WTI Oil (USD 70.71) : A correction has started …

Tensions in Middle East, tough US positioning versus Iran and Venezuela pushed oil prices further up in recent weeks .

Saudi announcement of a potential boost in oil supply is reversing price action and WTI @ USD 60-62 could be seen again very quickly .On top of this, extreme bullish positioning of futures traders might exacerbate the move down short term.

 

 

US Energy sector bottoming vs SP500

 

 

US Energy Sector (XLE Etf ) versus SP500 chart in last 2 years

US Energy stocks bottomed early 2016 at an historic low level versus SP500 (0,025 ratio XLE/SP500) and thereafter bounced 54% in the next 11 months from USD 48 to USD 77 ( Second chart below) . Some technical elements seem to show that we might be in the same situation as early 2016  since the last 10 days or so  with XLE:SP500 ratio bouncing off from same level as in 2016, ADX indicators warning of trend change from down to up, bullish divergences on the ratio and XLE crossing the 50 days MA. Not one indicator is significative on its own but their combination might be a good signal of a trend change for Energy and a period  of catch up versus the main indices (not exclusively on US markets ) . It is good to mention that SP 500 as of end of august was up 11,74% while Energy sector was down 15,33% , a difference of more than 27% YTD and this difference amounts to 38% if we compare Energy to Tech stocks . Market might have decided it has gone to far : Tech stocks have started to correct and energy stocks to bounce.

On oil prices, big Names ( like UBS ) have oil prices targets at USD 60 (WTI oil) currently trading between USD 48 and USd 49.

Global Energy stocks I follow and that are good buys at current prices in my  opinion are amongst others Schlumberger (SLB) , Royal Dutch , Transocean (RIG) , Petrobras (PBR ) , Gazprom,…

 

US Energy Sector (XLE Etf )

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

 

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.

 

 

 

 

Buy Signal on Gazprom – ADR quoted in London USD 4.43 USD // NatGas Seasonality

 

The Chart here below dated Feb 8th shows NatGas seasonality over the year since 2005 : In average,  the commodity starts the year on a weak note until February where it picks up quite strongly into June/July. Price tends to stabilize during Summer and thereafter decline into winter /end of year.

             Source : The Bespoke IG

 

In 2017 weakness has persisted until Mid to end February and Natgas has started its up move since then as one can see on below chart (Black line / Left scale) .

Chart here below points out correlation (*) between Nat Gas continuous Contract (left scale) and Gazprom (right scale )  : Nat Gas has started the move mid February as it did in average in last 12 years and Gazprom just (yesterday) follows up & showed (yesterday) a  buy signal (MACD buy signal bootom of chart) . Based on past action one can expect a 10 to 15% move to around 5 USD.

(*) Not that obvious as Ruble volatility has perturbated correlation  in last 3 years via its effect on Gazprom stock priced in USD.

 

 

 

 

 

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

 

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

 

 

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.
  • ej-daily-241016
  • Bullish Engulfing pattern on weekly chart

ej-weekly-241016

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

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!!

oil-111016

 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

Virtual Portfolio Update – September 30th 2016 – Portfolio Up 12,48% vs Benchmark up 7,58%

The weekly changes were tiny and positive of around 0,15% on SP500 and Nasdaq and negative of approximately 1% on Eurostoxx50 and Dax.

Portfolio is Up 12,48% since start versus +7,58% for the Benchmark (50% SP500 + 50% Eurostoxx50). Overperformance remains roughly the same compared to last week at +4,90% vs 4,89% .

The Crude Oil tracker (USO ) was bought at USD 10,93  yesterday at closing. This corresponds to an crude oil level above USD 47,75 resistance mentionned in September 29th post.

Chart   : USO Oil Tracker:  http://schrts.co/x9Vi8y

virt-portf-open-positions-300916

 

 

 

 

 

 

Technical Comment : WTi Oil // Virt. Portfolio Update

Oil price got a big boost from yesterday OPEC “agreement” – See previous post -. Technically oil prices show a more bullish picture and further upside MIGHT occur should the USD 47,75 level – september high and falling trendline coming from June tops – be surpassed . Daily RSI is giving a positive signal  and the supports on the downside are at around USD 44-45. Above USD 47,75 oil prices should target once more the 2 years key resistance zone of USD 51-52 which if crossed on the upside would open much more potential.

wti-290916

Action : USO – United States Oil – Isin US91232N1081 – Tracker on WTI Oil Futures.

I do not buy at current price (USD 10,75 – 4:30 PM ) and WILL NOT as long as the price does not cross the USD 10,90 on a closing basis (Equivalent of a USD 47,75 crossing on the underlying) . Max price USD 11,10 . Stop at USD 9,70 ie below recent lows/supports. 1 unit .

uso290916

Click on charts to enlarge

OPEC Agrees to First Oil Output Cut in Eight Years – Bloomberg

OPEC  reached an “agreement” to limit oil production … and Oil prices rallied 3 USD yesterday. There were many such announcements in the last 2 years even tough this one seems a bit more convincing. Problem is that details of agreement have NOT been announced. The most obvious reasons are that OPEC usual game is to gain time and push oil prices via verbal interventions and more importantly that they have not arranged yet how the limitations will be splitted amongst members. The big unknown is Russia’s (which is out of OPEC)  reaction : will they also also agree to curb production or go on with their current increase ? YES  there is an agreement but lots of skepticism amongst analysts and traders about its implementation and feasability.

More to come with charts and key levels.

http://www.bloomberg.com/news/articles/2016-09-28/opec-said-to-agree-on-first-oil-output-cut-in-eight-years