TIB: Today I Bought (and Sold) - An Investors Journal #270 - Japan Govt Bonds, Payments Software, Offshore Oil Drilling, US Regional Banks.
The jawboning and tariff threats continue. Japanese interest rates move on a few words and in comes the Bank of Japan to shore up the defences, or calm the nerves. Not before I book an unexpected winner. Crypto markets confirm divergence between leading coins, like Bitcoin, and the rest. Even Ethereum lags behind.
Portfolio News
Maket Jitters - Tariff Tantrum White House might have doused the fire last week but Donald Trump set if off again - currency manipulation and the Federal Reserve are at it again, he says.
Markets did react to the words and the US Dollar retraced. The harsh reality is the market is just reflecting what is going on. The Chinese currency is falling because export demand is starting to shift and capital is keen to depart China. Tariffs will be built into costs and US inflation will rise. The Federal Reserve has a mandate to manage inflation - rates will keep rising as inflation builds. The tax cuts are being funded by increased deficits which have to be funded. That implies higher yields to attract funds to finance the deficit = a higher US Dollar. Donald Trump can jawbone as much as he likes - the reality is he fueled the situation.
There is a massive irony in all of these words. Donald Trump accuses the EU and China of manipulating the currencies. He then tries to talk the US Dollar down and tells the Federal Reserve to stop hiking rates. The markets are deciding. Not even King Canute can do anything about it.
Meanwhile the tariff tantrum heated up with a threat of tariffs on all exports from China to US ($505 billion)
G20 summit was held over the weekend in Argentina. Protesters took to the streets to protest the IMF loan conditions - the IMF did just bail Argentina out. The G20 could not agree on any shared solutions to the tariff story but did highlight the risks
Growth has been less synchronized recently and downside risks over the short- and medium-term have increased. These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies.
https://www.nytimes.com/2018/07/22/us/politics/g-20-summit-tariffs-trade-war.html
IMF Managing Director, Christine Lagarde, put an estimate of 0.5% hit to global GDP from the tariffs already in place, and more if there are a wider array of tariffs deployed. My sense is 0.5% is wearable but more could drive the next recession as there is always a bigger multiplier on over-reaction.
A bigger dig into the data can be found in this article. A morsel of data for US impact - 30.3k job gains vs 432.7k jobs lost. Make America Great Again - indeed!! Even if the estimates are 90% wrong there will still be more jobs lost than gained.
Bought
Afterpay Touch Group Limited (APT.AX): Austalian Payments. APT offers three payments solutions for retailers. Buy now pay later. Secure delivery of non-physical products. Voucher, tickets and token delivery. Trade idea was shared with me some time ago and it slipped my mind. A reminder came along when price spiked 23% in a day on earnings.
Q4 FY18 underlying sales of approximately $736m represents a 171% increase over Q4 FY17 and a 39% increase over Q3 FY18
https://www.afterpaytouch.com/images/APT_ASX-Announcement_Q4-FY18-180719_FINAL.PDF
The business currently operates in Australia and launched in US in May 2018. A move globally will propel numbers even more. Day two price spiked another 14%. I am wary of momemntum trading but I bought a small parcel with a view to buying more should price pull back . 2nd parcel bought a day later on a 5% pull back in price. I will put in a pending order in 10% below last entry and wait it out to get some more exposure.
Shorts
Japanese 10 Year Government Bonds (JGB): Bond yields spiked on Bank of Japan announcement that they woud reconsider the yield curve strategy. The strategy that they follow is to flex the yield curve so that the 10 year yield is zero. Market reaction was swift with a rise in yield above zero to 0.11% and a drop in bond prices. Here is the weekend chart.
Note: this is a price chart. Price falls when yields rise.
This move took out the profit target I had set at 15075 for one of my contracts for an 18 basis points profit (0.12% - contract exposure is ¥1 million). This profit funds borrowing costs for my Bitcoin and Ethereum contracts for a few weeks.
Monday action has seen the Bank of Japan step in to increase purchases of 10 year bonds with yield dropping back to 0.065%. This feels like King Canute trying to stop the tide. I remain short 3 contracts (showing on my chart)
Expiring Options
Transocean (RIG): Offshore Oil Driller. July strike 14 call options expired worthless. Short term trade that fell foul of falling oil price. I did roll out to August in my other portfolios.
Huntington Bancshares Inc (HBAN): US Regional Bank. Strike 17 call option in one of my small portfolios expired worthless. This has been a frustrating trade which started in March 2015 as a January 2017 strike 12 call option and has been rolled out to January 2018 to February to March to July and has not quite made it. Investor ran out of patience and did not want to commit more funds to roll up.
The chart shows the challenge of the dying days of options trades (and short term trades) - market goes sideways for a while and time runs out (see the rings). The long term trades may still work as price is working along the sideways phases that are in the price scenarios.
Income Trades
All this month's covered calls expired worthless making for a 100% success rate month and generating just under U$1,000 in income (1.4% return vs closing prices). A volatile market that has a few down days does help covered calls - less chance of being assigned and implied volatility goes up a bit to increase premiums.
Cryptocurency
Bitcoin (BTCUSD): Price range for the weekend was $484 (6.2% of the high). Price tested the resistance level in Friday trade (top red dotted line) and retreated to test the support level all weekend (the green line). The price action is not as convincing as Ethereum but there is a higher low and there is scope to push through the resistance level to make a higher high. This resistance level is key as it is where the sellers were lurking last time (early June)
Ethereum (ETHUSD): Price range for the weekend was $34 (7.7% of the low). Price made bullish traintracks over the weekend and returned to test the resistance level. This is an encouraging move as price did make a higher low on that reversal. If price clears the resistance level again there should be enough momentum for it to make a higher high.
CryptoBots
Outsourced Bot No closed trades. (213 closed trades). Problem children went back to 18 coins with BTS (-16%) back on list again. (>10% down) - ETH (-40%), ZEC (-51%), DASH (-55%), LTC, BTS , ICX (-60%), ADA (-42%), PPT (-67%), DGD (-60%), GAS (-70%), SNT, STRAT (-57%), NEO (-67%), ETC, QTUM (-59%), BTG (-66%), XMR, OMG (-40%).
ETH and OMG both slipped to -40%. ICX and ADA get to -60%. GAS at -70% is the worst.
Profit Trailer Bot Thirteen closed trades (1.26% profit) bringing the position on the account to 0.81% profit (was 0.68%) (not accounting for open trades).
Six of the trades ran one level of DCA. This suggests there is value to exploring more levels of DCA. Currently the bot supports a double down model for DCA - i.e., each purchase is double in size. This does not work well when when there is a stop loss in place behind the DCA levels as it increases the number of winning trades needed to cover the doublings. The scale of the pending list reminds me of this every day.
I added BAT to the whitelist as there is a chance that Coinbase will list it. They announced that they would consider listing coins that were classified as securities. There is some confusion as to who said what. Market took the news it liked first.
There is one coin (NANO) on the Dollar Cost Average (DCA) list with one level of DCA.
Pending list remains at 11 coins with 1 coin (VEN) improving, 1 coin (IOTA) trading flat and 9 worse.
I sense there is a clear divergence happening.
Bitcoin turned off the lows on June 25 and has since gone up 36%. I went back to the pending list from June 27 and compared where those coins are now. One would have expected them to have all gone up, say half as much as Bitcoin. Only one coin has exited the list (XLM) and 4 coins have gone up somewhat (between 10 and 20%) - all less than Bitcoin (XLM, EOS, IOTA, OAX). When I look at how the coins on the whitelist (especially the new ones (XLM, POWR, ZRX), there is a clear message to me. The market is being more careful in assessing which coins to follow - those with a solid track record and something tangible and real to offer. The others are being left behind. Even Ethereum is lagging as it has only risen 17% since the June lows.
New Trading Bot Positions dropped 1/2 point to -50.5% (was -49.9%)
BTC improved 1 point and the other 3 coins dropped
Currency Trades
Forex Robot did not close any trades and is trading at a negative equity level of 4.0% (higher than prior day's 3.2%).
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
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
July 20, 2018
Sir your analysis is really good,
bitcoin always take a pump in 139 days
i think this is the evidence that it will go up now,
sir one think i want to ask to you that will bitcoin go high due to ETF?
if yes then what do you expect its price?
thanks for this information
@pradeepkr34
I do not make price predictions. An ETF will help as it allows people who are nervous about the technology to invest. Quite frankly, why pay someone to assemble coins into a fund and pay them a percentage? How much? It is a guess.
yes you are right as we all have a doubt in our mind for the bitcoin as it has no dad-mom
As we are seeing there are a huge prediction in the BTC price by many people
so do you think they are just trying to manipulate the market?
There are lots of people making wild price predictions. Mostly they are attracting attention to the other things they do. Example: Wild prediction on a blog page. More eyes. More advertising money or clicks to email list funnel.
Manipulation is a factor in unregulated markets. The more liquid the market the less manipulation there can be. Bitcoin market is influenced by the big miners who have large Bitcoin holdings. When they need cash price does move. When they have another investment idea, like another crypto coin, price does move.
Pump and dump is a big problem. I write about the ones that affect my coin trades. As liquidity grows and ownership widens, this will become less of a factor. It is a form of manipulation. That is why I am steering away from those markets. Bitcoin is not really a pump and dump possibility except in small exchanges - too many players. Open API's will eventually kill pump and dump - the arbitrage traders will mop up price discrepancies as soon as a pump begins.
@carrinm
Thank You So Much Sir,
I Have Got Too Many Informations from this Post.
You cleared my doubts which is really appreciated.
You Are Awsome.
Thanks For Giving You time I Am Glad to see your work.
Keep Posting These types Of Informative Posts. It really Help us.
Useful market information @carrinm, allow me to share.
Be free to share anytime you want.
Thank you @carrinm
It's really good to know about Bitcoin.. bcoz when ever it goes down and it comes back too.
Well ur production is supup..no doubt.
I have question regarding ETF,
Please tell is it the right time to buy this or I should wait?
Please tell.
Thanks.
I cannot give financial advice. Which ETF are you asking about?
All I do is say what I am doing. You make your own research and your own choices.
Sorry sir, i didn't mean like that, I heard about ETF on news channel, so thought may be u know about it.. that's why asked about it.
Anyways thanks for the reply.
Thanks for sharing..
Good job sir and you are great person of steemit. thanks for sharing this sir.
Thanks for you and most welcome sir@carrinm.
This post has received a 4.08 % upvote from @boomerang.
The longer this chess games of tariffs last, the more likely capital flows will be impacted and industries will need to take action to offset these impacts. This will impact the consumer which is still the most substantial part of the US economy.
Regarding Cryptocurrencies, there seems to be a flight to quality in the sectors. Many potential disruptive projects that have working protocols would be the most attractive assets to accumulate.
The hidden price of tariffs is through inflation and/or reduced earnings. It is a different form of tax that can only be avoided by reducing consumption or absorbing the cost. The end result on markets will be the same.
Hi @carrinm, I too have a feeling that BAT might get listed on coinbase, it a very good project and team so I am collecting some. Also, I am collecting Nano at this point, may get a good return on investment. So how long have you been using trading bots like profit trailer, and how was your experience is it that much profitable? Thanks in advance.
good marketing information and useful ... thanks for the information @ carrinm