OPEC crimping supply is curtains for the oil price

The sub-headlines in the overnight OPEC oil news read;

“Dispute between core members blocks deal to boost output”
“Coming days will determine whether the conflict will escalate”

https://www.bloomberg.com/news/articles/2021-07-05/opec-in-crisis-as-specter-of-destructive-infighting-looms-again?sref=qLOW1ygh

I think OPEC’s disarray is NOT a positive for the oil price.

OPEC+’s abstinence of adding supply will see slack (supply) found elsewhere due to the lure of current oil prices and adds weight to my trading call of a temporary peak occurring soon as I wrote in last week’s post.

https://robzdravevski.com/2021/06/28/looking-for-interim-peak-in-crude-oil/

The price of Brent is likely to see a $1 or $2 spike in tonight’s (today’s) session, as the U.S. wakes up from its 4th July holiday break)….

which all coincides with marginal and futile Oil Price upgrades by broking firms to a measly $80.

and if you are establishing a new “long’ position here, you must wonder what last few percent are you trying to squeeze out?

July 6, 2021
by Rob Zdravevski
rob@karriasset.com.au

A 14% rise and no one blinks

Isn’t this just extraordinary ?

And I do mean extraordinary, yet it seems to be accepted as normal or expected.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 14.6% annual gain in April, up from 13.3% in the previous month.

https://www.spglobal.com/spdji/en/corporate-news/article/sp-corelogic-case-shiller-index-shows-annual-home-price-gains-surged-to-146-in-april/

Macro Extremes (week ending July 2, 2021)

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)

Nil

Overbought (RSI > 70)

Tin (for the 10th week)

Gasoil

Heating Oil

RBOB Gasoline

WTI Crude Oil

Brent Crude Oil

Iron Ore

Hot Rolled Coil Steel

Orange Juice 

the CRB (commodities) index

France’s CAC-40 equity index (for the 12th consecutive week)

Korea’s KOSPI equity index

Switzerland’s SMI equity index (for the 3rd week)

the Nasdaq 100

the S&P 500

and the Copenhagen, Stockholm and Helsinki equity indices.



The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Natural Gas

Assets (securities) within my immediate universe 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)

AUD/USD (for the 3rd consecutive week)

Oversold (RSI < 30)

Nil

The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations above the weekly mean)

Nil

Notes & Ideas:

The list of extreme readings remains light as new trend are developing and mean reversions take place.

It’s time to prepare for when the new occurrences of extremes arise.

In the past week, most price volatility occurred in the commodity and equity markets, while currencies and bonds remained subdued. 

Movers for the week include…

Aluminium +3%

Hot Rolled Coil Steel +7%

Natural Gas +6% (see my break-out trading call)

Leans Hogs rose 6% (after falling 17% in the past 2 weeks) 

Corn rose 7%, recouping last week’s 8% decline

Soybeans +10%

The biggest news is the Nasdaq and S&P 500 rose (2.7% and 1.7% for the week respectively) to make new All-Time Highs and reach Overbought territory.

All while the Banking and Transports indices are not. 

Furthermore, the Russell 2000’s high is back on March 15, 2021 and the MidCap 400 high was April 26, 2021.

Other notable moves included a 3.5% decline in the Hang Seng Index and a 4.2% fall in the Hang Seng China Enterprises Index (HSCEI) 

Korea’s KOSPI and Australia’s ASX 200 were flat on the week and that was enough have their RSI reading ease below the Overbought 70 mark.

The U.S. 10 year bond yield it yet to break above 1.75%. The yield fell to 1.43% from last week’s 1.53%. The 10’s remain range bound. Markets could become explosive is they break either below 1.25% or above 1.65%.

A mostly benign week for Cryptocurrencies except for Ethereum’s 12% rise. 

Here is my Trading Buy call.

And lastly, Bitcoin is trading 154% above its 200 Week Moving Average, which is slightly higher than last week’s 149% reading and certainly lower when compared to its 466% peak in mid-April 2021.

July 4, 2021

by Rob Zdravevski

rob@karriasset.com.au

Concentration not Diversity

It may have been missed by readers in last week’e edition on Macro Extremes…….

but the ASX 200 equity index is at its most overbought reading since July 2019.

* on a mid-term, weekly basis

Today, the ASX 200 is trading at 7,296.

This may portend a decline in the index, however one of my predictions for the coming year or so, is that Index Huggers, ETF investors and even portfolios holding a large number of securities may be quite disappointed with their performance.

In other words, the index may oscillate in an uninspiring fashion and not reflect the ‘gems’ or winners found within.

I think there will be rotation of monies within sectors providing attractive investing opportunities but the index won’t necessarily paint that picture.

July 2, 2021

by Rob Zdravevski

rob@karriasset.com.au

It may have been missed by readers in last week’e edition on Macro Extremes…….

but the ASX 200 equity index is at its most overbought reading since July 2019.

* on a mid-term, weekly basis

Today, the ASX 200 is trading at 7,296.

This may portend a decline in the index, however one of my predictions for the coming year or so, is that Index Huggers, ETF investors and even portfolios holding a large number of securities may be quite disappointed with their performance.

In other words, the index may oscillate in an uninspiring fashion and not reflect the ‘gems’ or winners found within.

I think there will be rotation of monies within sectors providing attractive investing opportunities but the index won’t necessarily paint that picture.

July 2, 2021

by Rob Zdravevski

rob@karriasset.com.au

Owning a Russian Bank is less riskier than Sydney real estate

Today, I’m selling shares in TCS Group.

It’s a Russian Bank (3rd largest by customers) and financial services company.

I bought the shares (which are traded in London, priced in USD) at the $21 mark, 1 years and 3 days ago.

Today, they’re $87 per share.

A quadrupling return at any time, let alone within 12 months is simply extraordinary. It doesn’t happen often.

They were trading at a P/E of 5 back then and now I feel they are fully valued, especially as I think the share price has capitalised perhaps 3 years of earnings so quickly.

This is why I am so interested in the hunt of picking stocks in global equities markets.

While the fervour of residential real estate continues, I haven’t seen a Sydney house price quadruple in the past year.

<insert catty swipe>

Some may suggest that buying shares in a Russian Bank is a different risk profile than a residential property.

I’ll argue differently.

I think buying a residential property in one particular city, in one specific street, with a ‘north’ facing living room window and a net rental yield of 2% (which is a P/E of 50) with little chance to improve its (operating) revenue and limited ability to lower the fixed and maintenance costs…..is riskier.

July 1, 2021

by Rob Zdravevski

rob@karriasset.com.au