Stifel : Macro & Portfolio Strategy – January 2018

• Stifel sees a 5% SP500 correction in Q1 for SP500.
• SP500 seen at roughly current levels by EOY = Active investing environment
• Slide 2 for long term forecast !!! (Note that Stifel forecast has been quite correct in the last 6-7 years in this bull market).
• Slides 6 on long rates and SP500.
• US 10 Yields seen at 2.96% eoy

Link to the Stifel Macro & Portfolio Strategy :  Stifel 050118

 

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

 

US Markets update : SP500 Break out – NDX 100 No sign of Tiring

 

SP500 : Main US indice broke out (See red down moving line) yesterday of its nearly 2 months consolidation phase initiated after March 1st all time high. Chances are great now that SP500 will test and beat previous highs at 2400  . MACD daily is turning positive. Strong supports (Green Channel) remain untested in the 2280-2300 zone .

Companies fundamentals also support current positive market momentum with earnings growth of 11% announced so far for last quarter (77% of SP500 companies reported at this day ) – see below table.

 

 

 

Nasdaq 100

All time high again on NDX 100 . Strong momentum goes on on Tech Companies with only a limited consolidation in recent weeks . Trend indicator turns positive . A big gap occured yesterady in the aftermath of french election which is bullish unless if case it would be closed within 1 or 2 days .

 

 

 

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.

 

 

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)

 

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

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

 

Barron’s : A Trumped up portfolio of 40 stocks by RBC Capital Markets

http://blogs.barrons.com/stockstowatchtoday/2016/11/21/these-40-stocks-create-a-trumped-up-portfolio/?mod=BOLBlog

Stocks suggested by RBC do match following criteria :

  1. Domestic orientation.
  2. Low P/E stocks : Perform better if strong growth.
  3. High operating leverage : Benefit in case of strong growth.
  4. Highly taxed companies : Will benefit more in case of decreased tax rates.
  5. High volatility stocks : Will outperform low vola stocks which are more rate sensitive.

The 40 Stocks :

AmerisourceBergen (ABC)
Legg Mason (LM)
Alliance Data Systems (ADS)
Lincoln National (LNC)
Aetna (AET)
Southwest Airlines (LUV)
Alaska Air (ALK)
Macy’s (M)
Ameriprise Financial (AMP)
McKesson (MCK)
AutoNation (AN)
Navient (NAVI)
Anthem (ANTM)
Norfolk Southern (NSC)
Bed Bath & Beyond (BBBY)
PNC Financial (PNC)
BB&T (BBT)
Ryder (R)
Best Buy (BBY)
Regions (RF)
Cardinal Health (CAH)
Staples (SPLS)
Capital One (COF)
Southwestern (SWN)
Discover Financial Services (DFS)
TEGNA (TGNA)
Express Scripts (ESRX)
Tesoro (TSO)
Freeport-McMoRan (FCX)
Unum (UNM)
Gap (GPS)
Urban Outfitters (URBN)
Huntington Bancshares (HBAN)
United Rentals (URI)
Nordstrom (JWN)
U.S. Bancorp (USB)
CarMax (KMX)
Wells Fargo (WFC)
Kohl’s (KSS)
Zions (ZION)

 

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

 

 

 

 

 

 

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******************

One Day before election – Markets bouncing – Virt.Portfolio : Add DAX & US BIOTECH ETF (2)

Buy iShares Nasdaq Biotech ETF (IBB)  at limit 253,50 USD

Permanent attacks of Hillary Clinton against the drug industry had the consequence she has been seen as the biggest threat for the sector for months. In recent months investors sold the”Rumor” of a Clinton election and made of the S&P500 Health care sector one of the worst performing sector in US : – 13% since August top and – 8,50% YTD .

This is a “Buy the News” trade in anticipation of a Clinton win  and we use here the Biotech Sub Sector which is more volatile and suffered even more than the global index : -35% since 2015 top, -27% YTD and -16% since August interim top.

The Technical rationale for this trade :

  • The Index is at 2 Year support line in the 240-250 USd range.
  • Reached oversold levels that matched 6 out 7 times in the last 5 years with excellent entry points for the mid term (see purple ellipses).
  • Divergences appear in daily MACD but no crossing up yet.
  • Index price is back to its 3 years ago price.

Stocks (17:15 CET Time) currently quotes USD 261,18 up 9,50 USD so the limit put pre market (253,50 USD) was too probably too low : I increase  a bit limit to USD 257 .  If we enter this trade SL set at below USD 230

ibb-071116

Buy  ETF Dax Daily Long 2 X at limit 218,25 ( Current @ 219 EUR) – Leverage ETF .. 2 times the dax daily performance. – ISIN DE000A0X8994.

For rationale for this trade on The Dax see the post on “Dax Technical comment”  dated November 3rd : We play here a potential bounce from major index support. Here too i was too cautious with the limit at 218,25 and i change it to 218,75 EUR (Current 219,99 EUR) .

dax-2x

 

************** Click on the charts to enlarge *******************

 

 

 

 

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

Odds of a Trump presidency, which has scared investors in the last week,  retreats again today on FBI reaffirmation it will not take action against Hillary Clinton over new emails diclosure. This will likely have as an effect for the equity markets to interrupt a long losing streak of daily losses – 9 days for SP500 , not seen since 1980 – and initiate a strong bounce .

This bounce will (is taking) place from already discussed support levels : in the 10250-10400 area for the Dax , from 4650 (at which we closed puts holdings on friday ) for Nasdaq 100, and from 2080 for SP500 as shown on chart below. The said supports should hold at least for the short term if H.Clinton gets elected. 

SP500 Chart technical rationale for a bounce from friday’s closing ( Note that SP500 futures are already 25 points higher) :

  • Bottom of downtrend channel .
  • 200 days MA is support.
  • RSI @ oversold levels matching with entry points in the past (>75% of cases).
  • Streak of 9 down days.

Targets 2120 @ thereafter 2140 – 2150 range . Should 2150 be broken up on a daily closing basis, the US index will probably hit new highs and go beyond 2200.

On the downside (Trump elected) 2080 will be broken down and a minimum of 5% and up to 10% slide is expected so after Brexit levels would be revisited .

sp500-071116

Action :

Buy 1 unit in the ETF Dax Daily Long 2 X at limit 218,25 ( Current @ 219 EUR) – Leverage ETF .. 2 times the dax daily performance. – ISIN DE000A0X8994.

Buy 1 Unit of iShares Nasdaq Biotech ETF (IBB) at max price of 253,50 USD , Last closing at 251,70 USD.  ISIN US78464A8707-  

SEE NEXT POST FOR CHARTS & COMMENTS .

 

 

Technical Comment : Nasdaq100 + Virt.Portfolio Action

US equities markets have closed down the last 7 days which is the longest losing streak in 5 years. This ( 7 days or more) happened 3 times in last 20 years : In 2008 when Lehman failed, in August 2011 when US debt was downgraded and in November 2011 for the EU debt crisis. This time and since last week,  the markets have started to anticipate other potential nasty events for the markets which are 1/ a Trump election at the White House (Risk of short term selloff ) 2/ Risk of constitutional disputes in case of Clinton election (The risk for the markets would be more mid term but positive just after the election).

Technically, US markets (Here shown NDX100) are reaching oversold levels matching with strong bounces in the past .. in case of “normal” corrections as shown by red ellipses. During the last two 20%+ corrections oversold levels did not matter and markets corrected further .

Potential stopping points (Blue ellipse) are are at 4702 (2015 closing and current quote on NDX futures), 4694 (July 2015 top) & 4656 (Sept.2016 low).

Trump elected at the White House bears the risk of MUCH more downside, one must be clear but it should not be the preferred scenario here as Clinton is still leading in majority of polls.

ACTION : Sell 1/2 of Nasdaq Put at current price of 2,28EUR ( Nov 3rd 10:55) . We keep limit placed yesterday at 2,70EUR for the other half . Note that given the increased volatility in markets ahead of US election i might quickly reestablish the full hedge.

ndx100put-ndx-price

 

 

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 )

 

apple251016

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%).