Political crisis in Brazil … again ! Market moves Overdone … buying opportunities !!!

 

Following reports President Temer would be involved in a bribery scandal , Bovespa lost on thursday 9% and Real 6.5% in a complete panic mode. Markets are fearing Brazil could enter another period of political trouble endangering ongoing needed social and pension reforms . The Msci ishares Brazil ETF is down 16% on the day !!! which might price already part of worst case scenario i.e. prolonged political uncertainty ( Temer resigning or not , no reforms being implemented,..)

Our recent Tactical Buy Vale opened yesterday at USd 7.49 and is trading today pre market at USD 8.25, just to show the extent of the panic. In my  ( .. and most of analysts this morning) opinion this is clearly an exaggeration.

Here below Petrobras chart : PBR lost 16% in USD terms …  / see also Barron’s on PBR for more fundamentals reasons why to step in .

Action : Buy 0.5 unit in petrobras at opening (Max USD 9.10) and 0.5 unit at yesterday’s closing price of USd 8.50 based . Rationale 1/ Panic move 2/ Volume 3/ Low end of trading range .

Action : Buy 1 unit in EWZ (iShares Brazil ETF) for an exposure to Brazilean market in USD terms (down 16% yesterday ) at opening (Maximum USD 34.75) .

 

Petrobras in Barron’s last week end :

Re-energized Petrobras Headed Higher – Barron’s

 

 

Tactical Portfolio : Sell Twitter – Buy Vale – Buy Schlumberger

 

Twitter : Sold

Profit booked at closing today – USD 18,54 – for a 30,50% profit . Momentum is slowing and reversing after recent after earnings sharp move higher but stock did so far not manage to surpass the USD 19-19,50  resistance zone . Should price go beyond USD 20-20,50 stock technical outlook would improve again. For the mid long term one has to keep in mind that stock remains a potential take over target . We might come back to it on a tactical basis later.

 

Vale : Buy

After a 5o% dramatice surge in the first 6 weeks of the year, Vale had early may nearly retraced this move bottoming at USD 7,84 with 200 days MA as first support around USD 7,75. Price -Momentum divergence appears and MACD is turning bullish . We buy at closing price today – USD 8,36. Vale is very volatile stock and only for “Dynamic – risk conscious ” investors . STOP LOSS below 200d MA i.e. USD 7,5 closing basis.

 

 

Schlumberger : Buy

Technical rationale : 1/ The more than 1 year USD 69-70 support held firmly at recent bottom and stock seems to reverse  2/ MACD turning bullish today  3/  RSI reversing above the 30 level  4/ the final (?) down move since mid april took place in above average volume wich is another potential reversal signal.

Buy at 72,67 // SL 68,50 closing basis.

Transocean (RIG) – USD 11,17 – as same sector alternative and technicals showing same reversal signals but RIG much more volatile than SLB – same remark as for vale … for risk conscious investors and only with tight stops .

 

 

Tactical Portfolio Update – April 29th 2017 – Performance +17,32%

Trades since last update dated April 17th :

April 18th : USO / WTI Oil tracker – Take profit limit reached at opening on April 18th @ USD 11 – Plus 7,33% in 1 month – April closing @ USD 10,24.

April 18th : Take profit limit reached on Coeur Mining @ USD 9,85 – Bought @ USD 8,12 1 month ago.

April 19th : Take profit limit reached on Easy Jet @ GBp 1090p – Return of 23%+ including dividend.

April 25th : Stop Loss at 1 EUR reached on NDX put certificate. See April 25th post “NDX no sign of tiring” … US markets broke out and continued higher… a hedge for nothing …

April 25th : Buy 0,5 unit in the CITI Turbo Call Cac 40 KO 4151 @ EUR 11,52 – See same date post.

 

Tactical Portfolio : Current holdings

Tactical Portfolio : Closed positions

 

CAC40 : Significant Long Term Break Out

The French Index celebrated Macron Victory in first round of election with a quite significant breakout as shown in chart below. The red downtrend line that connects major tops in 2000, 2007 and 2015 has been broken the day after the election first round : This is a significant move and will remain so as long as market does not retrace this positive move in the short run which i do  not believe will happen at this stage.

One can put in place a tactical trade set up with limited risk here : Buy the french market – ETF, individual stocks, certificates, .. – and place SL below the former resistance which lies around 5150. Risk of around 3%.

ACTION TACTICAL PORTFOLIO :  Buy CITI Turbo Call Knock Out 4151  Certificate  / Leverage at current price of 11,53 EUR is 4,59  (1% investment gives you a 4,59 exposure to CAC40 )- ISIN DE000CX7L4F3 . Action taken : Buy 0,50 unit at current price of 11,52 EUR -CAC40 base level 5275- / Buy another 0,5 unit in case of market short term consolidation around 5180 -5200 – Limit at 10,75 EUR valid end of week.

 

 

 

Tactical Portfolio Update – April 17th 2017 – Performance +16,92%

Trades since last update :

February 27th : Sale of iShares Nasdaq Biotech  (Link : http://schrts.co/ezRRVX  )   at limit of USD 298 for a 12,24% profit in less than 3 months . Price thereafter briefly traded above the USD 300 cap and is now at USD 290.

March 3rd : Hedging : Buy 0,4 Unit (2% pf) i Citi NDX put Certif at 1,97 EUR . Current 1,56 EUR / -8,32% (calculated on 1 unit position equivalent)

March 8th : Sale of XLV – US Health Care tracker (Link : http://schrts.co/9xxaX9  )– at USD 75,05 for a 11,20% profit in 3 months + . Tracker is now trading at USD 73,88.

March 8th : Sale of iShares Hedged Japan ETF (Link : http://schrts.co/vMwA7q) at USD 28,56 for a 15,39% profit in around 6 months . Tracker closed last week at USD 27,08.

March 17th :  Buy of Coeur Mining – CDE – (Link : http://schrts.co/3SeYmW ) at USD 8,12 . Current price : USD 9,82  / +20,94%.

March 17th : Buy of WTI Oil Tracker (USO) at USD 10,37 . (Link : http://schrts.co/3SeYmW ) Current Price : USD 11,13 / +7,33%

March 17th : Sale of iShares Mexico ETF  – EWW – (Link :  http://schrts.co/tDo2us  ) at USD 49,52 for a profit of 15,49% in less than 2 months . EWW is currently trading at USD 51,19.

March 21st : Buy of Gazprom at USD 4,43 – Current Price USD 4,3750 // – 1,24%.

 

See in red in table below TP and SL levels updates.

Tactical Portfolio :

Closed Trades :

Pressure is mounting on US stocks …

 

 

Barron’s : March 7th , 2017

 

SP500 shows reversal signal at yesterday’s closing 

Second such MACD reversal signal since US election , the first one (1st blue ellipse ) lead to market consolidation in the 2230-2280 range without major correction. I would set initial targets in the 50d MA 2280-2300 previous resistance zone . A move above recent 2400 top would negate current bearish sdignal (less likely scenario) .

 

 

 

Virt Portfolio :

Today’s action : Take profit on tactical positions on Health care tracker (XLV) (+/-12% profit in 3 months – chart shows triple top forming  )  , ishares Nasdaq Biotech (IBB) (+/- 11% profit in 3 months ) and on Japan ETF ( +/- 15% profit in 4 moths – Nikkei strong resistance around 20000 level ) and so revert in a neutral positionning in the said sector/country allocations.

Virtual Portfolio : On the hedge side again …

 

I Buy this morning a position of 2% (0,4 units) in the Nasdaq 100 CITI Knock OutPut certificate – Knock out level at 5549 – Open End – Current leverage of 25%+ – ISIN DE000CY1D3F9 – @ 1,97 EUR .  Stop Loss on this position on Nasdaq100 closing above recent top i.e. above 5400.

Technically and as already mentionned a few days ago, US markets are on some criteria at extreme levels : sentiment indicators , very low VIX level equivalent to investors complacency. Additional signs of reversals are adding up : On Nasdaq 100, MACD daily has turned down , RSI hitted all time highs a few days ago an reversing. ADX indicator is above DI+ & DI- which  testifies of a overheated market.

Snap IPO yesterday is another sign of market overheating and of investor sentiment : Company valued at USD 28B $ after first day of quotation. Zero profit since creation 6 years ago . None expected before years. Tech is a quickly evolving markets and competitors will not wait to propose same kind of app and probably bring other ideas that could kill such – for time being- no profit business.  Following Bloomberg, Snap went public at 21 times its 2017 Ads sales i.e. twice as expensive as Facebook and 4X compared to Twitter . Snap is likely NOT Facebook or Google . These latter are exceptions . Snap’ s current valuation is clearly driven by investor’s greed which translates the current state of psychology reigning in US markets .

In this environment the aim is to put a safety net below nice profits gathered last year and in 2017 so far .I nevertheless do not want to commit to much on the hedge as we have seen false signals on 2 occasions already in last 3 months so i put a SL on the trade so the risk is limited to around 0,50% of portfolio in value.

 

 

Update Mexican Peso : From Oversold To Overbought in 1 month time.

 

Hereafter an update of chart posted on January 23rd   : “Mexico … Time to buy ! ”  :   Link here  .

9 % gain for MXN since January 23rd . Investors who played this move via a pure Forex/leveraged trade could take partial profit from here and approaching the 19 support level. Investors who traded MXN via a short term 1 year bond purchase should hold. Those who did not act should wait an upward correction to 20,25 to 20,50 as  a good entry point.

 

 

 

 

Virtual Portfolio Update – February 17th 2017 – Portfolio +14,59% – YTD + 0,61%

 

 

The US markets continued their march (much) higher since our last updates so that both SP500 and Nasdaq 100 broke their resistance levels discussed on January 17th and 19th posts . SP500 (See 1st chart below) surpassed the 2275 point which acted as support thereafter and early february the 2320 was also broken which as expected “..move above 2320 would be very bullish.” accelerated the move to above 2350. The US markets are overbought and could even become more overbought with this very strong trend in place. A correction will come but nobody dares to call an end for the current move and knows what will be the trigger for it. Action on Nasdaq 100 (See second chart below) was even more spectacular with a 5%+ up move after crossing levels mentionned in January 17h post. Technologies are deeply overbought on a daily basis but the RSI on weekly chart testifies of another 2 to 4 %  upside potential is not excluded . I would definitely not chase this segment of the market at this stage but keep our current 15% IT exposure in our strategic (Long term) exposure . This is matching the proportion of IT stocks in the FTSE All World index. Our portfolios strategic allocation is overweighted in Healthcare (16% vs 10%), Materials (15% vs 7%) and Industrials (15% vs 10%) and underweighted in Financials and Consumer Staples.

Virt. Portfolio :  The two 1% of portfolio hedges taken on SP500 and NDX 100 expired worthless as their strike levels were surpassed … this is how this kind of put “insurance” works : if the underlying asset (here SP500 and Nasdaq ) continues higher from the time one takes the position , one profits from underlying positions positive move and loses from position itself . If underlying asset loses in value , result can be 2 , 5 or 10, .. times the committed amount depending of market move size and leverage of position taken .

My Balanced allocation model portfolio (50% Max Equities) is up 1,95% YTD : Equities (out of hedges) contributes positively to performance by 2,55%, bonds by 0,33% and hedges negatively by around 0,90%.

 

 

 

 

Virtual Portfolio Update – January 31th 2017 – Portfolio + 14,87% – YTD + 0,85%

 

Portfolio is up 0,85% for January vs 0,14% for our SP500/Eurostoxx50 average benchmarks.

Best performers YTD are Emerging Markets, Turkey (+ 10,52% !!but  in TRY) , Brazil (+7,38%) , India and Hong Kong (+6%).  Matured markets performances were softer : SP500 (+1,79%) , Dow Jones (+0,51%) , Nikkei is down 0,39%, Dax up 0,48% and Eurostoxx50 down 1,50%.

From now on I will publish this update on 15th and at end of each month and like in the past any transaction at the time of placing the order. 

Readers of this blog who would desire to have an insight of my STRATEGIC allocation  can contact me any time via email or telephone . The Balanced allocation (50% Max equities) has yielded +1,80% YTD (USD based)

 

 

 

Mexico … Time to buy ! – Virt Portfolio

 

Mexican Peso :   The Mexican Peso has lost around 18% against USD since the day before Donald Trump’s election  and  38% since 2014  . This latter numbers might look huge but it has to be put into perspective considering that currencies like EURO, GBP and NOK,..  have respectively lost 24%, 29% and 28% against the Dollar in the same period. In the last 3 years, the Peso has suffered like most other currencies from general USD strength and on top of that was slaughterted by the so-called “Trump”effect especially when in Q2 2016  odds to see Trump as the Republican candidate for the US election started to increase . Even tough the Trump administration might dramatically hurt mexican economy, MXN recent weeks acceleration to the downside (Up for USD) is clearly an exxageration. Do not forget that as The Economist pointed 2 weeks ago,  40% of inputs in goods sold from Mexico to US comes .. from USA !! If Trump wants to punish Mexico, America itself will be hurt.

Technically,  MXN has reached last week the upper side of its 1 year range and being in overbought position it looks difficult to see the 22 level broken at this stage. The trend is slowly reversing as shown by the macd curve and bearish (for USD) divergences do appear between price and momentum indicators (here macd).

There is room for correction here in favour of the peso given that “Trump” effect will likely fade and that USD has entered a consolidation (nice word to say weakness) period .

Short term MXN bonds can be found with 5 to 7% yields in very good names . For example a Rabobank  maturing in Jan 2018 has a approximate 6% Yield , a 3 years EIB with 7% yield .

 

Mexican Stocks :  The mexican stocks valued in USD as shown by the Ishares Mexico here below (ticker EWW) have lost 20% since November 8th ( by the way Russian stocks have GAINED the same percentage) . Stocks like the currency seem to have bottomed from an range (USD 39 -USD 42 – see long term chart link below ) that acted as strong support in the last 10 years . Like for the MXN I add MACD reversal and price/ momentum divergence as technical evidences of a potential rebound .

Action : Buy 1 unit of EWW Max price 43.25 USD // SL : usual 10% closing basis .

 

Long term EWW chart :    http://schrts.co/ZY8wGG

 

Virtual Portfolio Update – January 20th 2017 – Portfolio + 15,08% – YTD + 1,04%

 

All principal DM indices are flat or down on the week : SMI -2,09%, FTSE100 -1,90%, CAC40 -1,46%, Eurostoxx 50 -0,80%, Nikkei -0,77%, Nasdaq -0,34%, SP500 -0,15% & DAX +0,01%. The best performers are EM with Turkey +1,89%, Brazil +1,37% & Shanghai +0,33%.

Markets are in a low volatility/consolidation period since more than one month and a break out of recent ranges (see last post for SP500 specifically) will define next direction .

 

Virt. Portfolio Update / Techs Stocks rally exhausting

 

Techs stocks (here Nasdaq 100) have been very strong since December 31st catching up poor performance in the aftermath of US election. The rally is tiring with recent decreasing volumes (Red lines) . NDX100 slowly reaches the 70 overbought RSI level and the upper part of an up trendline traced since early 2016 (Blue line ). After having seen on the US markets a “Buy the News” after Donald Trump election , we might see a “Sell the Fact” as we approach the inauguration.

The tactical hedge (on SP500) currently represents 1% of portfolio (0.2 Units).

Action : Buy another 1% (0.2 units ) of hedge via the CITI Turbo PUT Nasdaq100 KO strike 5179 (ISIN : DE000CX63TM6) at current price of 1.29 EUR (17/1 – 13:30 CEST)

 

Virtual Portfolio Update – January 13th 2017 – Portfolio + 15,40% – YTD + 1,32%

 

Nasdaq hit all times high this week . Generally speaking , most assets/indices/..  who overperformed in the last weeks of 2016 are consolidating or underperforming since 31/12 : Industrials, energy and financials sectors in US, US small and mid caps , Eurostoxx50 , Utilities in Europe , USD, China . On the contrary those who underperformed in November, December tend to overperform so far in 2017 : Technology , Health care (in US), Emerging markets with Brazil , Turkey (In TRY only) and India amongst the best performers, EURO, precious metals and  US treasuries .

 

Virtual Portfolio Update – January 11th 2017 – Portfolio + 15,83% – YTD + 1,70%

 

The Portfolio is up 15,83% since inception nearly 1 year ago and up 1,70% Year To Date.

The average performance of positions we hold (out of the hedge which is 1% of Portfolio) since 31/12 are up 2,90% so the 25% cash we hold as ammunition in case of market correction is clearly weighing on performance.

The Oil tracker bought in December was stopped at USD 11,07 yesterday evening – Loss 4,73%. WTI Oil is back below the often mentionned very important Resistance/Support level of USD 52,50 : Technical picture is weak again with daily trend showing more downside and bearish weekly chart. Price might revisit bottom of last 9 months trend in the USD 45-46. More positive could be expected if prices reverses back to above USD 52,50. Oil markets fundamentals, oil producers intents and divergent effective real actions do not help to have a clear vision on what happens next.

Take profits levels have been added for EasyJet and The Biotech tracker.

 

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 : 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

 

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