Mergers, merger rumours and an upgrade cheer markets. Enough to get my take profits targets in mining services. Taking action on Japan Government Bonds ahead of futures rollover. Shuffling some big profits in altcoins.
Portfolio News
Market Bounce
Markets went from gloomy to happy on the back of some merger news in the tech sector and an Apple broker upgrade
Too bad that I did not know last week that the merger was coming from Nvidia (NVDA) which propelled its price above the top of my 150/160 bull call spread range.
Cannabis Carnival
Cannabis sector got its share of merger news with US cannabis retailer, Harvest Health acquiring a rival chain.
I did watch the CNBC interview - Harvest Health seem to have a very disciplined approach.
Europe Muddles/Brexit Bumbles
EU and UK agree an addendum to the withdrawal agreement.
This addendum is a legally binding addition to deal with the Northern Ireland/Ireland situation. There will be an arbitration process put in place in the event that circumstances push toward needing a hard border. Without reading the details, it is hard to say if this will be enough to get the agreement approved in UK Parliament on March 12. To my mind, it will be hard to believe that parliamentarians are voting in the best interests of British voters if they reject the agreement. Currency markets expressed their view pushing the Pound up and the Euro down.
Airlines and Boeing
Ethiopia Airways Boeing 737 Max-8 crash has wide ranging ramifications with a number of countries and airlines grounding the aircraft pending the findings of the investigation and action from Boeing to fix the problem.
My portfolios are currently exposed to airlines via Air France KLM (AF.PA) and American Airlines (AAL). Air France KLM does not have any of the aircraft - so they could be a net beneficiary picking up flying slack in Europe. American Airlines are operating 22 aircraft at last count with a big order book of 100 places (78 more).
https://en.wikipedia.org/wiki/List_of_Boeing_737_MAX_orders_and_deliveries
Total fleet for American Airlines is 962. It is hard to estimate revenue losses but losing 22 aircraft for a period of time can be covered with some juggling of aircraft and schedules (my guess - and I did once work in operations for airlines for British Airways).
Note: AAL data shows 24 737 Max 8's.
Bought
Latin Resources (LRS.AX): Latin American Lithium/Copper Exploration. LRS ran a share purchase plan to fund the next phase of the development of their Argentinian salt brine lithium tenements and their Peruvian copper tenements. Normally I invest in stocks like this in small parcels and in this case I was holding 210,000 shares. The SPP had a minimum transaction size which got me 1 million additional shares. That is a big dilution if one does not take the offer up.
Sold
Shares sold with profits to fund pension payments in my pensions portfolio.
ALS Limited (ALQ.AX): Analytical Testing Services. 8.5% blended profit since May 2018. TIB232 and 238 set out the rationale. In those posts, I drew a comparison with other mining services operators [Note: ALS also does life analytical services. So it is not a pure comparison.] Here is the updated chart.
My target was to get back at least to 2013 highs. Price got close to those highs not longer after I entered and then dropped back in the tariff driven selloff. My trade was a switchover trade to exit Emeco Holdings (EHL.AX - orange line). Timing of the switch was perfect as Emeco has since given back all the outperformance and landed up in the same place as ALS. At the bottom of the chart is 5 year laggard, Austin Engineering (ANG.AX - green line) - more about that below.
Austin Engineering (ANG.AX): Mining Services. 25% profit since February 2017. Austin Engineering provides mining services to the resource sector principally in Australia and Chile. A look back at TIB26 where I set out the rationale and expectations for Austin Engineering, shows that I was looking for ANG to drive profits on the recovery and growth of the base metals commodities its customers mine. I updated the chart comparing ANG to the Powershares Base Metals ETF (DBB), which I used then. The gap which was 60% is now wider which is hard to believe given ANG has gone up 25% in that time. Ah Hah!! - I was comparing apples and oranges as DBB is in US Dollars and ANG in Australian Dollars. A better comparison is to Beta Shares Mining Resources ETF (QRE.AX - orange line) - updated charts starts when I opened the trade.
For a long time ANG (black bars) was outperforming its customers with the largest gap about 40 percentage points (3 times higher) and finishing well below. Investing lessons in here are one could have averaged down a few times in Q1 of 2017 and the price action showed a triple top (maybe even a head and shoulders) from Q4 2017. Not only was it a triple top but it also followed a text book Elliot 5 waves formation. Lastly, price certainly was affected by steel/aluminium tariffs announced in Q1 2018 - even though Australia was subsequently exempted from the tariffs by implementation date in June 2018. The shape of the orange line during the middle quarters of 2018 suggests a turning over, though the recovery from the selloff is strong. This might not have been the right time to exit BUT the slowing growth story bothers me.
I will reconsider both of these trades if the US-China trade deal is signed.
Shorts
Japan 10 year Government Bonds (JGB): Japan Interest Rates. With the massive spike in Euribor prices on the revised ECB growth forecasts last Thursday, my IG Markets account was hit with several margin calls. I closed out the 3 short JGB contracts for steep losses (92 basis points (0.6%) on two and 96 (0.63%) on the other). Face value is ¥1 million. They were due to be rolled over at futures expiry on March 13 and I was going to take the loss anyway. This has been a real widow maker's trade over the last few months. In September 2018, I had no open contracts - the chart tells the story from there.
The Japan story was a story of Japan deflation problems compounded by US-Japan trade tensions (automotive tariffs threatened) and China tariffs. The big round of China tariffs started in July and August 2018. I had closed out all my shorts in September 2018. The trade tensions did push the US into selloff, which makes safe haven assets attractive. This was compounded by the Federal Reserve rate hike in December. My trade entry in November was predicated on rates rising in US and Europe ahead of the Federal Reserve meeting. Japan did not follow with safe haven demand for JGB's pushing prices up. Of note is JGB prices did not come back when US stocks rebounded from Christmas Eve lows.
The sad part of the whole trade was that price has been staying under the top of the channel for close to two years - then it broke out and we all know that after a period of price compression the breaks are strong this one 1.5 times the width of the prior range.
Cryptocurency
Bitcoin (BTCUSD): Price range for the 4 days including weekend was $190 (4.9% of the open). Price was going both ways on Friday and pushed higher on Saturday and has been drifting lower ever since but not dropping below Friday's low. A reversal from here could see price having a go to clear $4000
One Bitcoin trade hit short term profit target for $148.88 per contract profit (3.9%) on Saturday
Ethereum (ETHUSD): Price range for the 4 days including weekend was $9 (6.5% of the high). Price was held within the bands of Friday's range trading around the $132 level. The chart feels different to Bitcoin with price dropping below that key level in Tuesday trade. Will it hold the short term support around $127 (purple ray)? $124 looks a more realistic resting place to me.
Enjin (ENJETH): I saw the price spike reported in Twitter.
I was holding ENJ in one of my test portfolios set up in the peak of the boom. I closed out the ENJ holding for 421% profit (in ETH terms) since January 2018. Chart shows the rocket ship journey - coin did nothing for 14 months and then bang. I will review my portfolios over coming days to see what a mess they are in.
Proceeds were reallocated to next 3 coins trading negatively in the portfolio (NULS, BRD, CMT) in equal shares. The original idea was to rebalance the portfolios quarterly across all the coins - that never happened as prices collapsed (and I lost interest). I chose to reweight differently - not prepared to add more weight to complete losers like AION.
CryptoBots
Profit Trailer Bot Trades closed on XLM, OMG, TRX, XLM through the weekend. As Binance is doing API maintenance work at present, I will show the detailed story in next update. While API work is ongoing, I have set up "sell only" mode as the default. I do not want to get caught out with rogue trades or price spikes when the API re-opens.
New Trading Bot Trading out using Crypto Prophecy. Trades closed out on FUEL (breakeven) and EOS (0.05% profit). EOS trade was rogue trade coming from the bot I thought was closed. I set an exit to recover trading costs. FUEL trade was standing since November 2018. Over the period of running DCA trades on FUEL plus the original trade, profit amounted to 5.5%
Quick update on FUEL chart which shows two big price pumps with the 2nd one taking out my exit target. Note: No dump this time
Currency Trades
Outsourced MAM account Actions to Wealth closed out 4 trades for 0.24% profits for the day. Trades are open on AUDCAD (0.22% negative).
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
American Airlines logo is licensed under the Creative Commons Attribution-Share Alike 4.0 International license. Boeing fleet data is credited below the image.
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
Bitcoin: Get started with mining Bitcoin for as little as $25 http://mymark.mx/Galaxy
Crypto Prophecy provides a useful tool to identify oversold and overbought coins - https://mymark.mx/CryptoProphecy
March 8-11, 2019