Trying to hear what's not being said
August 29, 2020 Leave a comment
The market capitalisation of U.S. tech stocks is now greater than the value of the entire European stock market, according to Bank of America.
On Thursday August 27th, 2020, these tech stocks reached a combined market cap of $9.1 trillion compared to the $8.9 trillion sum of European stocks.
August 28, 2020 Leave a comment
My cautious views about chasing the gold price had merit and today (albeit my timing was off by a month) are justified as the reward didn’t out-stack the risk being taken of being long Gold and gold stocks following what I viewed as the “fat part of the trade” was already had and the tail was wagging during a euphoric move driven my media and the herd.
In other words, my work suggested that initiating a long position in May, June or July was a marginal proposition.
Now, ASX listed gold stocks are 20% below their recent highs, but more interestingly some are trading at the same price seen in January, February or March of 2020.
If you are a “trader” and you managed to “pick the eyes” out of the peaks and trough, I’m certainly pleased for you but as an investor, that’s not my bag.
As prices in gold securities continue to make weekly lower highs and lower lows, over the weekend, clients will be receiving my entry price suggestions for selected stocks at the lower end of this mean reversion and trend correction.
I’ll continue to post notes on various assets and securities when I see extremes (at either end) of price action or sentiment.
August 28, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 28, 2020 Leave a comment
On February 27th, 2020, the weekly AAII Investor Sentiment Bull/Bear survey showed us that more individual (retail) investing respondents became bears.
By that day, the S&P 500 had already fallen 400 points (12%) over the previous week.
In the next 5 days, the market then bounced 6% but then savagely declined 30% over the next 3 weeks.
The majority of respondents remained bearish through that “whip-saw” and the memory of that sudden damage has seen that majority maintain their bearishness since that March 23, 2020 low, all while the S&P 500 soared 58% over the next 5 months.
It’s not an exact science, but this survey is a handy tool to gauge the antithesis of the market…..being, the stance of the retail investor.
Today, the spread is narrowing. I’m looking forward to next Thursday weekly release.
In the meantime, the S&P 500 and Nasdaq are the most overbought since their February 18th, 2020 peaks.
August 28, 2020
by Rob Zdravevski
rob@karriasset.com.au
August 27, 2020 Leave a comment
Recently, the US Dollar was registering oversold readings.
Inversely, the Euro and British Pound were overbought.
Pundits are citing improving prospects for the EUR and GBP, while the strength in these currencies is ONLY due to the weaker USD.
Specifically, the EUR has “no business” trading at around the 1.18 mark (against the USD) respectively.
In actual fact, neither currency is exhibiting “strength”.
The chart below shows they EUR/GBP cross has been trading sideways for months.
If you have EUR, it’s prudent to Sell some of your “temporarily” strong currency and Buy some USD.
My best FX trade however is, sell AUD / buy GBP at 0.5485.
Target is 0.5090
This are general thoughts, see my disclaimer
August 27, 2020
by Rob Zdravevski
rob@karriasset.com.au
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
rob zdravevski's blog 
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