One of my ‘investing buckets’ and sectors of interest covers Cloud SaaS Software.
I think there are many stocks worthy of analysis.
My preference are the ‘giants’ with reasonable market share and ‘sticky customers’, which implies difficulty or bother should you choose to discontinue their service or product.
They may offer a free 14 or 30 day trial but not a ‘freemium’ product.
Thus Spotify, Zoom and Dropbox aren’t of interest,
while SAP, Docusign, SAP, Salesforce, Xero and Shopify are attracting my attention.
Charts below.
March 17, 2022 by Rob Zdravevski rob@karriasset.com.au
Isn’t it interesting who the willing buyers still are?
Natural resources and their prices find their own levels.
Commerciality does prevail, it’s the price which differs under particular circumstances.
Today, I hear that Russian oil is being sold at $30 below spot price.
For example, while the United States doesn’t buy any oil from Venezuela 🇻🇪 (who has nearly 20% of the world’s proven reserves), Venezuela does in fact sell Oil to many Asian nations including India, who buys approx. 120,000 barrels per day of Venezuela’s 500,000 daily exports.
China, India, South Korea and Japan buy plenty of Iran’s 2.3 million barrel daily export. It just may not be at the current $96 market price.
It pays and saves to observe where the noise is coming from.
Furthermore, it’s wise to identify where the most crowded trades are.
In the past weeks, the froth which appeared in the financial media included;
Oil rising from $94 to $130. It’s now $96, which is the same price when Russia invaded Ukraine.
Gasoil (diesel) futures contract rose from $900 (on February 24, 2022) to $1,665 and its now back to $900.
Wheat went from $8.40 to $13.60 to now trade at $10.50.
The price of Rotterdam delivered coal went from $193 to $460 only to fall back to $312.
Since February 14th, the Hang Seng market fell 27%. It’s now 15% higher than this week’s lowest point.
It goes on and on.
A lot of money has been made and lost on these moves, both and up and down. For those of the correct and wrong side of the trade. Some were Long and others were Short.
Now that Oil has fallen 30%, I don’t hear the media fervour in the same manner as when it was rising.
Apparently when Oil was at $120, it was going to $200.
A couple years ago, when Gold last touched the $2,000 market it was on a one way path to $4,000
Remember when Bitcoin was $60,000, “the noise” was gearing us up for $250,000 or $500,000.
Reiterating that journalists (and the pundits) are merely reporting the news which has already occurred, it’s important to remind yourself that they aren’t market participants.
Canny investors and traders position themselves before the news is reported.
Today, I see the Hang Seng market up 16% in only 2 days. Over the same time, the Nasdaq has risen 6.8% and the S&P 500 has advanced 4.3%
Stocks such as Alibaba and Shopify have climbed 34% and 17% respectively in the past 2 days.
On other note, this doesn’t necessarily make me happy because it just shouldn’t be doing this.
You shouldn’t crank out 1 year of gain from an index in only 2 days.
Be careful, everywhere.
Do your own thinking and ignore or filter the noise.
Markets go to where they can do the most damage.
That can mean up or down. It can hurt you if you are short or long at the wrong time or price.
It can hurt you when they go up, if you aren’t invested and then decide to chase the train which has left the station.
It can hurt you when you sell your stock at its lowest point because the pain is too much to bear and your investing horizon suddenly changes from years to days.
Be careful when chasing rainbows or jumping at shadows.
It is the first thing you must do; when conducting business, settling a transaction or making an investment.
Even if you are buying oranges from the greengrocer, unless you are trading them for apples.
It’s time for some tactical tweaks and tilts in the Currency market.
The evident move has been the strengthening of the U.S. Dollar.
I’m a Seller of some USD and preparing to…..
Buy some Euro near the 1.08 level,
Buy some GBP at 1.2850,
Buy JPY (now) around the 117.50 mark,
Buy some HKD (if you have business to conduct there)
The Korean Won is back to the same weakness (against the USD) seen in March 2020, which mimics the same level as February 2016 and July 2010.
That is certainly making South Korea competitive again which is good for their electronics, heavy machinery and automobile industries.
I’ll be interested buying their equities when the KOSPI Index touches 2,460, which is a further 7% below today’s closing price.
And finally, the Danish Krone (DKKUSD 6.80) and Swedish Krona (SEKUSD 9.60) are also exhibiting notable weakness, attractive to Buy, should you specific commercial requirements to do so.
Here is the US10-US02 bond yield spread (the yield curve) overlaid against the S&P 500.
If you closely track when the yield curve goes ‘notably’ Oversold (on a weekly basis), it’s prescient that the S&P 500 finds support for its next advance.
Now it is doing this for the 9th time in 35 years.
The only time when a new S&P 500 bullish trend was stifled or diffused, was when the yield curve moves sharply to an Overbought level (or more specifically to a reading near to 62 or above) within 10 months of seeing its previous Oversold moment.
Coinciding with my earlier posts today, the timing of entry will be the artistic part.
The science of seeing the yield curve touching 0.08% – 0.02% may aid the decision.
