Trying to hear what's not being said
July 27, 2024 Leave a comment
The Canadian Dollar will appear in some ‘extreme’ categories in tomorrows edition of Macro Extremes.
The study below shows the CAD/USD dancing with the Bloomberg Commodity Index and the Canadian Inflation Rate.
Incidentally, that Canadian inflation rate has eased from 8% to its current 2.7%.
July 27, 2024
by Rob Zdravevski
rob@karriasset.com.au
July 14, 2024 Leave a comment
I see a change in trend for Iron Ore prices coming “soon”;
and so the effect on the various companies involved within the supply and production chain.
July 13, 2024
July 11, 2024 Leave a comment
The Gold price in AUD has risen yet the equity price in gold mining companies are lagging and subdued.
Here is a study of the stock price of ASX listed Evolution Mining and the Gold price in AUD.
Mining is difficult…..when publicly listed, you are forced to produce, irrespective of the costs.
And it matters how an investor expresses their view relating to a particular theme or idea.
July 11, 2024
by Rob Zdravevski
rob@karriasset.com.au
June 25, 2024 Leave a comment
In mid-November 2023, this note implied ‘it’s not too late to buy Nickel’ when it was trading at $16,781.
On April 20, 2024, when Nickel was trading at $19,224, I wrote a note about preparing to ‘sell Nickel’ suggesting that it’ll reach somewhere around $22,075.
In mid-May, 5 months and 30% later, Nickel traded within 2.5% of that figure (at $21,500)……close enough.
It was true that Nickel’s upward trend was not exhibiting any strength.
Today, one month since that peak, the price of Nickel has declined 20% and is now trading at $17,140.
It is not giving me a buy signal yet.
June 25, 2024
by Rob Zdravevski
rob@karriasset.com.au
May 16, 2024 Leave a comment
Whilst the AUD/USD is currently in a medium and longer term upward trend, I think that it looks constrained around the 0.6750 – 0.6722 mark.
My read is that it needs make a ‘higher high’. If not, the AUD/USD will continue its digestive and consolidation pattern lower.
and so….it would go for commodities and bond yields.
May 16, 2024
by Rob Zdravevski
rob@karriasset.com.au
May 5, 2024 Leave a comment
A weekly Macro, Cross Asset review of prices trading at extremes which may generate future investment ideas and opportunities.
The following assets (on a weekly timeframe) either 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)
Australian 2, 3, 5 & 10 year government bond yields *
Japanese 2 year government bond yield
South Korean 10 year government bond yield *
Copper/Gold Ratio
U.S. 5 year government bond yield minus U.S. 5 year inflation breakeven rate *
Newcastle Coal
Oats
AUD/IDR *
AUD/THB *
Hang Seng China Enterprises Index (HSCEI) *
Hang Seng Index *
J’burg 40
Singapore Straits Times Index *
Overbought (RSI > 70)
Russian 10 year government bond yield
AEX
Budapest
Malaysia’s KLSE *
Pakistan’s KSE Index *
FTSE 250
and Turkiye’s BIST 100 *
The Overbought Quinella (Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
Brazilian 10 year government bond yields
Copper
Extremes “below” the Mean (at least 2.5 standard deviations)
SHY
PHP/USD *
Dow Jones Transports *
And Indonesia’s IDX30 *
Oversold (RSI < 30)
Lithium Hydroxide
North European Hot Rolled Coil Steel
The Oversold Quinella (Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)
Lumber
Urea
Notes & Ideas:
Government bond yields fell.
Many streaks were broken such as the 5 week winning streak in Canadian and South Korean 10’s along with all the yields across the British curve.
Chinese 10 year bond yields is no longer oversold as its yield rose.
Equities were mostly higher.
However, selected European bourses did see weakness.
China’s A50 Index and the U.S. KBW Bank Index have risen 7.5% and 5.2% respectively, over the past 3 weeks.
IBEX, MIB, & Stockholm’s OSX 30 aren’t overbought anymore.
The HSCEI and Hang Seng both rose 4.5% for the week, adding to last week’s 9% advance.
Furthermore, the Hang Seng and U.S. (KRE) Regional Banks Index are in a 3 week winning streak.
The SOX finished flat following last week’s stunning 10% rise.
Karachi broke its 6 week winning streak.
The Nasdaq Transports has declined for 5 consecutive weeks.
And Toronto’s TSX registered a bearish outside reversal week.
Commodities were mostly lower, again.
Weakness was seen in Cocoa, Coffee, Precious Metals, Oils and Distillates.
Strength was evident in Base Metals, Coal, Gases and Grains.
Some of the grains have strung 3 weeks of consecutive gains.
Aluminium, Tin & Nickel are not overbought anymore, nor is Cocoa, Coffee or Gold (in any currency).
Cocoa has fallen 31% in the past fortnight and has broken its overbought streak of 27 weeks.
While Australian Coking Coal isn’t oversold this week.
Robusta Coffee has fell 15% accounting for nearly half of the 39% rise seen in the prior 9 weeks.
Cotton has fallen for 8 consecutive weeks while Rubber has sunk for 6 weeks straight.
Iron Ore in a 5 week winning streak.
U.S. Hot Rolled Coil Steel performed a bearish weekly outside reversal.
And Lithium Hydroxide has now spent 42 consecutive weeks in weekly oversold territory.
Currencies are providing stealth guidance for the health of various asset trends.
The big news was the strength in the Japanese Yen and it’s no longer at last weeks extremes.
The AUD rose against all except the Yen.
The Canadian Loonie fell while the Euro was mixed.
The British Pound fell with the exception of the USD pair.
The Thai Baht broke its 7 week losing streak against the USD.
And the USD/SEK registered a outside weekly bearish week.
The larger advancers over the past week comprised of;
Australian Coking Coal 3.2%, Baltic Dry Index 9%, China Coking Coal 4.7%, Tin 2%, Newcastle Coal 5.8%, Natural Gas 11.4%, Platinum 4.7%, Dutch TTF Gas 5.5%, Uranium 5.5%, Corn 2.3%, Oats 7.9%, Soybeans 3.2%, China A50 2%, HSCEI 4.4%, Hang Seng 4.7%, Russell 2000 1.8%, KRE Regional Bank Index 3%, FTSE 250 1.7%, Nasdaq Biotechs 5.9%, Chile 2.6% and the BIST 100 rose 3.6%.
For reference, the S&P 500 rose 0.6% for the week.
The group of largest decliners from the week included;
Aluminium (1.9%), Cocoa (23.1%), WTI Crude (6.9%), Cotton (3.5%), Lean Hogs (2%), Heating Oil (4.7%), Coffee (Arabica) (10.4%), Lumber (2.7%), Lithium (5.7%), Gasoline (6.9%), Coffee (Robusta) (14.7%), SPGSCI (3.8%), CRB Index (3.5%), Brent Crude Oil (6%), Gasoil (5.3%), Urea Middle East (2.1%), Silver in AUD (3.6%), Silver in USD (2.4%), Gold in AUD (2.7%), Gold in CHF (2.6%), Gold in EUR (2.2%), Gold in GBP (2%), Gold in ZAR (3%), CAC (1.6%), MIB (1.8%) and Spain’s IBEX fell 2.7%.
May 5, 2024
by Rob Zdravevski
rob@karriasset.com.au
April 20, 2024 Leave a comment
I think LME Nickel can trade up to $22,075. At that point, it should be overbought. It doesn’t seem that the current upward trend has much steam.
During November 2023 and January 2024, Nickel prices appeared in my weekly edition of Macro Extremes when prices where between the $16,700 and $15,900 range.
Back then, Nickel was registering a weekly oversold reading and it was a signal to accumulate and establish positions.
When accumulating, allow for variance.
April 19, 2024
by Rob Zdravevski
rob@karriasset.com.au
March 19, 2024 Leave a comment
The run in Copper has been seen and it may be full, for the time being.
On July 18, 2022 (20 months ago), I signalled a long trade in Copper expressed through the shares of #Sandfire Resources (SFR.ASX).
Since then, #SFR‘s stock price has risen from $3.75 to its current level of $8.54.
The ‘fat part of the trade’ has been seen.
Today’s price suggests a stock price which is trading at the upper end of its extremes.
On a weekly basis, SFR.ASX is overbought, trading at 2.5 standard deviations above its weekly mean and it’s at a stretched percentage above its 200 week moving average.
The hubbub around the copper price (and related companies) paints a similar picture, while I specifically think there is a bull trap in #HG1!
In corporate finance land, this is a time when its advisable for copper related companies to conduct a capital raising (new share issuance) to either reduce debt or fund capital expenditures plans or perhaps use your (improved) currency, name your shares to make an acquisition.
March 19, 2024
by Rob Zdravevski
Karri Asset Advisors
rob@karriasset.com.au
March 17, 2024 Leave a comment
Wheat is at an all-time low.
In the chart below I circled the buying frenzy when #Russia invaded #Ukraine and the whole wold became experts on #wheat shipments out of Odessa.
This was supplemented with pundit commentary that the world was facing a calorie shortage.
Today, wheat is nearing an oversold extreme and no one is talking about it.
Is being ‘Gluten Free’ the new Electric Vehicles dictum?
The 2nd derivative is that food companies now have cheaper inputs.
I wish Barilla #pasta was publicly listed.
Its good for the importers, bad for the exporters.
Good for the processors, bad for the growers.
March 17, 2024
by Rob Zdravevski
Karri Asset Advisors
rob@karriasset.com.au
March 16, 2024 Leave a comment
The parabolic move of the year (so far) goes to Cocoa.
Historically, such parabolas are usually thumped and mean reversion is honoured quickly.
The most recent #parabolic price moves were seen in Natural Gas and Wheat in the earlier phases of the Russian/Ukrainian War.
The attached monthly chart goes back to 1984.
The Empirical Rule states that 99.7% of data or prices observed following a normal distribution lies within 3 standard deviations.
Today, #cocoa is at 3.5 standard deviations.
While the upward move is astonishing, but I do wonder, with such probabilities, who is buying Cocoa at such prices?
Other extremes are seen in the distance above moving averages and the width of the Bollinger bands.
In the meantime, the stock prices of Hershey, Nestle and Barry Callebaut are wallowing at their recent lows.
March 16, 2024
by Rob Zdravevski
rob@karriasset.com.au
rob zdravevski's blog 