Trying to hear what's not being said
October 7, 2021 Leave a comment
Natural Gas prices in Europe have risen 7 fold in the past 7 months.
Bitcoin hasn’t done that……just saying!
#oldschool
On a more serious note, beware of parabolic price moves.
Watch but don’t play.
If you own gas which you can deliver into Rotterdam……sell it.
It’s a sellers market.
This price should halve, quick smart.
October 7, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 7, 2021 Leave a comment
Yesterday I posted charts showing the correlation between the
a) AUDJPY vs U.S. 10 year bond yield
and b) AUDJPY vs the CRB (commodities) Index
Today (below) you can see how a) Copper vs AUSUSD
and b) Copper vs the U.S. 10 bond yield are ‘tracking’ each other.
September 7, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 7, 2021 Leave a comment
What a difference a day makes, although one day doesn’t make a trend.
Overnight WTI Crude, Brent Crude, Heating Oil, Gasoline all fell 2%. Natural Gas fell 10%.
What is more important is last night’s trading session produced a bearish outside reversal day in all of mentioned commodities. This is where prices traded outside the previous day’s range, meaning today’s high and low was higher and lower than yesterdays range and the closing price was below yesterdays. It’s a bit more bearish because today’s close was lower than yesterday’s intra-day low.
September 7, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 6, 2021 Leave a comment
At the close of trading on Tuesday October 5, 2021, much of the energy complex was overbought and extended on many measures.
As much as I try to call tops, bottoms and pivot prices, probability suggests that one shouldn’t ‘go long’ with new money and new positions amongst the energy commodities at current prices.
So, with that my view on Natural Gas, Crude Oil, Gasoline, Gasoil & Heating Oil is that they are reaching a trading peak and selling is more prudent than buying.
The latter (Heating Oil) appears in the chart below.
October 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 6, 2021 Leave a comment
And Copper needs to initially hold $4.07 over the next couple days and more so, $4.02.
A break below $4.02 means it has recently made a lower high and lower low.
Then we can expect to see the following move lower;
the AUDJPY (a weaker AUD), the CRB Index, Oil and U.S. 10 year bond yields.
This will make down-trodden technology stocks attractive.
For now the U.S 10 year bond is 1.55% and I expect a spurt to 1.58% in the next 2 days.
In turn we should see a couple more down-days in equities and a Nasdaq 100 touching 14,325 (another 2.8% lower from today’ close) would satisfy a 50% retracement of the 21% rally which commence May 12, 2021.
but remember to watch Copper….
October 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 6, 2021 1 Comment
Do you know how you see price charts after the move has already happened. Financial media journalists are particularly good at that.
I remain critical of them because I just wish they would publicly make a call, form a view or take a position rather than always reporting things after the fact and acting as if they predicted it.
Below is my April 30, 2021 call that Natural Gas prices were on the verge of the ‘mother of all breakouts’.
Upon breaking above $3.03 mentioned in the article, they are now $6.25.
Part of the position was sold at $4.07.
It’s now time to sell the rest.
October 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 6, 2021 Leave a comment
And then we can watch if the CRB (commodities) Index follows the AUDJPY (orange line) as well.
October 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 6, 2021 Leave a comment
I’m watching the AUSJPY currency cross. It’s one of my favourites.
It’s at an acute point.
Let’s see which direction the AUDJPY (orange line) moves and see the U.S. 10 year bond yield follow it.
October 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 2, 2021 Leave a comment
The following assets (on a weekly timeframe) registered an Overbought reading or traded more than 2.5 standard deviations above its rolling mean.
Extremes “above” the Mean (at least 2.5 standard deviations)
U.K. 10 year government bond yields (Gilts)
U.S. 2 year and 5 year govn’t bond yields
The Bloomberg Commodity Index
And the USD/JPY (telling us the Yen is weak)
Overbought (RSI > 70)
Hot Rolled Coil Steel (for the 53rd consecutive week)
Coffee
Tin
The CRB Index
and India’s Sensex & NIFTY 50 equity indices
The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
Gasoil
Heating Oil
Baltic Dry (shipping) Index
Natural Gas
And the JKM “Japan/Korea (LNG) Marker”
Assets (securities) which touched the other side of the extreme, being Oversold (where the RSI is < 30) or were at least 2.5 standard deviations below its mean are;
Extremes “below” the Mean (at least 2.5 standard deviations)
Germany’s DAX
South Korea’s KOSPI equity index
GBP/USD (meaning the British Pound has weakened)
Oversold (RSI < 30)
None
The Oversold Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean.
None
Notes & Ideas:
The price action remained the bond market this past week with commodities also featuring the larger movers amongst the list below.
Bond yields have been rising. Following from last week’s round-up of movers over the past 2 weeks, we take a look at the past 6 weeks movers in yields.
Australian 10’s have risen from 1.07% to 1.49%.
U.S. 10’s from 1.13% to 1.47%
French 10 years from -0.15% to + 0.12%
U.K. 10’s have doubled from 0.52% to 1.01%. This weeks high was 1.06%.
Japanese 10’s are climbing, Korean 10’s are nearly overbought while the US10 year minus US2 year spread is on the verge of forming a bullish trend which is another indicator of stock market risk.
I am also watching the Copper/Gold Ratio to also assist with a directional call on interest rates and the USD (DXY) Index is above 94.
The larger advancers over the past week comprised of Baltic Dry Index (shipping) 12% (it’s up 30% in past 3 weeks), WTI crude 2.6%, Cocoa 4.6%, Iron Ore 6.7%, Gasoil 2.7%, Heating Oil 5%, JKM 13%, Coffee 5% (adding to last week’s 4.2% advance), Natural Gas 9.3%, Gasoline 2.9%, Sugar 5%, the CRB Index 2.2%, Corn 2.8%, Wheat 4.4% & the U.S. KBW Banking Index rose 2.4%, adding to last week’s 3% rise.
The group of decliners included Aluminium (2.4%), Cattle (2%), Nickel (5.3%), Orange Juice (3.6%), Rice (2%), Soybean (3%), AEX Index (3.1%), CAC-40 (2%), DAX (2.4%), S&P 500 (2.2%), TAEIX (4%), OMX Stockholm (2.6%), OMX Helsinki (2.3%), OMX Copenhagen (5.5%) (remember the Overbought signals on these in the last month), India’s Sensex (2.1%), Nasdaq (3.5%), the Nikkei tumbled (4.9%) and SOX fell (5.5%).
Note: the Philadelphia Semiconductor Index (SOX) has been generally trading sideways for 4 months and is the same price at February 2021. This somewhat validates the thinking that when the semiconductor shortage story hit mainstream, it was already built into the stock prices. The SOX has tripled from its March 2020 low and has risen 8-fold since January 2016.
Heating Oil has soared 23% in a month and as the chart below illustrates, has tripled since April 2021, when it last flashed an ‘extreme’ buy signal. Today, my signals for Heating Oil suggest selling.
A rise in the U.S. Dollar has generally resulted in weaker commodity prices. Gold in AUD continues to hold a A$2,312 support level.
But I continue to watch and think that recent rise in interest rates will be a head-fake and lead to a reversal lower. The next resistance in U.S. 10’s is 1.62%.
Higher U.S. interest rates means a rising AUD. If 10’s hit resistance and reverse lower, the lower AUD and weaker commodities trade is back on.
October 2, 2021
by Rob Zdravevski
rob@karriasset.com.au
October 1, 2021 Leave a comment
Here are some quips about mean reversion, knowing when not to chase something and insisting on a bargain, or perhaps ‘buying straw hats in winter’.
There is significance in BHP’s recent pullback,
in the chart below,
see the notable reversion to its 200 week moving average,
note we are taking a long term view here,
this chart is a weekly chart covering 25 years,
invariably BHP mean reverts,
parabolic moves see mean reversion quicker and savagely,
and often a subsequent resumption of the previous trend,
I don’t see a structural breakdown of the commodity supply complex and demand.
To coincide with a visit to the 200 week moving average,
using Fibonacci calculations (it’s something I use to help pick an entry price),
subjectively, BHP has retraced 62% of the advance from its March 2000 low,
which is another way of weeding out those who bought late into the rally.
And over a slightly longer period,
the chart below tells us that if BHP falls to $34.30,
it represents a 50% retracement of a 6 year advance,
which started at $14.13 in early 2016,
$34.30 would represent an attractive risk/reward opportunity.
Rio Tinto has a similar analog and story.
I’ll only post a simple weekly chart below, with its 200 week moving average.
Using my mean reversion principles,
the chart below is a simple example of Wesfarmers,
and when not to chase a stock,
and help identify whether you are being the marginal buyer,
WES has deviated to more than 50% above its 200 week moving average,
never has it seen such an extreme,
add high valuations and one would be a fool to have been a buyer above $50,
in fact $50 is where probability suggested selling,
citing the notion that the ‘fat part of the trade’ had been had.
From the book of ‘insisting on a bargain’
and depending on economic landscape and valuations,
I wouldn’t interested buying this stock unless it saw $36-$42,
wait for the mean reversion,
otherwise it may make for a pedestrian investment.
In another example, I’ll show you what the craze in lithium related companies looks like,
here is a chart of Pilbara Minerals (PLS.AX),
it has a market capitalisation of A$6 billion,
it’s trading at stratospheric levels above its 200 week moving average (WMA),
at a current price of $2.05, it is trading at nearly 200% above its 200 WMA
the recent rally resembles a parabola,
don’t be surprised if new investors today end up halving their money in the next several months.
While the next price chart is of a quality gold producing company,
called Evolution Mining (EVN.AX),
it has a market capitalisation of A$6 billion,
it’s trading at 15% below its 200 WMA,
nobody likes Gold or gold stocks today,
seems like buying a straw hat in winter?
Also appearing in the unloved category is Chinese equities,
the Hang Seng China Enterprises Index (HSCEI) tracks the performance of major H-shares,
H-shares are Renminbi-denominated shares issued by Chinese companies,
they are listed on the Stock Exchange of Hong Kong,
which are traded in Hong Kong dollars.
The HSCEI is trading on a current Price/Earnings (P/E) Ratio of 9,
and its currently 20% below its 200 week moving average.
………just something to think about.
October 1, 2021
by Rob Zdravevski
rob@karriasset.com.au
rob zdravevski's blog 