Trying to hear what's not being said
September 21, 2020 Leave a comment
It just seems like the age of the stockpicker and macro trader is upon us.
The challenge lays ahead for the passive ETF index hugger.
September 21, 2020
by Rob Zdravevski
rob@karriasset.com.au
September 18, 2020 Leave a comment
| Market Quips & Synopsis Some brief points about selected markets or assets and look for the links within for added musings. About current markets, I’ll open up by saying.. I notice there is dangerous trading going on, market capitalisations in some companies are extraordinary. For example, how does $1 billion market cap on revenues of $20,000 sound? ASX scuttlebutt says, “shorts” are trying to pressure companies into raising capital, some are seeing increased stock “promotion” activity and there are many people in the market “that don’t know what they’re doing or shouldn’t be there”. I see the AUD and XAU (Gold) in a holding pattern, (see the AUD chart below); they need to hold 0.7240 and $1,902 respectively, breaks above 0.7355 & $1,978 should see a new lurch higher Also watching AUDJPY closely, need to hold 76.00 to confirm “more risk-off”, A move above 0.7730 suggests “risk-on” and higher equity indices Another indictor to assess the steam in a S&P 500 decline is whether Japanese 10 Year Bonds (JGB”s) trade below 0.00%. The S&P 500 is down 6% from recent highs, Indicators are not clear in calling a new downward trend, however I think 3,272 is the target (a further 2.5% lower). The Nasdaq 100 has now fallen 11% since its September 2nd high. Looking for it to ease a further 2.4% to 10,814 before determining the strength of the decline. The decline wasn’t a surprise, as written by me on August 29 and September 3rd Global portfolios have a 3% short position in either (or both) the Nasdaq 100 or the SOX index My ASX 200 target is 5,803, which is 1.2% below the price as I write. I’m pleased with calling Oil down from $44 to $39.30. Brent held $39.30 for the past week, has since rallied 10% in past 4 days….quick rallies are not always a preferred scenario VIX remains relatively high at a reading of 26, the call option phenomenon has influenced this increase The De-Equitisation story combined with rising money supply & low interest rates leads to my thesis that higher equities is the dominant and over-arching long term theme. While we accept near-term rates will stay Lower for a while, I think the long end of interest rate curve will rise. AAII Survey exhibiting narrowest bull/bear spread since June 11, which is when S&P 500 had a 8.2% decline. Since March 5th, more retail investors have remained bearish (than bullish). This survey remains a reasonable contrarian indicator as markets bottommed on March 26th and never looked back. Oil Rig count showing no meaningful change of increase, see attached, number of rigs in operation has halved I remain long term bullish on the Oil price and continue to accumulate positions (proxies) to benefit from this opinion. Incidentally, I have a view there is a coming crisis in energy prices which will stoke inflation (albeit it may be 18 months away) In another edition, I’ll expand on various investing themes and I hope to soon publish my bullish thinking about Platinum on my Linkedin page. That’s all for now… warm regards, Rob |
September 17, 2020 Leave a comment
Short term views include;
AUD/USD needs to hold 0.7240, otherwise it moves lower to 0.7140 or test 0.7067. (see chart below)
Coinciding, AUD/JPY needs to hold 76.05, this FX cross seems to leading risk-off sentiment in equities markets;
My ASX 200 target is 5,803;
S&P 500 direction not conclusive, thus…
Bias is to accumulate on weakness, although developing downtrends need to be monitored.
Gold short term downtrend, albeit not a strong trend,
needs to hold $1,902 support, other $1,825 region is next stop
(see chart below);
thus caution on Aussie gold stocks may increase;
Note, Brent rallied 6% in 2 days, as it held $39.30 (which remains important support);
Hope to summarise my Long Platinum view in coming days;
And I’m holding a 3% portfolio short index weight for global portfolios in U.S. listed SMH
September 17, 2020
by Rob Zdravevski
rob@karriasset.com.au
September 17, 2020 Leave a comment
so the previous post shows the chart up until I issued a Sell advice on Lumber,
but the chart below shows the whole picture before and after….
My late July 2020 Sell advice followed a 42% rise in 40 days, which is exceptional for any asset let alone a physical commodity.
Lumber then rallied a further 74% over the next 6 weeks before falling 36% this past week.
A bull market coupled with euphoria, mania and mean reversion all within 3 months.
Hopefully, homebuilding costs in the United States reflect the sudden and lower prices?
September 17, 2020
by Rob Zdravevski
rob@karriasset.com.au
September 17, 2020 Leave a comment
I suggested Lumber (futures) were a “Buy” in mid-June.
A month later it was time to sell.
A good trade by all accounts.
Below is the chart, at that time…..
then, look at my next post to what happen afterwards
September 16, 2020 Leave a comment
“By the end of 1980, six out of the top ten companies by market capitalisation were energy related related as was one third of the S&P 500” – Goehring & Rozencwajg
40 years later that landscape is very different.
Today, the energy component of the S&P 500 is 2.8%. The lowest on record.
September 10, 2020 Leave a comment
Interest Rates at the longer end of the curve may be poised to rise.
I think many concur (mainly through central bank guidance) that shorter term rates will stay lower, for longer.
In the interim, I may have views that 10 & 20 year debt at the consumer levels may become cheaper (perhaps 2.8% for mortgages);
however my interest in the Gold/Copper ratio has less to do with predicting price action in those underlying commodities, but more so with the direction of U.S. government bond yields.
I think it is plausible that short term rates stay low but I think longer dated bonds will rise.
Take a look at my printed, line drawing, stacking different time line (1yr, 5yr & 15yr) charts on top of each other, old school effort below…..
FYI, today, the U.S. 10 year government bond is yielding 0.70%.
September 10, 2020
by Rob Zdravevski
rob@karriasset.com.au
September 10, 2020 Leave a comment
Yield in Japanese Government 10 year Bonds (JGB) are moving lower today, falling from 0.03% to 0.022%.
This is a big move!
What’s more significant is they look set to move below 0.00% and into a negative yield as a new “short-term” downtrend seems to be developing.
A little correlation to watch is what looks like a leading indicator.
The JGB’s are preceding a move in the S&P 500 AND a most notable historical observation was the JGB downtrend which started in mid-January 2020 signalling an early peak in the S&P 500.
The downward pressure on the S&P 500 seems to have increased especially when the JGB yield went negative.
For now, let’s watch it if it moves below zero again.
In the chart below, the blue line is the JGB yield (right hand margin) and S&P 500 appears (legend in the left hand margin) in red. The green horizontal line is the 0.00% interest rate mark.
September 10, 2020
by Rob Zdravevski
rob@karriasset.com.au
September 9, 2020 Leave a comment
This pullback isn’t the “one”;
Buying on the dip;
Cover your hedge shorts??;
See previous posts where equities are a fertile habitat;
Brent Crude came back to $39.30’target;
Still longer term bullish Oil;
Tesla down 31% in a week and still not oversold;
Watching AUD as it temporarily traded below 0.7240 but not conclusive.
September 9, 2020
by Rob Zdravevski
rob@karriasset.com.au
September 9, 2020 Leave a comment
“it took Apple 35 years to reach a market cap of $1 trillion and a further 23 months later to hit the $2 trillion mark”
“and Apple’s stock price has doubled without increasing its earnings”
“invariably, its easier for your market cap to increase from $1 trillion to $2 trillion, than it is to go from Zero to $1 billion”
“7 stocks in the S&P 500 have been responsible for 99% of the market recovery since late March”
some things heard on the Pivot podcast with Kara Swisher & Scott Galloway – Tues. Sept 8, 2020 “Pivot Schooled No. 3 edition.
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