Markets bounce back. Contrarian trades coming in China Tech and Greece and US Steel. Activists attack Symantec in the cybersecurity hotbed. Profits in US Regional banking again. A quiet day in crypto land.
Portfolio News
Market Jitters - Tariff Tantrum Again I watched the US markets open. They wanted to go up right from the start.
Key news was the China trade discussions are coming up again and a dip in the Chinese currency as China took action to slow the decline. Earnings news was interesting. A big jump on good Walmart (WMT) earnings and a huge collapse on JC Penney (JCP - down 26% in my portfolios). Jim Cramer was scathing about the JCP statement. Own up when you did a bad job rather than trying to paper over the mess with words.
The headlines do reflect some of the caution with warnings of a potential collapse coming. One can only guess how those talking heads are positioned as they spread such information. At least Turkey concerns were pushed back with the Turkish Central bank taking action to curb speculative bets on the Turkish Lira. I have written quite a bit about currency markets and the way they give clues. The Australian Dollar is the worst performing currency in the developed world in 2018 - down 11% from its highs. It has reached the lows seen in 2016 and 2017.
The next few weeks will be key clue time about CHINA and COMMODITIES. The Australian economy is doing well enough and unemployment is dropping. I am not trading this but I am positioned for it to go lower as about 90% of my investments are outside Australia and I spend in Australian Dollars.
Bought
Invesco China Technology ETF (CQQQ): China Technology. China technology shares have taken a pounding since the tariff tantrum began to unfold. Technology has been a key driver of the rise of the S&P500 - I fully expect this to be true of China too in the long term. One of the talking heads presented a trend chart a few days ago of Ali Baba showing how price has retraced to the trend line. I am already invested in China Technology through this ETF. Its chart looks the same. Intuitively, I sensed that price has reached a key level.
This morning I drew in the Fibonacci retracement for the current cycle - price has reached the key 0.618 level. Now if you go back and test the prior cycles you will find that the last 2 turned on 0.618 and the one before on 0.768. I added another parcel to my holdings in one portfolio.
VanEck Vectors Steel ETF (SLX): Steel. Tariffs were supposed to help US steel stocks and they were supposed to do it quickly. The sad reality is the exact opposite has happened with the fears about impact on GDP growth pushing prices the other way. The chart tells the sad story - and it also shows the September call option I bought at the time which is under water.
There is a lot to NOT like about the chart. Price has broken the uptrend twice since the 2016 lows. Price has formed a head and shoulders pattern which is a strong reversal pattern especially as the right shoulder is lower than the left shoulder. Price has broken below the support line which has been in place for some time on the third try. I am pretty sure my options trade is dead. I bought a parcel of stock. It seems a crazy choice.
Why? Jim Cramer talked about charts. It is all very well being technical about charts BUT one also needs to read the fundamentals of growth and management and tariffs and the like. He liked Nucor (NUE - orange line) - I decided to broaden the punt and went for the sector. As it happens the sector and Nucor look much the same
Symantec Corporation (SYMC): Cybersecurity. The last 6 earnings reports for Symantec have been punished by the markets with the August 3 report the worst. This has provoked shareholder activist to come and shake the place up - price spiked on the news.
Cybersecurity is a hot topic. Symantec is at the heart of it. Jim Cramer view was that this was a good business that was being offered at a bargain price. I bought stock and options. On options, I bought January 2020 20/30 bull call spread for net premium of $2.44 which offers 309% maximum profit if price reaches $30 on or before expiry. The chart shows the bought call (20) and 100% profit as blue rays and the sold call (30) as a red ray with the expiry date the dotted green line on the right margin. The chart also shows the earnings dates - draw a line above each E and see the price reaction.
I would like to believe that the activist move does mark the bottom of the drop. Modelling the run from the last collapse (blue arrow) as a price scenario sees this trade comfortably reaching maximum profit before expiry. In the next chart I have overlaid the price of the sector ETF (HACK - redline). If Symantec closes just over half the gap the trade will make 100% profit and the stock will go up 20%. I am also invested in HACK.
Global X MSCI Greece ETF (GREK): Greece Index. In TIB280 I shared a chart of relative market valuations using Price to Book Value. Greece was at the top of the list. I averaged down my entry price on this US-listed ETF - as Jim Cramer says, wait for the market selloff to get the price you want. Here is the table again.
https://www.starcapital.de/en/research/stock-market-valuation/
Harvest One Cannabis Inc (HVT.V): Canadian Marijuana. Harvest One share price did not react to the Canopy Growth (CGC) news again today and neither did it go down. Other cannabis stocks did. I added another small parcel to one portfolio to even up the sizes between portfolios.
Sold
Huntington Bancshares Incorporated (HBAN): US Regional Bank. Sold January 2019 strike 19 call options for 44% profit since November 2016. Price has been below strike for most of the last 6 months and broke back above over the last month. As I am holding a January 2020 15/25 bull call spread in this account, I decided to take some profits. This has been a long and slow build with the first trade done at strike 10 in November 2012 and this last trade has delivered more than half the profits for the whole series.
Cryptocurency
Bitcoin (BTCUSD): Price range for the day was $269 (4.1% of the high). I wrote yesterday that the market needed to decide which way it wanted to break. It could not decide and price made an inside bar. [Means: Price was fully contained by the high and low of the previous day]
Ethereum (ETHUSD): Price range for the day was $22 (7.3% of the high). Price too made an inside bar and encouragingly stayed above the support level at above $275 all day.
CryptoBots
Outsourced Bot No closed trades. (213 closed trades). Problem children stayed at 18 coins. (>10% down) - ETH (-55%), ZEC (-58%), DASH (-67%), LTC (-41%), BTS (-50%), ICX (-8%), ADA (-62%), PPT (-72%), DGD (-74%), GAS (-86%), SNT (-57%), STRAT (-75%), NEO (-79%), ETC (-40%), QTUM (-73%), BTG (-76%), XMR (-47%), OMG (-62%).
Most coins improved 1 or 2 points. ETC (-40%) did slide back into 40% down group and NEO (-79%) dropped out of the 80% down group. PPT (-72%) was the biggest improver up 7 points. GAS (-86%), remains the worst. I did add a little more juice in the Binance account which has been where I have been trading the Crypto Prophecy trial.
Profit Trailer Bot Five closed trades (1.94% profit) bringing the position on the account to 1.24% profit (was 1.17%) (not accounting for open trades).
Dollar Cost Average (DCA) list has ETC as a new entrant and PT Defender working on EOS, XLM and ZEC. As ETC has dropped below 5% I will add it to PT Defender list. PT Defender has made some XLM trades.
Pending list remains at 12 coins with 7 coins improving, 4 coins trading flat and 1 worse.
New Trading Bot Positions improved 1 point to -64.7% (was -65.5%)
NEO traded flat and ETH, LTC and BTC all went up one point each
I continued the trial of Crypto Prophecy and made 3 winning trades on XEM, XLM and TRX. I have built a screener that looks for price trading below a lower Bollinger Band on a one hour chart. I then check if Crypto Prophecy is showing an excessive price drop situation then I check on Binance how the chart looks. I am choosing to exit for price moves over 1%. It works thus far. The design idea is to identify big winners - I am not game to run the downside risk just yet for longer holding times. Here is a winning chart showing the entry (blue arrow)
Currency Trades
Forex Robot did not close any trades and is trading at a negative equity level of 8.6% (lower than prior day's 9.8%).
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. PB table is credited below the table. 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
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
Crypto Trading: get 6 months free trades with Bitmex for leveraged crypto trading. http://mymark.mx/Bitmex
Bitcoin: Get started with mining Bitcoin for as little as $25 http://mymark.mx/Galaxy
August 16, 2018