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

 

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 )

“Surprise! Shares of IBM Can Rise 35%” as per Morgan Stanley analyst – Barron’s

 

IBM was just a source of disappointments to his sharehoders in last months ( and years). MS analyst says there are 3 reasons to buy the stock now : 1/ Stock is cheap 2/ Dividend of 4,2% is high 3/ Reasons which pushed stocks down are losing steam : The long shift process from hardware to software and from local machines to cloud is coming to an end and so pressure on revenues which for a part was voluntary, margin and profit. Huge investments of above USD 30bln into Cloud, security business, social, mobile and analytics will start to bear their fruit.

IBM’s stock has lost 33% from USD 179 february top to recent bottom at USD 139, an underperformance of roughy 40% versus SP500. Time to catch up has come …

Technically 1/ IBM’s stock price bounced from the USD 135-140 area  2/ Trend via MACD daily shows a reversal  3/ One can see a positive Price/Momentum divergence on chart     …  Chart Here

I bought stock at Opening yesterday just above USD 143.

Link to : Barron’s on IBM – August 23rd

IBM Vs SP500 – Last 2 y

 

 

Gold Miners ETF (GDX) : Breakout above USD 23

 

GDX recently broke the down trendline (purple) above USD 23 . This could prove to be a strong signal as long as above USd 23 prices are maintained and Gold prices also ends with cleanly breaking the USD 1300 level ( 3rd test since April).  Continuation of US equities market – so far tiny with SP500 down 2.50% – correction initiated 10 days ago might be the trigger for Gold finally surpassing the USD 1300 key level.

Short term, flattening 50 days and 200 days MA + Purple TL will act as support in the USD 22-23 area.

 

 

GDX (Right Scale) vs Gold Price (Left Scale)

 

 

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

 

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 .

 

 

 

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.