TIB: Today I Bought (and Sold) - An Investors Journal #248 - French Insurance, Europe Interest Rates
As big as Brexit single handed. Thanks Mario Draghi. Ethereum wins a "get out of jail free" card. Football brings trade warriors onto the same team. More European financials for me and more shorts on European interest rates.
Portfolio News
Europe Muddles Mario Draghi, Governor of the European Central Bank, did single handled what 17.4 million Britons did when they voted for the UK to leave the European Union in June 2016.
What was that? Knock 1% off the value of the Euro versus the US Dollar. Here is the chart. It makes my 12 month puts on the EURUSD look a whole lot better than they did last week.
I warned that this could be a case of Europe Muddles. The good news is the ECB did put the easing debate onto the agenda of the meeting. They did say that they would start to turn off the easing spigot - in December and not September but data dependent. Now that is the first contradiction - data dependent but they have named and moved the date. The next contradiction is they said they would not raise rates until late Summer 2019. This is the first time they have put a date on a rate choice. That is not very data dependent either. If that is what plays out, my 12 month puts on EURUSD do not have enough time.
That said, the updated chart does seem to indicate that the price trajectory looks more like the pink arrow than the blue arrow. More about this later.
The news in my portfolios was mixed. The Europe markets did like the messages that economies and inflation are headed in the right direction. Banking markets did not like the longer timeframe before a rate rise - they went down. Other financials did go up though.
No surprise when the Bank of Japan did its Europe Muddles thing today too. No change. Japan Jitters perhaps
Market Jitters - Tariff Tantrum Big moves of the day came from media stocks and technology stocks.
I did write yesterday that I felt the brakes were off the media sector - all my stocks went up. Nice given I bought them with that in mind. It seems that the brakes came off the technology sector too - on the back of some solid IPO's as well. The day more widely was mixed with financial stocks and emerging markets and energy stocks a drag. Overall, my feeling was the markets were in a good mood and were absorbing the rate hike and the Europe Muddles and the Tariff Tantrum well. One of the talking heads said this morning that he felt we would cruise along in the US for a good 12 months.
Of course, this is always a fragile feeling with Donald Trump lobbing in the revised tariffs schedules after markets closed.
My portfolio did get its next round of regulatory approvals with Chinese authorities approving the merger of Qualcomm (QCOM) and NXP Semiconductors (NXP), also after market close. Like the Genworth (GNW) deal approved earlier by US regulators, I will read this as a tit-for-tat part of the tariffs negotiation process with one deal approved on each side of the table in a week. These have both been going on for months and months. It is no coincidence.
World Cup World Cup 2026 is awarded to USA, Canada and Mexico jointly.
http://fortune.com/2018/06/13/world-cup-2026-america-canada-mexico-bid/
It is an expanded event with 48 teams and the final will be in New York, It is always good to see sport unite nations that are at war on tariffs and migrations. By the time 2026 comes along all that stuff will have been long forgotten UNLESS of course a trade war does trigger the next recession. We will almost certainly see a recession before then - not saying when but we will.
What about the World Cup itself?
The opening ceremony had some sound problems and Vladimir Putin said nice words about the power of sport. The media latched onto some image problems - Robbie William's middle finger. Russia thrashed Saudi Arabia 5-0. In my portfolios, Russia Small Caps ETF (RSXJ) went up again. I am going to add some more overnight. More oil pumping and the World Cup has to be a good profits driver.
Bought
Axa SA (CS.PA): French Insurer. I have had a bid outstanding some time for a December 2021 strike 22 call option. I put these on to capitalise on the over-reaction to Axa's takeover bid for XL Group (XL). I already have 2020 expiries. My bid was the only bid in the market for weeks. That bid was taken up at €1.72 premium (7.9% of strike). The chart story is becoming a little complicated as I have two trade flows going before and after the XL Group bid. I have left everything on the chart and have added in this new trade as a fluoro green ray with its new expiry date on the right margin.
What is clear from the chart is that price is not going to repeat the Elliot Wave zigzag (labelled 12345) in the same way as last time. The step from 1 to 2 the second time is steeper and it may not be over yet. That said, I will not be surprised to see a consolidation in a range while markets digest the ECB actions. The chance remains that the blue arrow scenario prevails with price dropping some more during 2018 and then moving ahead as the data-driven ECB normalizes its balance sheet starting December 2018. That leaves the blue arrow scenario intact and this new trade will comfortably make the green ray 100% profit. If price reaches the top of the blue arrow, the profit is 250%. Of course, if price consolidates in a range and then starts a new 12345 Elliot Wave, it will be a lot more.
See TIB132 for the pre-bid trade discussion.
Shorts
Euribor 3 Month Interest Rate Futures (IZ): Europe Interest Rates. I watched Mario Draghi handling the questions after the statement. I thought he sounded like the classic technocrat that he is. All he did was listen to the question and then read out words from the prepared statement. He could have saved everyone a lot of time by just handing out the statement and opening up the coffee machines.
Euribor price action was immediate with an instant jump in price. Here is the chart I snapped as he was talking - an 8 basis point move then and settling at 12 (half a rate hike) to 99.70 implying a 0.30% rate in December 2020.
I added one more short Euribor contract. Note expiry for these futures is December 2020. US Eurodollar rates for December 2020 are currently sitting at 3.07% and they are quoting that level for the years after that too. Something is out of whack in believing Europe can be at 0.3% in 2 and half years from now and the US is at 3%.
I remain totally convinced that the ECB is going to get caught out long before late Summer 2019.
Expiring Options
Qualcomm (QCOM): US Semiconductors. My short term Qualcomm trade is going to the wire with closing price of $59.46 compared to a sold call of $60.
Little did I know that the Chinese regulators would approve the takover of NXP Semiconductors again after market close. This is the last regulator needing to make approval. This has propelled QCOM price over $60 in extended hours trading to $61.25. If I let things run to expiry, I will net-off $5 per contract profit plus the put premium for the $50 put I sold. I can choose to buy back the sold call and take delivery of the stock for $55 to grab a bigger share of the upside. I do hold the stock already so I will get some of the upside anyway. How much upside could there be and how much is factored into the price?
I will have to figure something out in the next few hours. The analysts are mixed - so am I!!
Scorpio Bulkers (SALT): Bulk Shippers. Bulk shipping has been a star in my portfolios with the exception of Scorpio which has lagged. I hold the stock and I hold a 7.5/10 bull call spread. Price closed at $7.55 which means that I would be assigned the stock which would double what is a small holding. If price closes below $7.5, the option will expire worthless. The chart tells a story of waiting for a blue arrow to unfold - hovering between right and wrong between the start and end lines (vertical green lines) and never getting near 100% profit.
I think I will wait this one out when markets open. I suspect the China tariffs fallout will take an edge off the bulk shipping market tonight.
Income Trades
It is looking like all income trades will not reach sold strikes = I love 100% winner months and a chance to write covered calls again for another month.
Cryptocurency
Bitcoin (BTCUSD): Price range for the day was $438 (6.5% of the high) and did close above the support level from the last leg down. The relative strength momentum indicator also reversed. Whew!!
Ethereum (ETHUSD): Ethereum price action was much more aggressive than Bitcoin with a 13% swing on the day following the news that the SEC declares it is not a security.
Based on my understanding of the present state of ether, the Ethereum network, and its decentralized structure, current offers and sales of ether are not securities transactions
William Hinman, the SEC’s Director of Corporate Finance
I am a little wary as this was a statement in a speech rather than a written declaration but it has to be taken as good news. Bitcoin liked the news too - it has already got the seal of approval as not being a security.
https://www.businessinsider.com.au/ethereum-price-spikes-after-sec-declares-not-a-security-2018-6
CryptoBots
Outsourced Bot No closed trades on this account (212 closed trades). Problem children was unchanged though a little less sad (>10% down) - (18 coins) - ETH, ZEC (-45%), DASH (-46%), BTS, LTS, ICX, ADA, PPT (-48%), DGD (-44%), GAS (-57%), SNT, STRAT (-43%), NEO (-55%), ETC (-41%), QTUM, BTG (-54%), XMR, OMG.
NEO/GAS did improve a bit but are still in the -50s.
Profit Trailer Bot No closed trades. Dollar Cost Average (DCA) list was unchanged at 12 coins with 3 coins improving, 2 coin trading flat and 7 worse. It is not surprising to see coins falling when ETH bounced on the SEC news.
ICX did improve on the day - the chart does show a mini pump and dump. See the volume spike driving the price up and then slides back to normal and spikes again on the dump.
New Trading Bot Positions improved nearly 2 points to let go of the 50 marker to -48.7% (was -50.2%).
NEO was mostly flat with the other 3 coins improving. Best was ETH on the back of the SEC news.
Currency Trades
Forex Robot closed 28 trades (0.57% profit) and is trading at a negative equity level of 1.8% (higher than prior day's 0.55%). It is good to see trading go back to normal after the VPS saga of the last weeks.
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, Fortune and ABC.net.au. 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
Steemit: Build your blogging reach the smart way http://mymark.mx/SmartSteem
June 14, 2018
Upvoted ($0.13) and resteemed by @investorsclub
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beneficial investment @carrinm, economic turmoil always changing,☺️
Change creates opportunity.
Can I post back your post? but with a different language (Indonesian).
I am very happy if people in my country can read it in Indonesian. If you allow.
No problem. Please translate with good care. I will be checking with the help of Google translate
I will do what I can and I have done it.
Another great post, I learn so much when I read them.
Got a new name to match Europe Muddles for Japan - Fuji Fumbles
yes, I agree with what you say @carrinm and we have to keep our vigilance when all the news comes out from the other party. This is to keep investments smooth and without carelessness. restem let others see about this and hopefully others can understand it from time to time. greetings from your new followers.
wow you look like a professional in this thing i don't understand much of the technical aspect but would love to follow to know what's happening around :) keep us updated and informed :D
Thanks. I have been doing this for a while and writing for years. I will keep trying to write in a simple way for easy learning
Now that's great to know thanks a lot will look forward to see more posts :)
Results of @smartmarket promotion
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