Spain joins Italy in a European muddle adding more fear to European bond markets. Bitcoin heads down to a new "no mans land". Only one (bot) sale today - Decred - designed to solve the weaknesses of the Bitcoin model.
Portfolio News
Europe Muddles Italy continues to muddle through meeting the democratic wishes of the people.
The Italian President rejected the Economy Minister proposed by the PM-designate as being too anti-Europe. He dumped the PM- designate too. Instead he appointed a former IMF technocrat, Carlo Cottarelli, as replacement Prime Minister designate. This will be a holding position until new elections can be run. The populist parties are unhappy and are planning a national protest day on June 2. The people have not been heard is their cry. Market impact was a solid smashing of Italian bonds (up 50 basis points in one session = 2 rate hikes) and stocks. That is hurting in my portfolio. Business investment will suffer directly. It is hard to assess what the impact of the uncertainty will be on Italian consumer spending and tourist visiting and then onto GDP. My instinct is to ride this one out in the same way we always do for Italy.
https://www.ft.com/content/b38bd864-627d-11e8-90c2-9563a0613e56
The European problems were made worse when the Spanish parliament gave notice that they would be holding a vote of no confidence in the Spanish Prime Minister, Mariano Rajoy, citing instances of corruption within his party.
Yesterday, I indicated that there was little contagion between Italy and Spain. Well it seems we did not need to worry about contagion but needed to worry about Spain itself. A view is that Rajoy has been dithering along instead of facing the realities of Catalonia and Spanish Nationalism and finding solutions - he has done the European thing. Kick the can down the road.
Rajoy is left with no room to manoeuvre, caught between increasingly irredentist Catalan nationalists on the one hand, and his new Spanish nationalist rivals on the right, Ciudadanos, on the other
I liked this Irish view of the Spain story - somewhat unbiased.
A lot of my portfolio is positioned for rising rates and continued growth in Europe. With the Spain and Italy news that part of the portfolio is looking a little sick (sick but not dead because I started in Europe a long while back from a low base). One trade that I put on a few weeks ago to ride US Dollar strength is looking very good - for reasons other than the ones I used. I bought puts on the Euro against US Dollar expecting to see the Euro continue falling. When I wrote up the trade notes, I presented two price scenarios. Here is the updated chart and it looks like we got the pink arrow scenario (which I have now moved across the the current price move). The trade has now reached 100% profit ahead of schedule.
Can it do more? The problems in Italy and Spain will rumble (muddle, maybe) for a while yet. Price has stopped at a resistance level for now which has touches above and below. I will not be surprised to see it reach the 2016 and 2017 lows at 1.05 if it passes through the resistance. (See TIB221 for the rationale on the trade)
In TIB221, the chart is incorrect as it has expiry date in the wrong place - needs to come one year earlier.
Lithium Lithium has been one of my cornerstone themes for a while now with the first investment made in Galaxy Resources (GXY.AX) who have 3 main Lithium plays. They mine hard rock pegmatite in Western Australia and in Canada and they have salt brine tenements in Argentina. News release today is that they have sold a package of tenements in the northern basin of the Salar del Hombre Muerto in Argentian for $280 million.
Immediate impact of the news was a 10% jump in the share price as this deal basically funds cash needs for the development work needed to bring the southern tenements to production.
Now there is a twist to this announcement that I will explore futhter. The buyer of those tenements is Posco, the Korean steel producer who apper regularly on my stock screens with a low price to book valuation. I have seen it on those screens so many times and not invested recently (I have in the past). A little more digging and I find they have ambitions to be "a leading supplier of core electric vehicle materials in preparation for the megatrend that will see the rapid increase of environmentally-friendly vehicles". This encompasses light weight materials and now I see it includes lithium. I will be adding Posco to my portfolio through the US ADR listing tonight. I will also look at options trades. Of course, if there is a deal for North Korea, Posco has to be a major beneficiary.
http://www.posco.co.kr/homepage/docs/eng5/jsp/prcenter/news/s91c1010025v.jsp?mode=view&idx=2751
Cryptocurency
Bitcoin (BTCUSD): Price range for the day was $361 (4.8% of the high). Price closed below the support level after a mostly down day and headed into a new area of "no mans land". Volumes were low which is not surprising given the holidays in US and UK. Looking for buyers after the holidays will be the message for the day today.
CryptoBots
Outsourced Bot One closed trade on DCR (1.93%) replaced by XRP on this account (206 closed trades). Problem children was unchanged (>10% down) - (15 coins) - ETH, ZEC (-41%), DASH (-46%), BTS, ICX, ADA, PPT, DGD (-47%), GAS (-50%), STRAT, NEO (-50%), ETC (-43%), QTUM, BTG (-50%), XMR.
ZEC joins the -40% club (now 7 coins) with GAS and BTG the worst at -50%.
DCR (Decred) is a decentralized coin designed to solve the scalability and consensus issues that bewitch Bitcoin. It ranks 29th in market capitalization. https://www.decred.org/
Profit Trailer Bot No closed trades. Dollar Cost Average (DCA) list was unchanged at 12 coins with 4 coins improving, 5 coin trading flat and 3 worse. EOS continues to improve ahead of its mainnet launch this week coming
The pattern of movement gives clues on bot strategy. The altcoins tend to trade better when ETH/BTC is falling once the first move down is complete. What appears to happen is panic hits the altcoins when ETH/BTC first falls and then the bargain hunters arrive. That suggests a strategy of switching off the robot on the big selloffs and then switching back on. I do have a script running that tests for a 2% decline in ETH price every 45 minutes. Then it goes into sell only mode until the 45 minute price move slides back under 2%. I might need to tweak those settings a bit.
New Trading Bot Positions dropped more than 10% (4 points) to -43.6% (was -39.7%).
All coins traded worse with ETH the biggest faller at over 10% (6 points) extra down
Currency Trades
Forex Robot did not close any trades and is trading at a negative equity level of 8.1% (lower than prior day's 10.6%).
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 and Ft.com. All other images are created using my various trading and charting platforms. They are all my own work
Maps of Italy and Spain are Creative Commons Public Domain http://creativecommons.org/publicdomain/zero/1.0/
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
Bitcoin: Get started with mining Bitcoin for as little as $25 http://mymark.mx/Galaxy
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May 28, 2018