A tumultuous up and down week in world markets and a quiet week on the trading front with a few nibbles here and there. This report covers trade activity in the week but not options expiries.
Portfolio News
In a week where S&P 500 dropped 0.57% after touching an all time high in the week, my pension portfolio dropped 3.35%. The big losers were in gold mining, in commodities more broadly and in solar and nuclear power.
It was tumultuous week with the fall of Kabul, the talk of the end to Federal Reserve bond purchases and rising covid cases grabbing at sentiment.
The weirdest part of the week was the way bond markets shrugged it all off. Maybe the bond market is going back to being the best bellwether for what is going on.
Big movers of the week were not big with Cellmid (CDY.AX) (+5.9%) best in Australia and Engie (ENGI.PA) (+3.5%) best in Europe and Navios Maritime (NM) (+7%) best in US and Stuhini Exploration (STU.V) (+5.8%) best in Canada.
The fallers took centre stage. A good example is BHP Billiton (BHP.AX) which announced the sale of their oil and gas assets to Woodside Petroleum (WPL.AX). BHP dropped 16% on the week and Woodside 11%. All the European banks dropped 3 to 5%
Crypto booms
Bitcoin price pushed lower by 7.7% but closed the week up 6.6% just over $50,000 - it was a short 4 years ago that price touched $4,400 for the first time.
The big move of the week was Cardano rising 49% from trough to close.
Bought
Allianz AG (ALV.DE): German Insurance. Insurance has been a strong sector since the March 2020 lows. Allianz has dropped out of favour after recovering 48% by April 2021 and dropping 15% from the June 2021 peak. I added a small parcel on the basis of the bounce from the post-earnings fall.
The chart shows the recovery and then the long sideways trading and the drift lower and the earnings collapse
The headlines of the earnings release look fine too. Dividend yield is a tasty 4.77%
Abbott Laboratories (ABT): US Pharmaceuticals. Jim Cramer added another parcel based on their covid testing kit product and approval for their Amptlazer amulet device. It seems clear that do it yourself testing has become a huge market (sadly not in Australia yet). I added for the first time in one portfolio. With trade price at $124.63, I also sold a September expiry 115 strike put option for 0.43% premium. This is around the levels of the lows of the last leg down and the consolidation for the March to May 2021 period.
Sold
iShares MSCI Turkey ETF (TUR): Turkey Index. Assigned early on a covered call for a 33% blended loss since July 2016/March 2021. I had averaged down but the averaged down trade was also a (small) loss. The initial purchase was on the back of strong GDP growth rates. Those got smashed by the handling of the Turkish Lira. The averaging down trade was to trade a market over-reaction to the most recent change of Central Bank governor. Income trades which I started in March 2021 did recover the small capital loss on the averaged down trade.
The chart shows the two entry points for my holdings. What seems clear is the situation has been improving since the last Central Bank governor change.
At the time I did put up a 24/30/20 call spread risk reversal - let's see how it is doing. Price has traded up the bottom of the last price gap but does not seem keen to break through. I have drawn in a price scenario (the middle arrow). Trade will need one of those to make the maximum. What is looking safe for now is the 20 strike sold put (October expiry)
The Estée Lauder Companies Inc (EL): US Consumer. With price closing at $327.40, a long standing pending order on a January 2020 300/320 call spread was hit once results were released. This locked in a modest 39% profit since May 2021. I chose to leave the October 2021 strike 280 sold put in place with close to 17% price protection. If that expires worthless, the profit on the trade ramps up 3 times. See TIB535 for the rationale
Quick update on the chart shows that price has pushed above the sold call level (320) and stayed there for a few weeks. Price then dipped below the level ahead of earnings and then bounced on earnings. My pending order has been standing for a few weeks - the spike from recent earnings must have spiked implied volatility too.
United States Natural Gas Fund, LP (UNG): Natural Gas. With price opening at $13.52 I closed out the bought legs of August expiry 13/15 bull call spreads leaving the sold legs to expire. This yielded a profit of 59% for the spread since July 2021. Price closed a little lower at $13.48
The updated chart shows that price made the same size move as the mid year 2020 move but this was not enough to take out the maximum profit target (just as the price scenario projected).
Shorts
Invesco QQQ Trust (QQQ): Nasdaq Index. With price closing at $368.98, the 338/325 ratio put spread expired worthless - the spread was cash neutral. Replaced it with a 347/332 ratio put spread. With price opening at $365.18, this provides protection for a drop between 5.2% and 10% with a cash neutral trade. Trade size is the equivalent of $69,400 = 4% of portfolio value.
Cryptocurrency
I review altcoin prices relative to Bitcoin and Ether regularly to assess whether to rebalance my alt coins portfolio. This week I did the Top 10 coins portfolio - current holdings are around A$600 each with a few laggards. I go through the charts and assess which coins are outperforming BTC or ETH. They become candidates for selling - this week Cardano has moved hard. It is also now more than $600 in one portfolio.
Cardano ADABTC: I sold a portion of Cardano into BTC and then applied some of the proceeds into two coins that look like they are reversing versus BTC. Trade size is to bring them up to equal weight.
EOS EOSBTC: The chart shows the classic pattern I look for relative to BTC - price breaking the downtrend and conforming the reversal with a higher low - not seen the higher high yet.
Stellar Lumens XLMBTC: This chart too shows the break of the downtrend and a higher low. The high is higher but only by a whisker. The ray at the top shows the first trade entry when I added XLM to this portfolio - not based on a trend change but just adding it in at the time. A patient investor would have followed trader rules and waited.
Income Trades
I bought back a few contracts to hold onto stocks that I want to keep holding and to reduce margin impact of stocks that are likely to be assigned on naked puts.
Covered Calls
Banco Bilbao Vizcaya Argentaria (BBVA.MC): Spanish Bank. 5 strike vs closing price €5.55 - premium €0.11 => loss €0.05. September covered call sold recovers the lost premium.
ENGIE SA (ENGI.PA): French utility. 12 strike vs closing price €12.34 - premium €0.24 => loss €0.125. This is only the 2nd buyback since January 2020 start
ING Groep N.V. (INGA.AS): Dutch Bank. 11 strike vs closing price €11.34 - - premium €0.26 => loss €0.16. This is only 3rd buyback since March 2019 start. The naked puts sold this month covered that premium loss.
Global X Lithium & Battery Tech ETF (LIT): Lithium. 81 strike vs closing price $81.88 - premium $0.75 => profit $0.05
Naked Puts
iShares Silver Trust (SLV) 22 strike closing price $21.35 - premium $0.55 => loss $0.41. Cumulative naked put income brings breakeven for this entry to $19.91 = 11% below Friday closing price.
Currency Trades
Euro (EURJPY): Short trade from the week before hit its profit target for 0.5% profit - first winner in a while.
I did get a MM Breakout signal to short EURUSD again - despite divergence showing on the daily still, I chose to take the trade as I liked the cycling back to 20 day moving average and the fact that the trade signal was off a 4 hour chart which was not showing divergence. The trade hit its profit target for 0.75% profit.
With the news from the Federal Reserve about the beginning of the taper, the USD has got stronger - I added two new trades short EURUSD in early trade Friday. One stopped out of 0.5% loss. I do not normally trade Fridays. A 2nd trade looks like it could well go the same way on Monday.
New Zealand Dollar (AUDNZD): New Zealand reported one covid case and NZD tanked 0.7% in a heartbeat - that stopped out my short AUDNZD trade which was in profit. Loss was small as I had tightened the stop loss.
I have been watching the AUDNZD chart - price went back to the resistance level I pencilled in a few weeks back and bounced off it - that had me going short also on Friday. As of Friday close the trade was profitable
Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas
Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. All other images are created using my various trading and charting platforms. They are all my own work
Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers. Crypto tickers come from TradingView
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
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August 16 - 20, 2021