Virtual Portfolio Update – December 31th 2016 – Portfolio Up 13,90% vs Benchmark up 13,88% // –

The Virtual portfolio ends 2016 with a 13,90% performance vs 13,88% for our benchmarks .
The MSCI World index had a +5,32% performance in 2016 and a +12,95% performance since our portfolio inception mid January.
As a reminder , this Virtual Portfolio has to be considered as the Tactical part of a widely diversified portfolio (out of Fixed Income and alternatives).
Investment decisions taken here are mainly based on Technical Analysis.

 

Virt.Portfolio as of 31/12/16

Closed trades since Portfolio Inception

 

Q4 2016 Virt.Portfolio Closed trades REVIEW

Virt.Portfolio : Closed Trades during Q4

Bristol Meyers Squibb stopped  on Oct.10th                 – Loss 10%

USO (Oil tracker) closed on Oct.11th                              – Profit 6,5%

Apple closed on  Oct.25th                                                 – Profit 20,43%

UBS Turbo Put NDX closed – Nov.2d & 3rd                 – Profit 41,83%

iShares Eurostoxx 600 Banks closed on Nov.28th     –  Profit 17,55%

ETf Dax Daily 2X  closed on Dec 15th                            – Profit 18,40%

Q4 2016 InvestorID Blog Posts REVIEW : USDJPY / EURUSD / GBPUSD / APPLE / SP500 / NIKKEI / GOLD / DAX

October 6th post : USD/JPY 

Forex : Dollar higher across the board // USDJPY

October 10th post : EUR/USD

EUR/USD : Warning for more downside if quote below 1,11 persists

October 19th post : GBP/USD

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

October 25th post : Apple

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

November 7th post : SP500

One Day before election – Markets bouncing – Virt.Portfolio : Add DAX & US BIOTECH ETF (1)

November 17th post : NIKKEI 

Nikkei breaking on the upside – Virt.Portfolio

November 23rd post : GOLD

Gold breaks the important USD 1200 support …

December 7th post : DAX

Dax update : If break of 10800 is confirmed, short term targets are in the 11400-11800 range.

 

Virt.Portfolio : Closed Trades during Q4

Bristol Meyers Squibb stopped  on Oct.10th                 – Loss 10%

USO (Oil tracker) closed on Oct.11th                              – Profit 6,5%

Apple closed on  Oct.25th                                                 – Profit 20,43%

UBS Turbo Put NDX closed – Nov.2d & 3rd                 – Profit 41,83%

iShares Eurostoxx 600 Banks closed on Nov.28th     –  Profit 17,55%

ETf Dax Daily 2X  closed on Dec 15th                            – Profit 18,40%

Virtual Portfolio Update – December 16th 2016 – Portfolio Up 14,76% vs Benchmark up 14,10% // OverPerf. 0,66%

ETF Daily Dax Long 2X was sold on Dec.15th at the EUR 259 limit (roughly equivalent to 11400 Dax level ) . It was bought on Nov 8th at EUR 218,75 so we book a 18%+ profit .

 

The UBS SP500 Put 2354 was bought at EUR 0,83 (Equivalent to SP500 at 2267) on Dec.14th.

 

Virt. Portfolio as of Dec.16th 22:00 CET

Virt. Portfolio Action : 1/ Buy Put Certificate 2/ TP on Dax 2X tracker // Will Equity markets make a pause after Fed decision today ?

The SP500 closed yesterday at 2271 i.e. 13% higher since the day after election (SP500 futures nearly touched 2000). No clear signs of reversal are  noticeable at this time ; the main trend is still up but main US indices (and some Europeans ones) are clearly overbought which is not sufficient to guarantee an immediate reversal. Nevertheless  a partial hedge of the Equities part of the portfolio as a precautionary measure is the right thing to do at this stage, in my opinion. Fed meetings days are historically high volatility days !

Action  : Buy 0,2 unit (1% of portfolio) of the UBS Put Certificate on SP500 with Knock out level at 2354 i.e. certificate become worthless should SP500 goes beyond 2354. The leverage level on this certificate is currently at 26 so by investing 1% we “hedge” 26% of portfolio , around 1/2 of equities in portfolio (out of commodities linked positions).

Action : Take profit limit on the 2X daily Dax tracker at EUR 259 (Current EUR 254). The take profit level matches with Dax reaching our 11400 first target level.

 

 

Eurostoxx 50 breaking higher …

In the aftermath of Italian referendum and ECB decision to extend QE until end of 2017, Eurostoxx50 has exceeded a cluster of resistances in the 3100-3150 area and made a new high for 2016.

The upside is open as long as profit taking in the next days does not drive the index back below 3100 on a closing basis and so cause a fake break up.

Many analysts do consider european stocks as not overly expensive and that they will profit from a weakening EURO . One has also to keep in mind that current levels of Eurostoxx50 is 17% off its April 2015 high & respectively 30% / 41% off 2007 / 2000 Highs ; Right , the european financial and economic landscape was much different at that time !!

estoxx50-131216

Long term Eurostoxx50 chart : In 2000 when the european index was at the top , EUR/USD was quoting around 0,90, at the bottom in 2009 , in the 1,30 -1,50 range … Where the EUR goes , …

estoxx50-w-long-term131216

Virt Portfolio : USO purchase triggered by WTI oil closing above USD52,50

I refer to the Dec. 6th post : “WTI Crude Oil Update : …The USD 51-52 range resistance becomes even more important as this is the 4th time it is challenged with no sucess. ……I would only buy USO at end of NY session (oil tracker – See Oct.10th and Sept.29th posts) should US Crude oil January future at that time be above the USD 52,50 level.

The WTI Oil Jan contract closed yesterday at USD 52,83 and so triggered the purchase of USO (US oil Tracker) at USD 11,62 (yesterday end of session).

As the technical picture of yesterday candlestick (Long upper shadow caused by a move to USD 54,50 and reversal thereafter) is far from perfect, I place a tight STOP of 3,50 % at USD 11,20 closing basis ( WTI oil below USD 51 USD)

oil-closing-121216

 

Dax Update from last week post.

I refer to last update on Dax last week : “If break of 10800 is confirmed, short term targets are in the 11400-11800 range.”

Very bullish weekly chart with strong white candle crossing previous multiple points (7 points ) resistance + Weekly Macd crossing higher.

Upside is open as said before with first targets at 11400 & 11800 with maximum retracements allowed to 10800-10900.

dax-weekly-121216

 

Virtual Portfolio Update – December 9th 2016 – Portfolio Up 15,16% vs Benchmark up 13,24% // OverPerf. 1,92%

We had a limit on the iShares Nasdaq Biotech ETF (IBB) since Nov 9th post – We are not going to chase the stock at such level but given the expected volatility to come we  nevertheless adapt the limit to 265,50 . Why 265,50? The reason is that a gap will form at today’s opening compared to yesterday sclosing at 265 . Gaps are filled in around 80% of cases.”

Gap closed this week (See below chart) and order executed at USD 265,50 during Dec 7th session.

ibb-gap-closed

In the last 2 weeks booming global markets , we are losing some advance compared to our benchmark given our Precious metals ( Gold , Silver & GDX) “protection” positions and our 1/4 of PF cash level. Markets reaches extreme overbought situation but no clear sign yet of a reversal is to be seen. This positionning including Health care exposure – XLV + GILD – (Sector remains oversold) bought at chepa price should act as buffer when inevitable correction will come.

sp500-overbought

Virt Portfolio positions

virt-portf-open-positions-091216

 

EUR/USD ( 1,0740) update.

In the Nov.18th post I referred to 1,05 as a potential level from which EUR/USD could bounce … and it did nicely 2 times since then as you can see on the chart below.

The italian No-vote to constitutional reforms was widely anticipated and the EUR was too oversold before the vote to trigger stop losses below 1,0450-1,05. The 2 Years long 1,0450-1,16 range remains in place.

The main trend is still down but short term upside to 1,0850 and 1,10 is likely. Expect some volatility tomorrow around the ECB meeting ; unhedge positions (EUR based investors – leave USD “open”) if cross trades in the abovementionned range.  USD Investors : ReHedge EUR in same range.

eurusd-071216

Dax update : If break of 10800 is confirmed, short term targets are in the 11400-11800 range.

Based on expectations that ECB will announce a stimulus program extension tomorrow and improved mood on the Italian banking sector, european markets are surging today.

Dax opened this morning at 10890 i.e above 6 months resistance levels cited  in Nov.10th post . I reiterate here same as 1 month ago i.e. “(Dax) …has the potential to go much higher IF it crosses the 10820-10850 on the upside on a closing basis …. Initial targets would be then set at  11400 and 11800 for 5 to 10% gains by end of year .”

Barring a quick reversal to below 10800 , the current move might be the start of a strong move as a year end rally for the german (and european markets as a whole)  market.

dax-crosses-10800-071216

 

WTI Crude Oil Update & Virt Portfolio

After last week OPEC agreement to cut oil production , US Crude oil ( January futures at USD50,60) has tested yesterday once more the “the 2 years key resistance zone of USD 51-52″ (Sept.29th Post) by touching USD 52,50 and reversing thereafter.

The USD 51-52 range resistance becomes even more important as this is the 4th time it is challenged with no sucess.

Many analysts are very skepticals about the success of OPEC production cut agreement . Here one view from O.Investor.com :  “…OPEC production, with caps, is still at a level that contributed to the current supply/demand imbalance and will do nothing to alleviate it, if they even live up to the agreement. Prices may continue to rise into the near term but I think there is more than a 50/50 chance the bottom will fall out sooner or later.”

What to expect from here ? Only a clear break of the USD 52,50 can trigger a sharp move on the upside . Should this happen oil price could reach the USD 60 level in a matter of a few days ; the move should then mirror the quick trip from USD 60 to 52 that took place in July 2015.

Action : No action at current price. I would only buy USO at end of NY session (oil tracker – See Oct.10th and Sept.29th posts) should US Crude oil January future at that time be above the USD 52,50 level. I suspect it might not happen soon but if so the ensuing move up could be dramatic.

Chart below is an update of chart posted on Sept.29th :

oil-061216