EURUSD entering multiple support/resistance range (1.1550-1.17) and DAX topping

 

EUR/USD (1.1695) is entering the long term key range of resistance support 1.1550-1.1700 :

  • 1.1715 was the August 2015 Top.

  • 1.1616 was the May 2016 Top.

  • 1.1550 was the Novemberr 2017 Bottom.

1.15 target mentionned in the April 12th post is in sight BUT a (big) corrective bounce could take place any time from the abovementionned  key levels . Down trend remains nevertheless in place. 

 

DAX : 13200 Target mentionned in the May 2d post have been reached yesterday…

Not a good sign to see DAX correcting lower while EUR is weak … MACD Daily shows Bearish signal today ( to be confirmed end of session).

 

 

DAX breaking higher

 

Long term support/resistance breaking higher on DAX ( Thank you EUR/USD ! )

The 12650-12670 ( 2 black lines below) seems to be broken : these levels match with :

1/ July 17 resistance
2/ trigger level for up move in september 17
3/ trigger level for down move in february 18
4/ multiple resistance zone in last 2-3 months

SHOULD DAX NOT REVERSE QUICKLY BELOW 12600 , the move to 13200 initially and higher might be very rapid .

 

Dax : Levels to watch …

 

a/ 11500 -11600 ( +/- levels reached overnight on Dax Futures) are KEY level as 1/ top at the end of 2015 2/ levels
that triggered the up move trough 2017 3/ Up trend since bottom at q1 2016 ….

b/ 13000 will cap up reaction for the moment (up trendline since mid 2016) .

– Trading range 11500 – 13000 : Above 13000 more bullish // Below 11500 : Big Danger if crossed.

 

 

 

 

Franklin Templeton Annual Conference / October 2017

Link to slides below text.

Europe

FT has strong view on european equities…

  • Private consumption led recovery (Slide 10) i.e more potential on the export side if EUR weakens.
    From big budget deficit in peripheral countries to surplus since 2010 for the most (Except Spain) (Slide 12).
    European growth better relative to US in 2016. (Slide 17).
    SEK = Opportunity relative to EURO (Slide 18) : Risksbank to hike rates sooner tha later  EUR-SEK spread to go down.
    Earnings in Europe at crisis low (2010) !!! Not the case for US .. (Slide 20). Momentum improving for EM earnings.
    European recovery well established : Unemployment at lows / IFO / Manufacturing PMI / GDP (Slide 21)
    Support for EURO improving vs 2016 amongst Member states (Slide 22)
    Huge potential recovery for european corporate earnings still 46% below pre-crisis peak….(Slide 23)
    … & at all time lows as % of MSCI World. (Slide 24)
    European Corporates sales recovery … earnings not yet … Margins will improve once we have more inflation. (Slide 25)
    P/B at 1.8 in the lower range for last 20 years. (Slide 27)
    Normalised PE at 18.50 cheaper vs US / DM / 30Y average of 21.50. (Slide 28)
    Headwinds & Tailwinds for next 12m. (Slide 33)

Templeton EUROLAND Equities fund is already in our « Best in class « Funds list”

Emerging markets

… and on EM equities.

  • GDP/Capita : Huge room for growth !!! (Slide 36)
    EM GDP( and trade) in % vs World more than doubled in 20 years .. just the beginning.. (Slide 37)
    EM demography = ++++ (Slide 38)
    Internet usage : Amongst the top 10 countries, 5 are EM . (Slide 39)
    EM Ccies Index … 22% lower compared to 2002 and 24% lower than 2009 at bottom in 2016 // Today still nearly 40% lower to 2011 top. (Slide 44)
    EM equities trading at discount vs DM .. PE 12.40 vs 16.50 , PB 1.8 vs 2.3 with higher earnings growth 14.4% vs 10.40% and higher margins. (Slide 45)
    EM increasing Tech domination : (Slides 49 and follow.)
    EM fundamentals sounder than DM : Banking system , Public & corporate debt , cap to asset ratio. (Slide 54 and follow)
    EM key issues : Fed / US stimulus policy/ USD / Korea / China adjustments .

 

Templeton Emerging Markets Equities fund : Last 2 years performance was very good mainly since Manager change back in 2014 .

 

Franklin Templeton Annual-conference-Presentation_Lux October 2017

 

UBS Technical View on Markets – 21/03/17

 

US markets – Break of SP500 2350  targets 2280 -2300 / Worst case 2240  // Sharp move but short in time 1 or 2 weeks.

Oils stocks basing and turning bullish.

Buy US Financials after pullback.

US yields will pull back short term  : Short term Top around 2.60% 10y in place // See 3% in H2 2017 .

Major top in USD in place / UBS sees DXY at 92 in 2018 from 100 now.

Bearish USD so bullish Commodities, Gold, EM, Oil .

Big move in Gold within 12 months minimun target 1700 USd after USD 1375 break.

European, stocks : Buy Dax on pullback at around 11500 and Eurostoxx50 3200 as  max retracement so buying opportunity in  3200 -3300 range.

 

 

 

 

Dax Update : 11400 Support and stocks to be considered if market bounces.

 

December 7th and  December 12th posts quoted  (Red arrow 1) : ” Upside is open as said before with first targets at 11400 & 11800 with maximum retracements allowed to 10800-10900.

The last 2 weeks of 2016 saw  first target of 11400 reached (Red arrow 2) and 11800 target in the last week of January (Red arrow 3). After a 17% up move since november , Dax is in a normal consolidation process and prices should be supported at previous 11400 resistance area . The ascending 50 days moving average blue line should help to support prices around the same zone.

Beware a daily close below 11400 as this could bring Dax down where the current move started back in December i.e. 10800 . A weekly close below 11400 would put more weight on the bearish side.

 

 

Should 11400 support holds and markets reverses (Watch MACD daily for confirmation) , the stocks having the best chances to outperform would be the “Trump beaten stocks ” (mainly the german car makers – amongst the worst performers YTD), the High BETA , the HIGH dividend and  the low PE stocks .

The 2 stocks complying with the 4 criteria are BMW and Daimler . I like the cyclical Thyssen Krupp that will likely overperforms if market picks up and EON ( High Div) in catch up mode since a few weeks after several years of misfortune.

 

Dax High Dividend Stocks

 

Dax High Beta Stocks

 

Dax Low PE Stocks

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.

 

 

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

 

Main Indices Weekly Review

Best Performers

Nikkei, thanks to a very weak JPY is the best performer this week. US small and mid caps including a majority of domestic companies not affected by a strong USD largely overperformed the rest of US markets since election. SP400 Mid Cap and Russell 2000 will probably continue to overperform SP500 in the next weeks . Russia and Brazil recovered this week after poor post election performance. Nasdaq stocks recovered most of heavy losses incurred in the days just after Trump was elected.

best-perf-191116

Worst Performers

Italian referendum planned for December 4rd started to weigh on european stocks which did not profit at all from a weakening EURO ; Italy was down 3% , Dax and Eurostoxx50 were flat . There is a risk that populists voting concerns will continue to weigh on european stocks. Second worst performer was the Indian market  (-2,70%) with government decision to demonetize high denomination bills persistently weighing on the local market. Conversely Indian bond markets is a big beneficiary of the move. Generally speaking EM including their currencies did poorly since the US election.

perf-week-191116

 

 

 

 

 

 

Virtual Portfolio Update – November 10th 2016 – Portfolio Up 13,98% vs Benchmark up 8,30% // OverPerf. 5,68%

  • Silver tracker was bought at USD 17,86, yesterday’s opening.
  • No limit reached for XLV (Healthcare Tracker) and IBB (Nasdaq Biotech tracker) buy orders ; those of you who followed advice to buy IBB without following (my) advice to place a limit could have booked today a profit of 14 to 15% in 3 days … Markets remain very volatile , we keep limits as they are.
  • The 2X Daily Dax was bought at the 218,75 modified limit.
  • Second half of Gold position was bought at USD 1302,25 for an average price of USD 1286,12.

Virt.Portfolio Open positions :

virt-portf-open-positions-101116

DAX : Follow up

I refer to messages posted on Nov.3rd and Nov.7th.

The aim was to “..play a potential bounce from major index support.” (Post Nov.7th) by buying the DAX 2X ETF . And again the german index bounced from its 10250-10400 key support range with NO CLOSING  below the 10250 point.

The very strong – Dax futures even touched levels below the 10000 bar yesterday morning, now at 10730 ! – and unexpected U-turn after Trump election seems overdone.

On a technical basis Dax is back near the top of its range – 10800/10830 closing basis– but nevertheless has the potential to go much higher IF it crosses the 10820-10850 on the upside on a closing basis with trend indicator (Daily MACD – bottom chart) crossing up at the same time . Initial targets would be then set at  11400 and 11800 for 5 to 10% gains by end of year . On the downside one should continue to watch the 10250-10400 levels with also the 200Days MA as support a bit lower.

As a reminder DAX is still down 0,50 % year to date (Eurostoxx50 -6%). Everything being equal most german (and european) companies might benefit from a weaker EUR / strong USD . The chances are great that Trump intended fiscal spending policy will be inflationary and drive the Fed to hike rates at a fastest pace than anticipated with positive impact for the USD / weaker EURO . A Euro in the 1 to 1,05 range would definitely not leave the european markets at current levels .

dax101116******** CLICK CHART TO ENLARGE *******************

 

 

 

 

 

 

 

Trump election : Risk off period ahead – Volatility – Polling institutes // Virt.Portfolio Action

The US election outcome more than likely will create more uncertainty for equities, bond markets and global trade going forward . We definitely enter a risk-off and volatile period. Not all sectors are equally positionned to potentially benefit from measures announced by Donald Trump in his program . Pharma, Defense, Steel , Construction, infrastructure in general are amongst the sectors that should perform better RELATIVELY SPEAKING ( I insist on last 2 words !!).

Indices support levels on a closing basis :

  • SP500 : 2080 – See Nov.7th post.
  • DAX  : 10250 – See Nov.3rd post.
  • Nasdaq 100 : 4650 – See Nov.3rd post.

Virt. Portfolio Action :

  • The ETF Dax Daily Long 2 X has been bought at EUR 218,75 Limit yesterday PM.
  • iShares Nasdaq Biotech ETF (IBB) : New limit at 257 Eur was missed by a little – Session Low  258,27 / Session High 265. The healthcare sector as a whole is welcoming the Clinton non-election : Preopening is at 277,25 (+6%). 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.
  • In order to protect the portfolio against uncertainty and risk-off period to come we add traditional safe haven vehicles which are GOLD and SILVER :
  • 1/ We buy the second half of Gold position @ current price (13:15 CET) of 1302,25.
  • 2/ We buy 1 Unit in SLV the Silver Tracker quoted in NY. Limit at 18,05 USD. The trend is up and, 200 days MA is support, 50 Days MA reversing up.

slv091116

XLV – Health care sector tracker Buy 1 Unit at yesterday’s closing price of 68,40. This is a very low limit considering the preopening price which is currently at 70,50. We will try here to benefit from market volatility to enter this unloved sector year to date – see rationale above and in the last post.

xlv

After Brexit failures, polling institures definitely lost all their credibility …..

polls-before-election***********CLICK TO CHARTS TO ENLARGE******************