Trying to hear what's not being said
July 25, 2021 Leave a comment
Friday’s trading session saw the current active contract price in Natural Gas hit my published $4.07 target.
This coincides with other readings which determined the closing out of the Long trade and now looking for lower prices in the coming weeks.
My view will also have ramifications for Oil & Gas related equities.
July 25, 2021
by Rob Zdravevski
rob@robzdravevski
July 25, 2021 Leave a comment
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)
USD/KRW (signifying a weaker Korean Won)
USD/SGD (sell your USD and Buy Singapore Dollars)
EUR/AUD (telling me the Euro is strong compared to a weakling AUD)
Overbought (RSI > 70)
Tin (for the 13th week)
Gasoil
Hot Rolled Coil Steel
Natural Gas
the CRB Index
Switzerland’s SMI equity index (for the 6th week)
Australia’s ASX 200
the Nasdaq 100
S&P 500 Index
and the Amsterdam, Copenhagen and Helsinki equity indices.
The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
Coffee
Orange Juice
Stockholm’s OSX equity index
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)
Cocoa,
the Russell 2000 and MidCap 400 equity indices,
the U.S. Government 10 & 5 year bond yields,
the Australian (10’s), Canadian, U.K., Chinese, Korean, German and Swedish 10’s
and the U.S. & Australian 10 year minus 2 year yield spread
Oversold (RSI < 30)
AUD/JPY (a weaker AUD and a stronger Yen suggests ‘risk-off’ is tiring)
AUD/USD (signifying a weak AUD)
Hang Seng China Enterprise Index
the Hang Seng Index
Nikkei 225 Index
Dow Jones Transport Index
The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations above the weekly mean)
None
Notes & Ideas:
The big moves and news for the week was in the bond market which saw buyers aggressively accumulating and thus sending yields plummeting.
Some currencies are returning to the ‘extremes’ list while more commodities are mean reverting and easing away from their Overbought extremes.
Most notably, the energy complex has seen a little profit taking and a result those commodities (including Iron Ore) have fallen below their 70 marks on the RSI.
In the bond world, we saw a rebound in bond yields from their mid-week lows, while most interesting to me was the Japanese 10 Year yield traded a 200% range. The JGB’s aren’t called the widow-maker for nothing.
Importantly, they didn’t ‘go’ negative.
The decliners included Iron Ore (3%), Platinum (4%), Soybeans (7%), Silver (2%), Taiwan’s TAEIX (2%) and the HSCEI (3%)
Advancers were dominated by equity indices such as the Semiconductor SOX index rose 4%, the Nasdaq and Helsinki markets climbed +3%, the Stockholm, Russell 2000, MidCap 400, DJ Transports, the S&P 500 all rose 2%…while amongst commodities Lean Hogs were up 2%, Lumber & Coffee soared 17% and Natural Gas surged 11%
The U.S. 10 year bond yield fell sharply during the week, to a low of 1.13% yet closed almost unchanged at 1.28% from the previous week’s close.
It was a week to observe overreactions.
The 10’s remain bound in a larger range but we watch it broader capital markets could become explosive is the 10’s break either below 1.25% or above 1.65%.
No cryptocurrencies registered any Extreme readings.
And lastly, Bitcoin is trading 145% above its 200 Week Moving Average, which is higher than last week’s 127% reading and certainly lower when compared to its 466% peak in mid-April 2021.
July 25, 2021
by Rob Zdravevski
rob@karriasset.com.au
July 23, 2021 Leave a comment
Stock-picking over Indexing
I am (and have been) positioning portfolios for rising inflation.
Because of this view, I think certain sectors will perform better than others (see sector rotation) and as a function of my business, my focus is picking the better companies to be invested in.
This is dominated by placing an emphasis on the ‘risk’ part of an attractive risk/reward opportunity.
In other words, try to take the least possible risk while seeking an adequate return and picking the stocks with tailwinds should take care of the rest.
In turn, due to many reasons (including a large overweight to technology), I think broad-based index tracking ETF’s (and the indices themselves) will be poor performers in the coming years.
It’ll be evident which money managers are index huggers.
I’m not being dangerous nor a maverick but I can’t help observe that in the asset management industry, all that a fund manager needs to do is, make sure their performance is similar and close to the rest of the sheep.
It’s safer staying with the flock…..you get to keep your job, retain assets and keep the gravy train chugging along.
I dare to say, that diversification certainly helps you achieve one common thing…….it’s that you are able to lose less money than others.
July 29, 2021
by Rob Zdravevski
rob@karriasset.com.au
July 23, 2021 Leave a comment
I found this news interesting.
Is the world’s 11th largest economy ahead of the curve and crowd when it comes to managing inflation or does its strengthening currency hinder growth and exports?
Incidentally, South Korea and Australia are ranked 12th and 13th
July 22, 2021 Leave a comment
I’m nearing some profit taking in #naturalgas
On April 30, 2021 I wrote about a potential Long trade in Natural Gas to watch out for, pending a technical analysis breakout.
The current profit taking suggestion is within a medium term context of a major bull market occurring in the Natural Gas price.
The breakout occurred around June 10th, 2021 and we’ve seen a 26% rise, since then.
Probability now suggests that Natural Gas takes a pause around the $4.07 mark.
July 22, 2021
by Rob Zdravevski
rob@karriasset.com.au
July 22, 2021 1 Comment
Readers may have picked up that I’m favouring the equity of cyclicals, industrials and businesses which are ‘asset-heavy’.
Steel is one of them….I’m conscious that I’m possibly late to the party (I didn’t see this move coming) as you can see (in the chart below) by the mesmerising quadrupling of the price in Hot Rolled Coil (HRC) Steel.
When I overlay a stock such as Hong Kong listed, Angang Steel, which is traditionally well correlated to the HRC price, it’s recent divergence from this ‘marriage’ is making me think if there is an investing opportunity…..but I haven’t got an opinion yet.
More work needs to be done but just sharing what is crossing my mind.
July 22, 2021
by Rob Zdravevski
rob@karriasset.com.au
July 22, 2021 Leave a comment
This needs to be highlighted….
the bloke in this article says in December 2000 that Bitcoin should reach $400,000.
Then 6 months later (only 2 weeks ago) he suggests that Bitcoin should crash to $10,000.
Scotty, mate, versus your $400,000 call, that’s comparable as saying it’s worthless.
He probably should be shown the door.
To be clear, I’m no fan of cryptocurrency. I write about as a speculative instrument (notice, I’m not even calling it an asset) and use it assess risk and the temperature of the fluffy end of the market.
Today, Scott makes a call that the S&P 500 will fall 15% by September or October and barely below its 50 week moving average.
Just for kicks, I disagree for various reasons (p.s. I don’t need to make a wager with him, it’s not a pissing match)……but that’s hardly a ‘ballsy’ call for the investing boss of a firm with $270 billion under management.
A 15% call merely brings the S&P 500 to its March 1st level. It retraces 62% of its 33% rally from November 1, 2020.
This is not a character assassination, but it should make many question where and how their money is being invested and managed.
July 22, 2021
by Rob Zdravevski
rob@karriasset.com.au
July 22, 2021 Leave a comment
Google is not evil.
DeepMind didn’t need to make this data publicly available.
July 21, 2021 1 Comment
The direction of the Copper/Gold Ratio (HG/GC) is a good indicator for checking on the health of the economy. Think of it as a thermostat.
It is also well correlated to the direction of the U.S. 10 year (the 10’s) bond yield. Often, the HG/GC precedes the move in interest rates.
In a recent post I wrote about the HG/GC’s relationship to the S&P 500.
Today, the short-term direction of the Copper/Gold Ratio has been down and so the 10’s (and S&P 500) have mimicked that.
The longer trend upward trend of the Copper/Gold Ratio remains intact.
Where this ratio trades to and its effect on the 10’s will determine the size of, and where the allocation of capital moves to.
Separately, (on a weekly basis) the 10’s have traded down to 3 standard deviations below its mean. Such a 3-sigma event has foreshadowed higher equity prices.
It’s at an acute point, however the equities bull market continues.
July 21, 2021
by Rob Zdravevski
rob@karriasset.com.au
July 21, 2021 Leave a comment
I enjoyed reading the quiet manner in which CATL goes about its business.
Shanghai listed, Contemporary Amperex Technology Limited (CATL) makes batteries for some of Tesla’s vehicles.
Today, its market cap is equivalent to US$185 billion.
Its stock has risen 9 fold within 18 months.
