Apple earnings tonight : Exp. USD 1,65/share

Apple stock has performed quite well recently : +24,50% since May bottom, 22,90% since last earnings report on July 26th  and we have a 20,5% profit since purchase in Virt Portfolio.  On the last 6 earnings announcements Apple stock gapped 4 times down the session after, 1 time up and 1 session was neutral. With recent performance one might consider that good news ( New Iphone 7 sales , Samsung problems, .. ) are already “in” and booking a profit of 20% has never hurted.

On the technical side stock is approaching the 70 level zone RSI where we saw most of the times in last 18 months 5 to 15% stock reaction down. MACD daily is negative (not relevant at this stage in my opinion ) and one can notice a negative stock/momentum divergence.

Tech Sector Versus OTHER US Sectors = OVERBOUGHT   :

techSource : The Bespoke Investment Group

ACTION : Sell at current price of USD 117,90. I am convinced that even if we attend a surge of stock price after tonight’s earnings we will be able to buy it back later at a cheaper price : note the wide USD 90 – 130 trading range in last 2 years )

 

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Virt. Portfolio : Buy EasyJet PLC at Limit price p935 .

This is a play on short term GBP bounce potential- See October 19th on GBP – . Easy Jet price evolution is strongly correlated to the Sterling  and as most Airlines to fuel prices.  We expect a short term bounce in GBP and believe most of bad news in terms of oil prices impact is already priced in.

PE is in 6 to 7 range and dividend yield (based on last dividend) above 6%. Price to book below 2.

  • ej-price
  • Stock is down 50%+ from highs in 2015 and 40% from Pre-Brexit levels.
  • Daily MACD has turned positive 2 days ago .
  • Positive Divergence Price/MACD.
  • Target 1200-1250 pence.
  • Risk limited to recent lows around 850 pence : SL below these levels.
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  • Bullish Engulfing pattern on weekly chart

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Infrastructure : THE Investment Theme for 2017 ?

Gold Update – Virt.Portfolio.

In the october 4th post i mentionned the USD 1280 level as the trigger for more Gold sell-off. This took Gold to levels as low as USD 1240-1245 per ounce. A small base has formed in the USD 1240 – 1250. On technical side Gold is recrossing up its 200 days MA and daily MACD is positive again based on current session action. This has to be confirmed on a closing basis as usual.

Generally speaking,  reasons to own Physical Gold or Gold linked assets  are multiple especially in a heavily indebted world economy in which liquidity provided to the system by CBs reach levels never seen in the past. These reasons amongst others are  : Potential risk of inflation (UK, US, EM), Negative real rates, Store of value, growing distrust in banks , politics and paper currencies, low correlation with other asset markets, Gold under-owned by CBs, limited amount of metal available, multiple geopolitical risks, …

I consider buying Gold or equivalents as a protection/insurance against the abovementionned risks : 10 to 15% MINIMUM would be a “must” in any portfolio for the long run.

Action :

  • Buy 0,50 unit of GOLD at current price USD 1270 . The other half would be bought should the metal extend its decline to the very strong USD 1200 support. This is 1/2 of position sold at 1285 in May.
  • Buy 1 unit in GDX at current price (14:43 GMT today USD 24,5250) – the most liquid and common Gold mines tracker – . 200 Days MA has been recrossed up and daily MACD is +.

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GBP Update // Current 1,2290 // (Partial) Take profit for shorts.

  • 1,21 – 1,22 seems to make a base with no strong signal of a reversal but downside momentum is slowing (See red arrow).
  • Long term picture has not changed (i.e. DOWN – see Oct.7th post) but odds for a short term up reaction to at least 1,26-1,28 range are increasing.

–> Time to take at least partial profits in the 1,21 -1,23 area for those who are short since Pre-Brexit above 1,40 and Post-Brexit above 1,34.

GBP is down 16,60% YTD and 28,50% since highs in 2014 versus USD .

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Nasdaq 100 – Update post dated Oct. 7th

Updated Chart here – http://schrts.co/KUKSyG

  • Up Trend red line has been crossed down .
  • There was no closing above 4895-4900.
  • MACD Daily has now been crossed down.
  • Seasonality remains bearish.

Given the abovementionned elements there is a risk of downside acceleration -especially if price goes below 50D Moving average currently  around 4800- and a retest of the recent 4630 support .

Virt Pf :

The Turbo Put bought at EUR 1,05 (based on NDX 100 @ 4865) quotes now at EUR 1,72 (NDX 100 Future @ 4790) so a 64% increase for a 1,40% on the index (Leverage when bought @ around 40 : 1,40% X 40 = Approx 64%).

 

 

 

 

Why Most Commodity Futures ETFs are not perfectly replicating their underlying ?

… And the reason why these should not most of times be held more than a few days / weeks. A good example is the USO tracker we recently traded (in /out in less than 10 days ) in the Virtual portfolio.

WSJ – October 9th : “What is Tracking Error in Oil Funds ?”

 

http://www.wsj.com/articles/what-is-tracking-error-in-oil-funds-1476064800

SP500 : BEARISH if closing below the 2130-2135 levels

Current levels on SP500 are at the juncture of 2 very important supports/resistances:  1/ The 2015-2016 resistance levels that prevented upside above 2130-2140 (horizontal line)  2/ The Up trendline traced from February 2016 bottoms with 3 supporting points.

The market has made lower highs since early august and is at 4 weeks low today, both facts being bearish as well.

Watch closing today and expect more damage in next days if this closing is below the 2130-2135.

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Virt. Portfolio : Profit Taking in Oil Tracker (USO)

  •  WTI crude oil chart shows a potential triple top in the making.
  •  Russia will likely not participate to Opec production freeze (See below).
  •  Goldman insists on OPEC deal fragility (see below)

ACTION : Targets of USD 51-52 mentionned in September 29th post have been reached and i take profit on the USO tracker at current price of USD 11,64 (5:08 PM). As stated in previous post on oil, should the current levels crossed on the upside , much more bullish potential do exist but .. a profit is a profit and i yake it here!!

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 Reuters :

Exclusive: Russia’s Rosneft boss Sechin says no to OPEC oil cap

Marketwatch :

Why Goldman sees oil dropping to $43 if OPEC can’t get a deal done this time

Published: Oct 11, 2016 5:28 a.m. ET

http://www.marketwatch.com/story/why-goldman-sees-oil-dropping-to-43-if-opec-cant-get-a-deal-done-this-time-2016-10-11

Virt Portfolio update

Action : Buy 0,3 unit (1,50% of portfolio) in below KO certificate at 1,04 eur – Put Nasdaq 100-  as a hedge / protection of portfolio. Leverage is 40 so it is a proxy to “protect” 60% (1,50% x 40) of portfolio .  ONLY USE THIS INSTRUMENT AS A HEDGE .. Becomes wotrthless should NDX 100 quotes above 4975.

ubs-certifRationale :

  • Nasdaq100 made an all time new high 2 weeks ago at 4895 and never managed since then to decisively break this high and the uptrend line originated in August 2015 (purple line).
  • No close since then above the 4880 level –> Strong resistance in the 4880-4890 area.
  • Large 20% move since after Brexit 3 months ago without any lasting down reaction.
  • Seasonality is historically bearish during first half of october.
  • Bearish Divergences between RSI/Macd and price.
  • If red TL is broken acceleration on the downside is likely.

When are we wrong ? A closing price avove 4895-4900 that could happen as early as today should employment numbers in US be on the lower range of expectations which would definitely kill any possibility of higher US rates for the November Fed meeting .

 

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Forex : Dollar higher across the board // GBPUSD ………………………………………………………………………………FLASH CRASH THIS MORNING IN ASIA IN CABLE which hits 1,19 and recovers.

GBPUSD  Monthly Long Term Chart:

After Brexit vote GBPUSD prices broke a trendline joining the 3 MAJOR BOTTOMS of last 25 years (1993 , 2001 & 2008) … this is a SIGNIFICANT move .

GBP looks oversold with RSI below 30 … this same level of RSI in 2008 matched with a GBP quote around 1,60 . This did not prevent Cable to fall further to 1,37 a few months after.

Mid and longterm trend are down and short term bounces are likely in the 1,28 – 1,30 area . Only a bounce above the red long term trendline can improve the mood , ie above 1,32 -1,33 area but this does not look to be in the cards at the moment . So watch 1,32-1,33 to be neutral to bullish again.

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Flash crash on GBP this morning : GBPUSD hits 1,19 and is now back jut below 1,25 :

http://www.bloomberg.com/news/articles/2016-10-06/pound-plunges-6-1-percent-in-biggest-drop-since-brexit-result

 

Forex : Dollar higher across the board // USDJPY

USD/JPY (103,90) …  Bullish setup as 1 / the cross has taken out the downtrend channel that held since more than one year. 2/ Triple bottom around 100 level AND MACD bullish divergence. 3/ ADX (bottom chart) is showing up trend starting .

Upside potential looks high for the mid term BUT keep stops below 100 on weekly closing basis .

Note that JPY weakness is bullish for Japanese stocks – See in Virt Pf recent purchase of Japanese stocks exposure using Currency (ie JPY) hedged Etf : HEWJ.

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