TIB: Today I Bought (and Sold) - An Investors Journal #184 - Europe Banks, French Supermarkets, US Oil, Airlines. Agriculture, Bitcoin
Stock selloff smashes Asia and Europe and then stalls in US. Back to the data. I am buying the dip in Europe and in US energy. Bitcoin also shies away from November 2017 lows. Whew!!
Portfolio News
Stock Selloff The selloff smashed stocks across the Asian zone. Sitting here in daylight it was hard to watch especially knowing that economic fundamentals are strong and the whole thing is driven mostly by fear.
It is really disappointing to see good profits wiped out by fear. I was holding the line. I did watch the European markets open and saw at the same time that US futures turned from negative to positive. I did wake up in the morning very concerned about the big bets I had placed short on interest rates the day before.
The key for me is fundamentals. Economic growth is strong right across the world especially in Emerging Markets. Earnings so far this earnings season with 60% of companies already reported have been solid with some stars. While interest rates are rising credit spreads to high yield areas are still modest. Central banks have started the process of normalisation. Signs of inflation are growing in US but have some way to go in Europe. Tax changes in US will be good for earnings looking forward. US Congress just extended the government funding past the February 8 deadline.
The main concerns I have lie in the Treasury markets with a major rollover coming up in US with the Federal Reserve now a net seller of bonds and China, Japan and Saudi Arabia not likely to be a strong buyers as in the past. Yields have to go up further to attract buyers.
Bought
BNP Paribas SA (BNP.PA): French Bank. BNP announced results that were better than their peers on a big selloff day. Perfect time to grab a slice of the better results when the whole market is down. Finger trouble landed me up with 1 share instead of 100. Will add the balance overnight - as it happened price did drop from further what I paid.
Carrefour SA (CA.PA): French Supermarket. French economy is growing. French people need to eat. A down day is a good day to average down my entry price. Added to both stock and December 2020 18/24 bull call spread positions. Premium on the spread at €1.85 is just over 10% and higher than I paid last time. Maximum profit on this leg will be 224% if price reaches or passes 24 before expiry.
ETFS Agriculture ETF (AGAP.L): Agriculture. One of the few shoots of green on both days of the selloff was agriculture. I averaged down my entry price on the holdings in the GBP listed ETF.
Commerzbank AG (CBK.DE): German Bank. I had a bid outstanding on a December 2022 strike 16 call option as I wanted to average down my first entry. That bid was hit overnight at €2.25. With a closing price of €12.44 this has some way to go to be a winner but there are 58 months to go.
Weatherford International plc (WFT): Oil Services. Averaged down my entry price.
Exxon Mobil Corp (XOM). Exoon Mobil announced earnings on Friday. It depends on who you listen to as to whether they were a miss or not. Zacks reports that the upstream earnings were a beat.
The market did not like them is the answer and then the selloff happened. I see a big collapse in a well run business like Exxon and am going to guess that the market has overreacted. I added a small parcel to my existing holding. I will not be surprised to see this big drop wiped out and price will go back to trend.
SPDR® S&P Oil & Gas Explor & Prodtn ETF US Oil. With Chevron (CVX) also disappointing markets, the whole oil exploration and producers sector took a hit. I averaged down my recently acquired position. The chart shows Exxon Mobil (black bars) compared with Chevron (CVX - - orange line) and SPDR Oil Producers (XOP - red line) since the oil price peak in 2014. This suggests to me that XOP has some way to close the gap to the majors.
See TIB139 for the discussion on XOP.
JetBlue Airways Corporation (JBLU): US Airline. Airlines did not escape the rout. I averaged down my entry price. A 15% drop from last weeks highs is not supported by the economic conditions prevailing in the US. I will be happy to see my 15% back in a heartbeat.
Sold
Downer EDI (DOW.AXC): Australina Infrastructure Services. ASX was smashed after the big selloff on Wall Street. Stopped out for 6% loss in 4 days at market open. Leveraged trade using CFD's needs a stop loss. Ouch!!
Shorts
Eurodollar 3 month interest rate futures (GZ9): I woke worrying about the bets I had placed. The chart tells me that I was right this time. Price had spiked up and then retraced close to the lows. The chart shows the last trade (the red square). Note: I want this chart to go down. I have now put in a stop loss for the top trade (the dotted red line at 9755).
Cryptocurency
Bitcoin (BTCUSD): Price range for the day was $2230 (27.3% of the high). I said I was going to be sitting on my hands on Bitcoin for a while. I did.
First thing I did was to draw a channel chart on it following a good pointer from @scaredycatguide. The discipline was about waiting for price to reverse on the channel. I watched price break below the December lows and I was looking to see if it would test the November lows.
I did add in a double position at $6240 on one of the channel touches. This kept the liquidation price below the November lows.
I did close out positions when price reached the top of the channel at $6493. I was keen to explore shorting at the top of the channel but one would need two accounts to do that - one for longs and one for shorts.
Litecoin (LTC). I added a small parcel of Litecoin today. With the prospects for a Litecoin Litepay product coming out I fully expect to see price move ahead once he crypto doldrums pass.
Crypto Robot Closed 3 trades for average 2.03% profit (DASH and XMR). Overall trading remains negative.
Crypto Mining as I wrote yesterday I did buy two new mining pools for Bitcoin and Ethereum. http://mymark.mx/Galaxy to join me. A Litecoin sale happens Wednesday 9pm Sydney time. Get your Bitcoin ready - mine are. I bought more today.
Currency Trades
Forex Robot did not close any trades and is trading at a negative equity level of 8.4% (lower than prior day's 9.0%).
Outsourced MAM account I run an outsourced forex trading account with Actions to Wealth. They closed out 7 trades for 0.14% loss for the day.
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 Express.co.uk and Bloomberg.com. All other images are created using my various trading and charting platforms. They are all my own work
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February 6, 2018