Parabolic Cocoa

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

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My take on Iron Ore prices

March 14, 2024 Leave a comment

3 months ago, Iron Ore appeared in the overbought category of my corresponding weekly editions of ‘Macro Extremes’.

That observation (along with my other metrics) tells industry participants and traders a) you have little business establishing new long positions and b) sellers should consider selling.

As #ironore prices approach oversold territory, the downward trend has strength.

I’ll look for a lower entry price and that translate into the equity prices of related companies.

p.s. #steel companies will have a better time to buy as well.

March 14, 2024

by Rob Zdravevski

rob@karriasset.com.au

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Nickel…..too early?

February 22, 2024 Leave a comment

Perhaps early but not too late to by #nickel ?

Tuning in to the headline and operational mining pessimism seen amongst Nickel producers (explorers have their own issues)……Nickel prices on the LME are trading at ‘extremes’.

February 23, 2024

by Rob Zdravevski

rob@karriasset.com.au

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All time low Gas prices

February 18, 2024 Leave a comment

The Henry Hub Natural Gas futures contract price traded to an all time low this past week.

The circle in the chart below denotes the moment when the world thought Europe was going to freeze to death.

February 18, 2024

by Rob Zdravevski

rob@karriasset.com.au

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More about commodities

January 15, 2024 Leave a comment

Here are the 9 occurrences over the past 40 years when the U.S. Inflation Rate/S&P GSCI spread was registering a monthly RSI reading of 32 or below.

It coincided with reasonable moments to buy commodities, as illustrated by the orange line which represents the S&P Goldman Sachs Commodity Index (SPGSCI).

I made a similar reference in a note published 2 months ago.

When inflation is oversold, I buy commodities

January 15, 2024

by Rob Zdravevski

rob@karriasset.com.au

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Commodities relatively cheap, not yet absolute

January 2, 2024 Leave a comment

For the first time in 3 years, (collectively) commodity prices are ‘at their cheapest’ when compared to equities.

Relatively, yes.

But not yet on an absolute basis.

As I warm to commodities (per my writings over the past 2 months), my ‘read of the tape’ says there is reasonable probability of a additional decline.

The chart below shows how the S&P GSCI Index has now reverted back to its 200 week moving average.

This mean reversion doesn’t translate into a ‘buy signal’ but it does tell me that I had no business buying it in the 700-800 point range.

My contrarian predisposition is to prepare for some selected long positions.

January 2, 2023

by Rob Zdravevski

rob@karriasset.com.au

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Mexico’s stock market has been a star

December 23, 2023 Leave a comment

Mexico’s stock market has hit an all-time high, following a recent 6 week winning streak.

In fact, the index has risen 8 of its past 9 weeks.

This week, Mexico’s main index registered a quinella of ‘overbought extremes’ and while momentum can suggest prospects of an extended move higher, my probability is conditioned towards selling, trimming and/or short.

Some may dismiss the importance of Mexico’s equity market but it’s GDP is ranked 15th in the world, which isn’t not too far away from Australia’s position at 13.

https://countryeconomy.com/countries/compare/mexico/australia

Incidentally, since the lows seen in 2009, the ASX 200 has risen 131% while Mexico’s IPC Index has climbed 225%.

December 23, 2023

by Rob Zdravevski

rob@karriasset.com.au

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Bugger this, take me private

December 13, 2023 Leave a comment

Diversified mining company, Anglo American plc announces that it will reduce production in order to cut costs and boost profitability.

https://www.ft.com/content/9e794642-f7f3-497a-ac02-e02b63cb96aa

OK, that seems logical and prudent….

In fact, why dig up the stuff if you are losing money on it or your costs are rising and crimping your margins?

but due to this news, the stock price fell 19% last Friday and 6% more in the following 2 days of trade.

Obviously, this would not happen if it was a privately held company.

And so, I think we’ll see a growing trend of listed companies becoming owned by private equity, sovereign and pension funds.

Benefits of such a trend would include allowing executives to move away from ‘short-termism’ and thus freeing up time that they currently spend appeasing public shareholders.

But the best part is not being forced to produce and grow at any expense, pressured by shareholder expectations and you also have most (if not all) of your funding and borrowing covered.

December 13, 2023

by Rob Zdravevski

rob@karriasset.com.au

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A little more lower for Crude Oil prices

December 4, 2023 Leave a comment

WTI Crude is ‘looseley’ trading 15% below the price it saw on the first trading day following Hamas’ attack on Israel.

And Brent Crude is doing a similar thing.

While my previous writings have re-iterated the peril of ‘trading the headlines’, for those euphoric and momentum buyers of Crude Oil are wearing some pain.

An announced OPEC+ production cut has provided oil price with any interim support. Possibly another headline traded by many.

I’m looking for a WTI Crude price to visit the $70 mark before possible buy orders are placed.

While that is 5% below the current $73.70 price, it could see that level within the next 10 days.

December 4, 2023

by Rob Zdravevski

rob@karriasset.com.au

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Nickel is back……..down

November 16, 2023 Leave a comment

Readers of my weekly Macro Extremes newsletter may have noticed that the Nickel price is appearing in the Oversold category.

It doesn’t happen all that often.

And so how to position for this view may come in the form of owning Nickel mining producers, or those hoarding Nickel reserves, perhaps it’s an opportune for buyers of Nickel (stainless steel) to lower their input costs or just buy Nickel itself.

November 16, 2023

by Rob Zdravevski

rob@karriasset.com.au

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