Trying to hear what's not being said
September 15, 2022 Leave a comment
I prefer ‘value’ (rather than growth) stocks being in distress because balance sheet analysis is an added and viable tool.
While there are surely holes in the argument that the ‘E’ (earnings) forecast may still be lowered, I think this market is in the general vicinity of favouring buyers, more so than ‘sellers’.
September 15, 2022
by Rob Zdravevski
rob@karriasset.com.au
Graphic Source: Bloomberg | Jean-Charles GAND
September 14, 2022 Leave a comment
Here is a story of convergence to the mean, not reversion.
The chart and graphics below show the Gold price (in USD) trading sideways for 2 years while the 200 week moving average has risen $300 or improved by more than 20%.
It has converged towards the oscillating price of Gold which has spent a couple years digesting and consolidating.
I’m preparing for a further 4% swoon from its current $1,706, down to around the $1,640 mark.
September 14, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 14, 2022 Leave a comment
This week’s Bank of America survey highlights include,
Fund managers are “super bearish” with average allocations to cash at the highest since 2001, with 62% being overweight cash;
A net 42% of global investors are underweight European equities, the largest such position on record;
A historically high 52% of respondents said they are underweight equities;
Of the polled 212 investors overseeing $616 billion in assets from Sept. 2-8, said 72% of those surveyed said they expected a weaker economy next year, and the most crowded trade was long U.S. dollar.
September 14, 2022
September 14, 2022 Leave a comment
The chart below shows the U.S. Dollar at a historically stretched moment of strength.
Such extreme percentages above its 200 week moving average coupled with weekly overbought readings also coincide with a peak in the Australian 2 year bond yield and a trough in the CRB (commodities) index, to only mention a couple.
September 14, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 14, 2022 Leave a comment
The Nvidia (NVDA:US) mean reversion is almost done.
It doesn’t necessarily mean that its 200 week moving average is the place to buy, as it may overshoot to the $103-$115 mark…..
this chart did tell you that it was dangerous chasing and buying this stock at stretched valuations as it soared way above its 200 WMA.
September 14, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 12, 2022 Leave a comment
And the corporate effect of what todays earlier currencies post translates to…..
Aussie companies selling products into Europe, the UK and Japan have been seeing weaker receipts, while those selling to U.S. customers or in USD denominated products (commodities) are booking handsome profits on favourable currency differentiation.
Japanese and European assets are considered cheap for holders of Australian Dollars while Americans (and their corporations) may see Australian assets as being ‘on sale.
Expect those respective benefits to wane while these ‘extreme’ currency movements correct and consolidate.
On a side note, the almighty strength of the U.S. Dollar seems to be a surprise……
2 years ago, I wrote this note when I remember reports of the pending death of the U.S. Dollar to be palpable.
Today, there doesn’t seem to be an opposite case against the bullish prospects of the U.S. Dollar.
September 12, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 12, 2022 Leave a comment
It is an appropriate and strategic moment for Australian Dollar importers and/or speculators to sell (a tranche of their intended or required) AUD and use it to either buy Euro (EUR), British Pounds (GBP) or Japanese Yen (JPY).
The (multi-timeframe) bullish trend for the AUD (against these currencies) remains intact as they register 5-7 year highs against these crosses.
It’s more perverse that the AUD is weak against the USD….and whilst it finds a floor, a rise in the AUD/USD (DXY is Overbought) will aide a few more percentages for an additional tranche of buying more EUR, GBP or JPY.
September 12, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 11, 2022 Leave a comment
When the spread (or yield curve) of the U.S. 5 year government bond yield <minus> 3 month yield is overbought on a Weekly RSI, it closely (and tactically) signals a peak in the S&P 500.
The S&P 500 is not a peak at the moment. Buyers of put options and callers of an equity crash perhaps take note!
There were two exceptions in 2013 when this wasn’t the case. I’ll look into this a little later.
Incidentally, an Oversold yield curve isn’t an inversely reliable timing indicator.
September 11, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 10, 2022 Leave a comment
A month ago, I published this study highlighting the correlation whenever Japanese 10 year bond yields are overbought and oversold happen to signal a corresponding low or high in the S&P 500.
September 10, 2022 Leave a comment
The following assets (on a weekly timeframe) registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.
Extremes “above” the Mean (at least 2.5 standard deviations)
U.S. 30 year government bond yield
EUR/GBP
Overbought (RSI > 70)
U.S. 2 year government bond yield
Spanish, French and Italian 10 year government bond yield
TBT
The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
U.K. 10 year government bond yields
U.S. 20 year government bond yields
German 2 & 5 year government bond yields
Extremes “below” the Mean (at least 2.5 standard deviations)
CAD/USD
SGD/USD
Oversold (RSI < 30)
U.S. 5 year minus U.S.3 month government bond yield ‘spread’ (not inverted)
TLT
Tin
GBP/USD
The Oversold Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
CNH/USD
KRW/USD
JPY/USD
Notes & Ideas:
The big news for the week includes Government bond yield are amongst the ‘overbought’s’, the bounce in only some equity markets and the continued strength of the U.S. Dollar.
So telling is the strength of the USD, the Japanese Yen is now at a 24 year low against the USD. That’s September 1998.
While the British Pounds seems to be the most weakest amongst the G7. It is registering extremes lows against the USD, EUR and the AUD…..I’ll take a look at buying Sterling.
In last week’s edition, I wrote;
Government bond yields are approaching their next round of being overbought, as are Cattle prices.
<the former are so, the latter is closing in>
Gold, Silver and Platinum are nearing buys,
<Gold was flat, while Silver rose 4% and Platinum soared 7% for the week>
Last week I mentioned that the Shanghai Composite, Copper and the U.S. KBW Banking Index had traded back down to their respective 200 week moving average for the second time in as many months.
This week, they appear amongst the gainers.
In other notes, the DXY is no longer Overbought while Hot Rolled Coiled Steel moves out of Oversold territory.
Palladium, MidCap 400, the KBW Banks, Nasdaq 100 and S&P 500 all performed an Outside Bullish Reversal week. The Russell 2000 did not.
The HSCEI and Hang Seng made lower lows. Look for more weakness, which should culminate into a buying opportunity.
Aluminium and Copper both mean reverted to their 200 week moving average, with the latter doing so for the 2nd tine in as many months.
The Nasdaq biotechnology index is 23% above its mid-June 2022 intra-day low.
For perspective, much of the rise in U.S. equities merely recovered some or all of the previous week’s decline.
For example, the MidCap 400 and SmallCap 600 fell 4% last week to see a 4% this week.
Similarly, the S&P 500 made up all of last week’s 3.3% fan with a 3.7% bounce.
The Philadelphia Semiconductor Index fell 7.1% a week earlier and clawed back 4.7% this week
And while S&P 500 didn’t manage to revert to mean its 200 week moving average in mid-June 2022, it can do so in the coming weeks without creating a ‘lower low’ of the June prices.
The mean is rolling higher, which is knowns as convergence.
The larger advancers over the past week comprised of;
Baltic Dry Index 11.7%, China Coal 6%, Lean Hogs 3.5%, Copper 4.5%, HRC 4.9%, Lumber 7.2%, Palladium 7.5%, Platinum 7.2%, Uranium 5.7%, Silver in AUD 3.8%, Silver in USD 4.3%, Corn 2.9%, Oats3.6%, Wheat 7.2%, Shanghai 2.4%, KBW Banks 5%, CSI 300 1.7%, Dow Jones Industrials 2.7%, DJ Transports 2.4%, S&P MidCap 400 4.4%, Nasdaq 100 4.1%, Nikkei 2%, Russell 2000 4%, SOX 4.7%, S&P 500 3.7%, STI 1.8%, Istanbul’s BIST 4.5%, Toronto’s TSX 2.6%, S&P SmallCap 600 2.8% (partially recovering last week’s decline of 5.2%), Nasdaq Biotechnology 5.5%, Nasdaq Composite 4.1% and Australia’s ASX 200 recouped a fraction of the previous week’s 3.9% decline, it rose 1%.
The group of decliners included;
Australian Coking Coal (2.3%), Rotterdam Coal(10.4%), Cocoa (2.3%), Gasoil (2.9%), JKM (2.4%), Tin (6.9%), Natural Gas (9%), Orange Juice (1.9%), Dutch TTF (3.5%), U.S. Gulf Coast Urea (5.4%), Middle East Urea (8.3%) and Oslo’s equity index fell 2.4%.
September 10, 2022
by Rob Zdravevski
rob@karriasset.com.au
rob zdravevski's blog 