Bang! Zoom! Straight to the Moon!

On hearing the latest jobs report Larry Summers told the Financial Times "we are now moving toward escape velocity."  The Great Recession is rapidly receding in the rear-view window.  Whether we reach the moon, fall out of orbit, or end up lost in space remains to be seen though.  "One of these Days America . . . " yes, we will find out.

After the bang of money creation we are zooming.  Stocks are up 70% in a year, gold, federal debt, interest rates, all seem to be nearing "escape velocity".  The boosters have ignited, the rockets are thundering, and off we go, pushing rapidly into the deep black depths (or is it debts) of space.

163,000 people found jobs last month, 48,000 of them as census counters.  Bill Bonner comments "If you could create wealth by having people count one another, perhaps we could create even more wealth by having them count the stars in the heavens." Put em to work in  Montana, no light pollution.

Alice never did get the ". . . Pow! Right in the Kisser!".  Let's hope Larry Summers is so kind.

Note: The "Bang! Zoom! . . .", "One of these days ...", and "Pow! Right in the Kisser!" phrases are paraphrased from "The Honeymooners", a 1955 TV sitcom starring Jackie Gleason as Ralph and Audrey Meadows as Alice.   I took the liberty of substituting "America" for "Alice".

The Coming Boom in Oil Service

With a deafening roar the greenish black gunk spewed 150 feet into the air, drenching men and machinery alike. Welcome to east Texas in 1901. The Spindletop oil discovery produced some 100,000 barrels/day (they expected 5), more oil than anyone knew what to do with at that time. The gusher heralded the start of the great east Texas oil boom. By 1903 the price of a barrel of oil was 3 cents.

But 1901 is so very long ago. Oil is now $80/barrel, gasoline $2.80/gallon, and both are heading up. A voracious, continually growing, worldwide fleet of 600 million plus vehicles, each suck up their quota every day with no end in sight. Oil companies drill through miles of rock and salt, often under thousands of feet of sea water, all doing so in a desperate attempt to find more of the elusive black stuff.

Now, in 2009, the easy pickings are mostly gone. Salt domes like Spindletop are tapped dry (Spindletop itself quit producing in the 1930's). Lots of hydrocarbons remain in the earth, but they are increasingly difficult to extract. Consider:

The U.S. (lower 48): Texas produces more oil than any other U.S. state but production peaked at 3.5 million barrels/day in the early 1970's. Now, Texas production is below 1 million barrels/day and steadily dropping. With the exception of North Dakota and the Gulf of Mexico, the same is true for the rest of the U.S.

Alaska: Prudhoe Bay, the largest oil field in North America, has produced some 13 billion barrels since 1977. BP plc estimated that as of August 2006 only some 2 billion barrels of recoverable oil was left in Prudhoe Bay.

Canada: Canada is the U.S.'s largest oil supplier. I covered Canadian oil production in a previous SA article. It covered the same scenario: conventional oil production is in decline. Potential exists in oil sands and shale, but environmental issues cloud the promise.

Mexico: The woes of Cantarell, one time the second fastest producing oil field in the world (behind Saudi Arabia's Ghawar), are legendary. Production peaked at 2.1 million barrels/day in 2003, and by 2009 it was at 774 thousand barrels/day and falling rapidly. Schlumberger (SLB) is now working with Pemex to slow the decline in Mexican production.
An interesting aside: It is thought that Cantarell exists only because of an asteroid strike some 65 million years ago (the same one that wiped out the dinosaurs). The strike created a large rubble field deep in the earth with good porosity in which oil collected.
The North Sea: North Sea oil production peaked in 1999 and A Wall Street Journal article on January 13, 2010, said about North Sea fields:

... oil and gas fields are in steep decline and nearing the end of their production lives.

The Middle East: The Middle East, especially Saudi Arabia, is somewhat of an unknown. The Saudis, currently pumping 8 million barrels per day, claim to have 4 million barrels per day of spare capacity. But, can you believe the notoriously secretive kingdom? Even assuming the Saudis are right, a worldwide economic resurgence could easily absorb this extra capacity. Ghawar, Saudi Arabia's, and the world's, largest oil field, needs increasingly large water injections to keep the oil flowing. Among other Middle Eastern states only Iraq may be able to ramp up production (and then only if it is able to keep the violence under control).

There is always the risk of geopolitical issues flaring up in the Middle East. Currently, things are relatively calm, and we have $80/barrel oil. Iranian Shiites have aspirations on Sunni oil, Al Qaeda is still around, and Israeli/Arab issues go unresolved. If any of the above flare up you can say goodbye to $80 oil - I don't need to tell you which direction it will go.

Elsewhere: Brazil, Russia, Africa, Indonesia, Venezuela are all large oil producers. All, except Brazil, have plateauing or declining production and/or exports. Several large off shore fields have been discovered in Brazil recently, but they are miles deep in the ocean, under salt and rock.

Throw a worldwide money printing binge into the mix, as governments try to inflate away their debts, and it seems certain the dollar denominated assets such as oil must rise.

This article is not meant to prove or even argue peak oil. Rather, the point is no matter what or who is right about peak oil, it will take more and more effort (read oil service) to keep oil flowing.

The oil services sector supplies the expertise that supports the massive worldwide infrastructure continually turning raw petroleum into useful products, such as the gasoline you put into your car. Whether it be horizontal shale, deep sea basins, getting more out of older fields, transportation or refining, none of it would happen without the oil services sector.

Oil Service Companies
Schlumberger (SLB) is a dominant player, and with a market capitalization of over $75 billion, it dwarfs competitors such as Haliburton (HAL) and Baker Hughes (BHI). Schlumberger is a quality leader in almost all aspects of the oil service industry. Recent acquisitions of Smith International (SII) and Nexus Geosciences enhance expertise in drilling and seismic services. If you were to pick just one, Schlumberger would probably be the best choice.
Transocean (RIG) and Diamond Offshore (DO) specialize in offshore contract drilling, while National Oilwell Varco (NOV) is more a "nuts and bolts" type company, designing, manufacturing and selling products used for the production and transportation of petrochemicals.
Exchange Traded Funds (ETFs)

If you wish to avoid corporate risk consider oil service ETFs. Three of the larger ones are: iShares Dow Jones US Oil Equipment Index ETF (IEZ), Oil Services HOLDRs (OIH), SPDR S&P Oil and Gas Equipment Services ETF (XES).

iShares Dow Jones US Oil Equipment Index ETF

IEZ has holdings in over 40 companies and is market-cap weighted. The three largest holdings: Schlumberger, Haliburton, and National Oilwell Varco comprise almost 40% of capitalization.
Since holdings are weighed by market capitalization, IEZ keeps most of your investment in the the larger, high quality companies, yet still gives some exposure to the smaller ones.
IEZ has a market cap. of $407 million and an expense ratio of .47%.
Oil Services HOLDRs

Like IEZ, OIH is concentrated in the larger oil service area. Transocean is the top holding at 15%. There are only 16 securities in this ETF. The three largest: Transocean, Schlumberger and Haliburton total around 35% of holdings. If you are considering investing in OIH you should be aware of the unusual features of the HOLDR Merrill Lynch products. Here is a good article on how they differ from most ETFs. Since you can only invest in round lots of OIH, you will need a minimum of $12,100 more or less at current prices to invest.
OIH has a market cap. of $2.28 billion and an expense ratio of .06%. The expense ratio is low because of the unique way that it is calculated (see the above article link for an explanation).
SPDR S&P Oil and Gas Equipment Services ETF

This oil and gas equipment and services ETF holds 24 securities, but no one security comprises more than 5-6% of holdings. Smith International is currently the largest holding. Although XES has many of the same companies as IEZ and OIH, there is a greater weighting of smaller to midsize companies in XES.

XES has a market cap. of $342 million and an expense ratio of .35%.

A Cautionary Note:

If you believe a double dip recession, crash, or even signifigant market decline are on the horizon, you may wish to stay away from this volatile sector. The sector shows even more volatility than oil prices do.

Disclosure: Author long XES

On Canadian Black Gold

"A New Saudi Arabia of Oil" scream the headlines. You've seen the hype. But, how do you separate truth from headline?  Well, we do know there are staggering amounts of hydrocarbons in the western sedimentary basins of North America.  It is no coincidence that the U.S. imports more oil from Canada than any other country.  While Saudi Arabia has 264 billion barrels of oil reserves, Alberta's Athabasca oil sands alone total some 1.7 trillion barrels of hydrocarbons.

Canada's oil and gas are vital for the U.S. The quiet rolling western prairies are safe, peaceful and close. One doesn't deal with egomaniacs like Venezuela's Chavez (though some might nominate Alberta's premier Ed Stelmach), Nigeria's violent saboteurs, or bomb-toting Middle Eastern jihadists. With that in mind, let's take a closer look at the Canadian portion of these "staggering" North American reserves.

Canadian oil originates from three sources: Conventional oil, oil sands, and newly recoverable oil from "tight" strata. "tight" refers to oil (or gas) locked in low porosity/permeability formations of shale, siltstone, or sandstone.  Historically, conventional oil production has predominated.  Now, by necessity, that is changing.

Conventional Oil and Gas

Mobil Oil discovered Pembina, Canada's super-giant oil field, in 1953.  Located in the Cardium Formation, some 100 kilometers southwest of Edmonton, Alberta, Pembina still produces more conventional oil than all other Canadian fields combined, it has given up over 1.2 billion barrels of oil in its 50 year history.

Canadian conventional oil, about half of all Canadian production, is a desirable light to medium grade.  Only 17% of Pembina's conventional oil has been recovered, yet production has been declining since the 1970's. It's there, you just have to crank harder and harder to get it.

It is no secret that worldwide conventional oil production is also in decline.  Saudi Arabia, which claimed two years ago it could produce 15 million barrels per day, has yet to even come close.  Saudi production has never exceeded 10 million barrels per day, even with the $120 plus/barrel environment of 2008.  Saudi Arabia's Ghawar, the largest oil field is the world, seems to be in decline (see here).  Saudi crude is rumored to be increasingly sour, with increasing sulfur and water content.

Even in decline, Canadian conventional oil production will continue to supply oil for U.S. and Canadian markets for quite some time.  Water and carbon dioxide flooding continue to push more oil out of Pembina.  Penn West Energy Trust (PWE) is a large producer of conventional oil and gas in the Pembina area.

Oil Sands

The extensive Athabasca oil sands and other smaller oil sand fields north of Edmonton are (as noted above) estimated to hold more than 1.7 trillion barrels of hydrocarbons -- the largest petroleum resource in the world.  The catch?  Oil sand hydrocarbons are bitumen, a thick, gooey, tar-like substance.  Bitumen lies in vast beds near the surface of north-central Alberta.  Huge shovels and trucks strip off the boreal forest vegetation and surface soil to get to it after which, capital intensive processing and refining are necessary to produce gasoline and other end products.  Often more BTU's must be input than are derived.

Oil sand development raises serious environment questions. The surface forest is destroyed, leaving a barren, moon-like landscape over thousands of acres. Greenhouse gas emissions are high. The Pembina Institute has taken the lead in monitoring oil sand environmental issues.  Some people question if it will be worth the environmental, ecological and financial cost.

Alberta's oil sands currently produce approximately half of Canadian Oil, most of it is exported to the U.S.  Despite the drawbacks, declining conventional oil production and rising prices have led to increasing oil sand production in recent years.  The trend is projected to continue, provided the environmental issues can be addressed.

Many companies, both domestic and foreign, have stakes in the Canadian oil sands. Suncor (SU) and Syncrude Canada (joint venture of several oil companies) are major participants. ConocoPhillips (COP) has big plans.  Imperial Oil (IMO), Canada's large integrated oil company, has a major presence.

Tight Oil Formations and Multi-stage Fracturing

Multi-stage fracturing (MSF) is where all the excitement is now.  MSF in horizontal bores has revolutionized North American gas production and may do the same with oil.

MSF has the potential to draw billions of barrels oil from previously inaccessible tight formations.  Tight formations often contain large quantities of oil and gas but, due to low porosity and permeability, have historically been hard to get at.  MSF creates flow paths in tight strata from which oil and gas can be harvested.  By creating fractures MSF makes accessable smaller, previously uneconomical, oil and gas collections . The hydrocarbons flow into the induced fractures while proppants, such as sand, ceramic, or other particles, prevent the fractures from closing.

Candian (and U.S.) tight oil often has a very desirable gravity (API 39-45), better than Pembina conventional oil (API 37), and comparable or better than WTL (API 39.6).  Since MSF technology has significantly reduced extraction costs it may be a game changer for western Canada.

Keep in mind that tight oil production rates often decline quickly and the water component rises over time.  For now, better technology is trumping this.  Here is an excellent 2008 article on U.S. Bakken tight oil economics.  Recent technological improvements continue to point toward ever better recovery rates, with up to 24 stage MSF improving productivity.

The success of MSF in the Pembina area will probably be duplicated in other fields, potentially drawing billions of addition barrels of previously inaccessable oil from tight formations.  MSF is now being tried in over 20 Canadian formations.

The Candaian company Petrobakken's (PBKEF.PK) website claims it is ". . . primarily a pure-play, southeast Saskatchewan, light oil-focused company with targeted 2009 exit production of more than 37,000 boepd, more than 95% light oil".  Petrobaken is now also moving into Cardium light oil with its proposed acquisitions of Berens and Result Energy.

One might also consider investing in Canadian Royalty Trusts (CANROYS).   Penn West , mentioned earlier for its conventional production, also has large tight oil lands as a bonus.  Enerplus (ERF) is another CANROY which pays high distributions and has large land holdings in tight oil areas.  Some of best land potential for MSF is on the flanks of convention oil fields such as Pembina.

CANROYS have special taxing considerations so consult your tax advisor.  Also, since distributions track the price of gas and oil they can change quickly.  Both Penn West and Enerplus plan to convert to corporations in the next few years as new taxes on CANROYS take effect.

Summary

MSF has revolutionized natural gas production in the U.S and, though unheralded, North America is now self sufficient in gas.  Can MSF do the same for oil?  Can MSF make up for declining conventional oil production?  Can it make  environmental sacrifices for oil sands unnessary?  It's a tall order but recent trends are encouraging.  MSF will, at a minimum, stem and help reverse the decline in North American oil production.  U.S. oil production, for the first time in 30 years, is now up (see my earlier article here).

Don't underestimate geopolitical considerations.  Declining exports from both Mexico and Venezuela make Canadian deposits even more valuable for the U.S.  Western Canada (and U.S.) are as safe an oil and gas investment as you can find now-a-days. A major flare up in the Middle East will send Canadian and U.S. oil and gas companies stocks soaring.

You have a choice of income paying CANROYs with large land holdings, established integrated companies such as Imperial Oil, or new exciting tight oil plays such as Petrobakken.

Thanks to "The Big Fat Greek Crisis" the US dollar is now strengthening against all risk currencies including the Canadian dollar.  This is driving commodity and natural resource company prices down so the coming weeks may present an excellent entry point into Canadian oil companies.  Do your own research.

Tags: SU, COP, IMO, PBKEF.PK, PWE, ERF

A Reversal: US Oil Production is Now Up!

Surprised?  I was,  . . .  but its true!   In decline since 1970, the American Petroleum Institute reported US oil production has now turned up, with October production of 5.36 million barrels per day, the most since 2005. See the article here. Even Exxon (XOM) is "coming home" with its proposed acquisition of XTO Energy -- XTO has a large position in North Dakota Bakken Shale acerage.

The Cheyenne River Indian Reservation  in western South Dakota is wild, desolate . . . and beautiful!  Three million acres of rolling prairies and buffalo, just as trappers and the first settlers saw it.  Much of the surface soil here is shale, Pierre Shale.  In the 1970's I found 80 million year old ammonites exposed, right on the ground.  The high clay content makes the soil poor for agriculture (probably why it was given to the Sioux Indians as a reservation in 1889).  Due to surface exposure, the original oil and gas components here are long gone, but not so for the deeper shale and sandstones deposits to the north, where a bonanza in oil and gas has been found.

Further north (meaning North Dakota, Montana, Saskatchewan) oil production is skyrocketing.  North Dakota may be sitting on one of the largest pools of oil in North America.  Bakken Shale oil production alone may reach 500,000 barrels per day in 2011, up 50% from two years ago.   And now, beneath the Bakken a new, apparently just as prolific, oil formation, called the Three Forks, is being explored.  The Three Forks is rumored to contain just as much oil as the Bakken.  Also, newly exploited to the northwest, in Canada, the Cardium formation is showing an abundance of oil.  SA author Keith Schaefer has written extensively on the Cardium.

Multi-stage fracturing, or fracing, of horizontal wells in tight shale formations is providing an unexpected abundance of gas and oil.  This new and rapidly evolving technology involves insertion of various liquids or gases (water, carbon dioxide, nitrogen, air etc.) along with proppants into horizontal bore holes in "tight" rock formations such as shale.  The liquids or gases create fractures in the shale and proppants (sand, ceramics, etc.) keep the fractures open.  Oil and gas then flow into the fractures and can be harvested.  For more information on the technology  read here.

Mid-Continent shale may have as much as 500 billion barrels of oil (admittedly a wildly optimistic estimate but if so think Saudi Arabia).  While it is true that much of this oil may not ever be recoverable, increasing prices and the aforementioned technology is rapidly improving the odds.

And, don't forget the Gulf of Mexico.  Although drilled heavily, companies are also producing more oil from the Gulf. Major projects are now coming on line while old fields, due to technological advances, are producing more than expected. New discoveries keep coming, read about BP's recent "giant" find here.  At the same time, smaller companies such ATP Oil and an Gas (ATPG) are prospering by extracting more oil than ever thought possible from old fields.  Technology is truly evolving and allowing us to find and produce ever more oil and gas.

So,  is all the "gloom and doom" of Peak Oil talk just that -- only talk?  Well, not so fast, the US increase is minuscule when compared to worldwide daily demand of approximately 85 million barrels of oil.  Oil demand, while stagnating in developed countries, is jumping fast in developing countries.  Car sales are exploding upward in India and China as road infrastructure is built out.  The "American Dream"  of car ownership is now becoming the Chinese or Indian dream.  With Asian populations many times that of the US the potential is enormous.

A few years ago severe shortages of natural gas were predicted in the US and several LNG port projects were started in anticipation of imports.  Now, construction has slowed or halted, and the facilities are languishing -- mostly due to US shale gas production.  It seems unlikely the same could happen with oil any time soon, but keep your eye on US domestic production.

Below are some US companies with significant stakes in Mid-Continent (read North Dakota) shale oil plays: 

Continental Resources  (CLR), at $6.7 billion market cap and 605,000 net acres is in both the Mid-Continent and Gulf Coast regions.  82% of the shares are held by insiders, with Harold Hamm, CEO, holding most of it.  Continental under Hamm, excited by the potential, has recently made a major move into the Bakken in North Dakota,

EOG Resources  (EOG), at $23 billion market cap and 513,000 net acres is in the Mid-Continent and Gulf Coast regions.  EOG, an international company, is probably the least speculative way to invest in the Bakken.

Whitting Petroleum  (WLL), at $3.4 billion market cap and 89,000 net acres is in the Mid-Continent Whiting is also in the Permian Basin, the Rocky Mountains, Gulf coast and Michigan.  Whiting is exploring the Three Forks formation under the Bakken.

Below are some Canadian companies that have significant western shale oil stakes.

Crescent Point Energy  (CPGCF.PK) is active in the Canadian Bakken and "believes it has a drilling inventory of 3000 wells to drill."

PetroBakken  (PBKEF.PK) recently combined with TriStar Oil and Gas and supposedly has an inventory of 1,300 Canadian Bakken wells.

Also, many of the Canadian Royalty Trusts have significant land holdings in Canadian shale areas.  An added bonus: they often offer attractive dividends.

A cautionary note:  I am not recommending any of the above equities.  Everyone's situation is different so use your own due diligence and investigation before investing.  It is true that there is a lot oil in North American "tight" shale, and technology is improving the cost of getting it out.  However, a sharp drop in world oil prices could make the shale oil, which is still fairly expensive to pump, uneconomical and many shale oil companies may be adversely affected.

Disclosure: Long BP and PBKEF.PK

Not Telling Jennifer . . .

"I'm not telling Jennifer" he said.  This from the man selling wooden chopping blocks last summer at a Michigan craft festival.  He was responding to my query concerning sales tax.

Not tell Jennifer? . . . Who is Jennifer? . . .   His wife? . . . Co-worker? . . . Why would she care?

Then I got it.  Jennifer Granholm is the governor of Michigan.  Conditions in Michigan are really bad right now and may be looking worse for the future.  The state,  businesses, residents . . .  everyone is scrambling!  Unemployment is 14.3%, up from 8.7% a year ago.

A recent, and rather frightening article, predicts that Michigan's General and School Aid funds will need to be cut almost 50% by 2017 (see here) if the budget is to be balanced   More and more residents are rebelling, clamoring that state employees and social welfare recipients also need to start sharing the pain.  Its a mess.

In a way ,the state brings on its own problems.  We collect sales tax on summer rentals in Michigan.  What I found quite astounding was how difficult it was to set up forwarding the payments on to the state.  You need to fill out forms and jump through a lot of hoops -- and thats to send money to them!

The state doesn't seem to have a provision for individuals to pay sales or use tax, even if they owe it.  The forms are all company oriented, and there is less and less traditional employment in Michigan.  After unproductive phone calls and emails I finally gave up and just put my last name in the "Company Name" field.  Not sure if it was correct, but they are accepting and cashing the checks.

Untaxed, unregulated, unlicensed, unreported . . . America's underground economy keeps growing.  The Christain Science Monitor recently estimated the shadow economy to be as big as $1 trillion or 8% of GDP  (see here).  Every uptick in unemployment, every tax increase, and every new regulation drives the figures up.

If you are unemployed and ambitious you do what it takes to get by.  Telling Jennifer is all too often just not a priority. 

Bargains at McDonald's

This morning, on a whim, I stopped for an early lunch at McDonalds (MCD).  I ordered two regular hamburgers and an iced coffee -- hazelnut, my favorite.   The charge? $3.17!  I looked at the receipt.  I was charged $.99 for the two  hamburgers and $1.99 for the coffee.

I started thinking about that.  Why would McDonald's only charge me $.49 for a hamburger?  That is about the same price I paid in St. Louis over 25 years ago.

The iced coffee I could understand.  You can get Starbucks type beverages for less -- a good way to get "prestige" on the cheap.  Of course the atmosphere isn't quite the same.

But, that $.49  hamburger?  After studying the posted prices over the counter I finally found, in small print near the bottom,  the regular hamburger price. It was marked $.69!  Well, that only deepened the mystery.  Why would they only charge me $.49?  Some kind of senior discount maybe?  I'm 60.  The sales clerk did not ask my age and I could find no promotion advertising a hamburgers or senior specials.

Times are tough,  If people can get 2 hamburgers for $.99 and skip the drink this would be a great way of getting meals on the cheap.  I'm not sure this stuff is good for you but it is cheap!

For what its worth: at the next table two teenage girls were splitting what looked like a large order of fries and a medium drink.  Apparently McDonalds is doing well with this type of stuff.

ETFs for Bear Markets

The dollar keeps falling while "real" assets such as gold, oil, and equities continue to march ever upward.  Its great to go along for the ride but keep in mind that "all good things must come to an end someday".  Sometimes a violent end! When the tide turns ... and you know it will ... how can you position yourself?

Just about anyone with an elementary school education can make money when equities, commodities and bonds all go up at the same time.  However, investments that do well when things go the other way are much harder to find.  Here are some ideas on how to hold your own, if not profit.

First, get into a healthy cash position, then consider these ETFs.  Most did well or at least held their own in the 2008 bear market.  Two are currency ETFs.  Currency markets are much larger and independent of equity markets.

1. UUP  Yes, the much maligned US dollar.  Just how low can it go?  Well, don't answer that question, but do consider that UUP was probably the best performing ETF in the second half of 2008.
2. CYB  The Chinese yuan.  This is an interesting play.  Currently the yuan is pegged to the US dollar but any change will most likely have the yuan appreciating versus the dollar.  Note that the yuan mostly held its own during the second half of 2008.  China is also printing money but doesn't have the deficit problems the US does.
3. TIP and BND  TIP invests in inflation protected US bonds and did not do well the second half of 2008.   However, if you see a stagflation scenario ahead TIP may be a good place to be. BND tracks a "broad, market weighed index" of bonds and except for a violent but brief spike down in September, when everyone was panicking, held its own throughout 2008.
4. DOG, SH, PSQ and RWM.  These inverse ETFs are a convenient way for investors to "short" the market and a great place to be in falling markets.  But, remember these ETFs are subject to tracking error and values decay over periods of time.  Also, see the comment about "bear" ETFs below.
5. GLD  Gold is commonly thought of as an inflation hedge.  Yet, more than anything, it is a store of value in uncertain times.  If you see greater than normal financial and social unrest ahead -- and most of us do -- you may want some gold investments.

If you are a day trader you can see a list of Yahoo Finance's "bear" ETFs here. Remember, most if not all, of these are for day traders only because of daily rebalancing.  Held long term, they not only can, but will, destroy your portfolio.  Click the "Return (Mkt)" tab on the Yahoo site to view the "Red Sea" of three year returns, losses run up to 70, 80, even 90 percent.  Only one, UDN, shows a positive three year return -- wonder why?

So, when will the equity-commodity-bond market run end?  Consider these potential early warning signs:  long term treasury rates start rising, the Fed is really ending Quantitative Easing, and an improving US economy which may cause the US Federal Reserve to raise rates.  For now the "herd" is jumping on the band wagon -- and more are boarding every day --  so enjoy the party.  But, be ready to jump when the music gets out of tune and the wagon starts swaying.

Disclosure:  I have a small "precautionary" position in SH