Trying to hear what's not being said
August 27, 2020 Leave a comment
The S&P 500 Index (at 3,478) and the Nasdaq 100 Index (at 11,972) are the most overbought since the Feb 18, 2020 highs….
it’s time to hedge out some market (index) risk.
August 27, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 27, 2020 Leave a comment
Short term, gold is in an early downtrend,
trend is not strong,
thus we rely on whether immediate support levels will hold,
if they don’t and they are broken, then we look at velocity of the move to determine if this embryonic down trend has strength (and perhaps more longevity)
In this interim or this current short term view,
My email to clients on Monday August 24th, suggested support levels for USD Gold where $1,907 – $1,882,
Yesterday Gold traded to $1,902 on that support line and has bounced $40,
see two charts below (one is the “bigger timeframe, the other is a close up on yesterdays low kissing the support line)
I expect Gold to test that support line again in the next day or so and watch if it holds before making the next call.
August 27, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 25, 2020 Leave a comment
What’s catching my eye.
A list of markets which are at points of extreme, a change in direction or developing a new trend.
Short Term (daily) Extremes:
Overbought – the Nasdaq, S&P 500 and Dow Jones Industrials
New Short Term Trends:
Lower…..
Gold (in USD)
AUDJPY (i.e. risk-off)
Brent Crude
Platinum
Russell 2000
Cattle
Higher….
Nikkei 225
DAX 30
SOX Index
Hang Seng China Enterprises Index (HSCEI)
very close – new Higher trend;
DXY (USD Index)
FTSE 100
CAC 40
Italy’s MIB
very close – new Lower trend;
Silver
Shanghai Composite
And Iron Ore (3 days ago) and Lumber had bearish outside reversal days
August 25, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 20, 2020 Leave a comment
I am (long term) bullish on the price of Brent crude oil, which will be another note for another day…..
but I am bearish on the equity prices of large oil companies, especially those listed in the U.S. due to their declining oil reserves, poor exploration and production cost management, awful capital allocation towards acquisitions, debt laden balance sheets while insisting on maintaining historical dividend distributions at any cost.
Furthermore, a recent brainstorm with a client (and friend) confirms the industry is operating with technology and a mentality that hasn’t changed for 50 years which has resulted in a dearth of innovation and lack of efficiencies being sought.
Shareholders of Exxon Mobil, Chevron, ConocoPhillips, Occidental, Apache and the like, should allocate ample time to assess their holdings, hedging and strategy,
while shareholders of oil field service companies…….
August 20, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 18, 2020 Leave a comment
August 17, 2020 Leave a comment
If airlines aren’t flying and Qantas (QAN.AX) announces extended grounding of its fleet, you cant be surprised that the stock price of debt laden Sydney Airport (SYD.AX) is falling.
In fact, I’d be a nervous debt holder.
How will SYD.AX service the interest coupons ?
Don’t worry, they’ll borrow more AGAIN to pay the interest (which it recently did in mid-April 2020 – see quote below) and the government will always stand to save such an important, strategic and unique asset.
Actually, come to think of it, it’s the equity holders which should be nervous as they rank below the holders of debt.
“Sydney Airport’s $850 million in new two- and three-year bank debt brings its liquidity to $2.8 billion which it said would “comfortably” cover the $1.3 billion in loan repayments it has to make in the next 12 months and up to $200 million of expected capital expenditure”
– quote source, Sydney Morning Herald, April 20, 2020
June 29, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 15, 2020 Leave a comment
The De-equitisation theme is still intact.
In the 2000’s, there were approx. 8,000 listed companies on U.S. exchanges.
Now, that number is about 4,000.
More and more capital being deployed into fewer and fewer available listed equities.
August 15, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 12, 2020 Leave a comment
This is not a celebratory post but intended to highlight the practice of observing prices and moods when they reach an extreme.
There are times when experience tells you that things are stretched, feeling “dangerous” or perhaps resembling mania, frenzy or euphoria.
(see my recent posts warning of such)
I still wonder what makes people chase assets at “stretched” prices.
Are they trying to “eek” out the last 10% of a move?
Are they oblivious that the “fat part” of the trade has been seen and had?
Do they understand what their risk/reward ratio looks like?
Today’s example is the price action in Gold.
Yesterday (overnight) Gold fells $130 per ounce of ~ 6.3%. It’s trading at $1,915 as I write this. Incidentally, Silver plummeted 17%.
It’s difficult (impossible, even) to pinpoint the timing of such a move, but it should be easier to understand when not to chase something at perpetually higher prices without having a sound reasoning for doing so.
Today, prices of Aussie gold companies are 7% lower and the poor sod who bought Saracen Minerals (SAR:ASX) 2 weeks ago at $6.75 is wearing 20% worth of pain.
Furthermore, these stocks are now trading at the same prices seen 6 weeks ago.
Wasn’t gold hitting new highs only 4 days ago?
August 12, 2020
by Rob Zdravevski
rob@karriasset.com.au
Below is a “weekly” 35 year chart of Gold and its rolling 200 day moving average.
At selected peaks, I have added the percentage that the Gold price was trading above its “weekly” 200 day moving average.
Incidentally, each move where percentages are listed coincided with a 3 standard deviation above its mean.
Today it makes for a marginal “even money” bet.
Let’s say that Gold extends itself to 80% above the 200 dma, thus taking it to $2,466 OR it decides to move lower to visit the “weekly” 200 dma of $1,370…..
So from today’s price, it’s either $530 per ounce upwards or $570 per to the downside.
Mean reversion does have its own gravitational pull.
August 20, 2020
by Rob Zdravevski
rob@karriasset.com.au