEARCA: ERX ) This fund creates a triple (3x or 300%) leveraged long position in the Energy Select Sector Index while charging 95 bps in fees a year. It is a popular and liquid option in the energy leveraged space with AUM of $545.2 million and average trading volume of 4.2 million shares. The ETF gained 20.1% over the past one week. ProShares Ultra Oil & Gas ETF (NYSEARCA: DIG ) This ETF seeks to deliver twice (2x or 200%) the daily performance of the Dow Jones U.S. Oil & Gas Index. It has been able to manage $151.4 million in its asset base with trades in a good volume of more than 302,000 shares per day on average. The product was up 12.9% in the same time frame. Direxion Daily S&P Oil & Gas Exploration & Production Bull 3x Shares ETF (NYSEARCA: GUSH ) This fund offers triple exposure to the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. It has accumulated $47.7 million in its asset base since its inception in late May 2015. Average daily volume is solid at around 913,000 shares while expense ratio is 0.95%. The product gained 57.7% over the past five trading sessions. ProShares Ultra Oil & Gas Exploration & Production ETF (NYSEARCA: UOP ) This product also tracks the S&P Oil & Gas Exploration & Production Select Industry Index, but offers twice the returns of the daily performance with the same expense ratio as that of GUSH. It has AUM of just $0.8 million and trades in a paltry volume of 2,000 shares. UOP was up over 28% in the same time frame. Direxion Daily Natural Gas Related Bull 3x Shares ETF (NYSEARCA: GASL ) This product seeks to deliver thrice the daily performance of the ISE Revere Natural Gas Index, which derives a substantial portion of its revenues from the exploration and production of natural gas. The fund has amassed $55.1 million in AUM and trades in heavy average daily volume of 2.2 million shares. Expense ratio comes in at 0.95%. The fund delivered whopping returns of 88.6% in the past five trading sessions. Bottom Line As a caveat, investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing – when combined with leverage – may make these products deviate significantly from the expected long-term performance figures. Still, for ETF investors who are bullish on the energy sector for the near term, either of the above products can be an interesting choice. Clearly, a near-term long could be intriguing for those with high-risk tolerance, and a belief that the “trend is the friend” in this corner of the investing world. Original Post

FireEye Curbs 2016 Loss Expectations, But Stock Still Tumbles

FireEye ( FEYE ) curbed its loss expectations for 2016 by a nickel at the midpoint of its guidance range as the cybersecurity firm slashed its capital expenditures view by $15 million, but its shares still fell. FireEye stock was down 2.5%, near 18, in afternoon trading on the stock market today , after shares had risen for nine straight trading days. Shares edged up last week during the cybersecurity RSA Conference in San Francisco. At the conference, FireEye announced a partnership with agent-less vendor ForeScout Technologies and unveiled an endpoint exploit-protection product. And its $275 million iSight Partners acquisition is already bearing fruit, FireEye executives told IBD. Tuesday, FireEye cut its 2016 capital expenditures view to $35 million vs. its earlier guidance for $50 million. FireEye sees $1.20 to $1.27 losses per share ex items, trimming earlier views for $1.25 to $1.32. FireEye reiterated sales guidance for $815 million to $845 million, which would be up 33% vs. 2015. FireEye retained its billings ex items guidance for $975 million to $1.055 billion. The consensus of 34 analysts polled by Thomson Reuters expected $829.9 million in sales and a per-share loss ex items of $1.30. Positive cash flow is still expected to come in at $70 million to $80 million, FireEye said. The updated guide comes as FireEye kicks off its 2016 analyst briefing. IBD’s 25-company Computer Software-Security industry group, which ranks a lowly No. 177 out of 197 groups, was down 1% Tuesday afternoon. FireEye stock has a low IBD Composite Rating of 17 out of a possible 99. Verisign ( VRSN ), Palo Alto Networks ( PANW ) and Check Point Software Technology ( CHKP ) stocks lead the group with CRs of 84, 79 and 73, respectively.

ServiceNow May Settle Some Patent Litigation With BMC Software

ServiceNow ( NOW ) stock rose Tuesday, with word out that it might be able to settle some of its patent litigation with privately held BMC Software, avoiding a trial scheduled to start Friday. A cloud-based business software rival of SAP ( SAP ) and Salesforce.com ( CRM ), ServiceNow shares were up more than 4% in afternoon trading in the stock market today , near 60.70. William Blair analyst Justin Furby suggested the possible settlement may “be a mild positive, as the prospect of a jury trial and the potential appeals process … would have likely created overhang on the stock. “More importantly, until this point, we believe the litigation has not affected ServiceNow’s sales cycles,” Furby wrote in a research note Tuesday. But the increased public attention of a trial “could have delayed sales for SerivceNow, particularly if the court would have ruled in BMC’s favor. “Lastly, BMC had sought injunctive relief, and had the lawsuit and subsequent appeals process gone against ServiceNow, it could have faced the prospect of discontinuing or rewriting certain of its applications,” Furby said. BMC sued ServiceNow in September 2014, claiming seven patent violations. Courts dismissed two claims, and BMC withdrew a third. But last month, BMC filed a second lawsuit against ServiceNow, claiming infringement of five patents, two of which were included in the original litigation, Furby said, adding that he didn’t know if the proposed settlement included this second case. He said he spoke with someone at ServiceNow who told him that “all matters in controversy between the parties have been settled, in principle.” ServiceNow did not immediately respond to IBD’s request for comment. The four remaining claims of the original lawsuit involve “managing a computer network via hierarchy,” collecting performance management data, determining the root cause of a problem, and “spotlight visualization” for IT service models, Furby noted. Hewlett Packard Also Suing ServiceNow As for separate litigation filed against ServiceNow in February 2014 by the former Hewlett-Packard Co. — now represented in the action by Hewlett Packard Enterprise ( HPE ) — claiming eight patent infringements, the court threw out four claims, stayed litigation on two, and scheduled an April 29 hearing and a May 22, 2017, trial date for the remaining two claims, Furby said. “The BMC settlement has yet to be finalized, and we are unclear what the amount will be and whether ServiceNow will be paying ongoing licensing fees to BMC as part of a potential settlement,” Furby wrote. ServiceNow has not been accruing reserves for damages but has been “expensing significant ongoing attorney fees … incorporated into guidance,” he said. Furby put the company’s net cash pile at about $700 million and estimated $325 million in free cash flow in 2016 prior to any settlement. ServiceNow stock is trading 34% off a record high 91.28 set Dec. 4. Its stock plunged 15.7% on Jan. 28 after reporting billings below expectations, although fourth-quarter non-GAAP EPS was up 533% to 19 cents, doubling analysts’ consensus, and revenue was up 44% to $285.6 million, also topping Wall Street. The IBD Computer Software-Enterprise industry group, led by SAP and Salesforce.com, has fallen 18% from its November highs. With $91.9 billion in market cap, SAP leads the group, followed by Salesforce’s $46.8 billion market value. ServiceNow’s market cap stands at $9.6 billion. Shares of SAP and Salesforce were up a fraction Tuesday afternoon, but Hewlett Packard Enterprise stock was down 2.5%.