3 dark clouds begin to combine to scare markets. Not me - I am averaging down in one portfolio and adding in a few new options trades in banking and automotive. Price discounts I do like.
Portfolio News
Market Rally Stutters
3 dark clouds begin to combine to scare markets
The talking heads talk about trade tensions. It feels more like trade war as Hardball lines up against the Long Road. In my portfolios, the only trades going up were hedge trades on S&P500 and Nasdaq, Gold, sold calls, short on Australian banks, puts on US retail and consumer staples and real estate AND one oil services stock (EMES - up 123% on the day but still down 96%). EMES is staving off bankruptcy.
They just got notice from NYSE that they are in breach of the listing requirement to trade for 30 days above $1.00 a share. Somebody, guessing the listing broker, bought a bundle of stock to move the price
I wrote this earlier today as a comment - worth repeating
"The bond market decided that the economic realities it was worried about in December are coming together again.
- Slowing economic growth (global)
- China trade
- Federal Reserve action
I watched a good opinion piece on Bloomberg from Komal Sri-Kumar talking about the Fed. His view is the Fed is in flip-flop mode. Best line was along these lines. Fed says they are data dependent. Their actions shows something else. In fact, the data is Fed dependent."
This is the worst kind of Fed and the bond markets showed that today dropping below 2.30 on the 10 year intraday
European markets also got the nerves and opened lower led by automotive stocks.
Markets know Trump did push the automotive tariff discussion out by 6 months last week BUT that was last week. A snippet in the article caught by eye on one of my holdings, Royal Mail (RMG.L), the UK Post Office drops 11% to make an all time low since privatisation. Talk is it could be nationalised again as part of the Brexit debacle.
Cannabis Carnival
On a down day for markets Harvest One (HVT.V) popped 7.59% after announcing acquisition of further growing capacity in Canada. The only Canadian stock going up.
Bought
Used the selloff to round up a few positions all averaging down entry prices. I have tended to average down too soon after initial purchases. I have been watching Jim Cramer who waits a bit longer to see if he can get a bigger average down.
Ensco plc (ESV): Offshore Oil Driller. Was left with a small parcel of shares after the recent consolidation - rounding up and averaging down at minus 40%. The merger with Rowan almost certainly ensures Ensco will be a survivor.
Iridium Communications Inc (IRDM): Satelllite Communications. This is a long term investment idea predicated on the use of satellite for a range of tracking and remote mobile phone service and even 5G applications. Averaging down at minus 12%.
Micron Technology, Inc (MU): US Semiconductors. Micron has been a big loser in the trade war and the DRAM price competition before that. Also a long term view - the world needs memory. I have averaged this down before at minus 15% with this one at minus 29%.
Ford Motor Company (F): US Automotive. With price sliding below $10 to $9.97 at trade time I added a June 28, strike 10.5 call option to one portfolio. The $0.13 premium is around half of what I paid on Monday and is only 1.2% of strike. See TIB422 for the rationale.
ING Groep N.V. (INGA.AS): Dutch Bank. Was looking to set up a December 2022 10/14 bull call spread with price drifting below €10 for the first time in a while. Put the trade on without looking at my current positions. What I achieved in the trade was to buy strike 10 call option and sell strike 14 call options I was already holding - i.e., did not get the spread. Here is what the trade idea should have been. Buy December 2022 10/14 bull call spread for net premium of €0.84 offering maximum profit potential of 376% if price reaches €14 in 3 and half years from now. Instead I booked a loss of 59% on the strike 14 call options sold and I left the trade open without a profit cap. What I will do tonight is find another strike to sell and buy back the strike 14's I inadvertently sold.
A quick update on the chart but not showing the new trade. The new bought call (10) runs from the current price level and goes one year longer than the dotted green expiry line. When I sort the trade out I will show the new chart
What I have done is draw in a Fibonacci retracement for the last upcycle and cloned across a blue arrow price scenario starting at the 1.27 retracement level (the pink arrow). That is what price did on the last cycle down (left hand red arrow). What this shows is if that scenario plays out price will comfortably clear €14 and both the revised 100% profit targets on other trades. Being open ended might not be a bad thing. What it also shows is there is lots of time to December 2022
Income Trades
I did say I would write a covered call after the big results jump on L Brands (LB). With 12.84% jump today, I am hard pressed to see this rise another 9.2% in 3 weeks. See TIB424 for the discussion on LB results.
L Brands, Inc. (LB): US Intimate apparel. Sold June 2019 strike 26.5 calls for 0.60% premium (0.87% to purchase price). Closing price $24.26 (lower than last trade). Price needs to move another 9.2% to reach the sold strike (easier than last month). Should price pass the sold strike I book a 24% capital loss. Income to date amounts to 3.7% of purchase cost.
Cryptocurency
Bitcoin (BTCUSD): Price range for the day was $512 (6.4% of the high). Price traded around the resistance level at $7761 (2nd dotted red line from top) but closed above near the top of the day's range.
Ethereum (ETHUSD): Price range for the day was $17 (6.6% of the high). Price tested hard lower but not down to the support level at $222. The shape of the bar (a long tail) suggests there were buyers down at the lows and price wants to go higher.
You will see there is a reversal point in October 2018 (top of blue arrow). It is in the middle of the support and resistance lines that price has traded in the last 10 days. I am hesitant to draw it in as a level as price is not really respecting it BUT it might if price wants to make a break higher = do not be surprised.
CryptoBots
Profit Trailer Bot No closed trades
New Trading Bot Trading out using Crypto Prophecy. No closed trades
Currency Trades
Outsourced MAM account Actions to Wealth closed out 3 trades on CADJPY, GBPUSD, AUDNZD for 0.01% losses for the day. Ironically the biggest losing trade was short GBPUSD. Trades open on XAUUSD (0.52% positive)
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
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
May 23, 2019