TIB: Today I Bought (and Sold) - An Investors Journal #367 - Swiss Banks, Cybersecurity, Oil Production, Fast Food

Market rally moves on. A little bottom fishing in Swiss banks and an oops moment gives away profits. Adding to Australian oil and only one covered call trade. Is $167.50 the cheap point to enter Fast Food?

Portfolio News

Market Rally

US markets continued where they left off before the holiday - a muted move up and shrugging off auto tariffs talk.

Walmart (WMT) earnings was a standout demonstrating how well they have rebuilt following the Amazon threat. The talking heads were confused how Walmart could succeed like this and December retail sales were down 1.2%. The key point made by one is US consumers now have real incomes (wage growth greater than inflation and rising employment). Let that sink in before one gets carried away with the statistical anomalies in the December number.

The bigger news was the rise in gold price to a 10 month high.

You read it here a little while back. Always good to see some hedge trades in my portfolios heading into positive territory. I will be adding to one of my gold miner stocks overnight. I like the European listing for Yamana Gold (RNY.DE) as it offers a Euro hedge - listed in Euros but earnings are in US Dollars.

US treasury yields continue to inch lower. The reiteration from Donald Trump that March 1 was not cast in stone helped.

Bought

UBS Group AG (UBSG.VX): Swiss Bank. After selling down some of the Swiss insurance stocks last week, I looked to deploy some of the released Swiss Francs. Picked UBS as a candidate and set up a December 2021 14/18 bull call spread. Net premium was SFr 0.64 offering a maximum profit potential of 525%. I was wondering why I had not set up this spread the last time I bought the strike 14 call options. I found out at trade time. I was already long strike 18 calls and those were sold. I may put in place the sold leg this evening.

A quick look at the charts which shows the bought call (14), breakeven and 100% profit as blue rays with the expiry date a full 2 years to the right.

What stands out is the double bottom and the strong bounce off that in 2019. Price has only to reach the mid 2018 highs to make 100% and a lot more if it reaches early 2018 highs. I might just leave this trade open ended and let it run.

Oil Search Limited (OSH.AX): Australian Oil Producer. Oil Search announced results which disappointed markets. I watched an interview with CEO, Paul Botten. The disappointment came from production miss following an earthquake which affected Papua New Guinea (PNG) production in February. What impressed me was production was 17% down for the year and profits up 12%. I was also impressed with the pipeline of projects coming on stream especially LNG from PNG. Given a year of full production and an improving oil price, 2019 could be a great year. I bought a small parcel of stock.

Two charts comparing Oil Search (black bars) to Woodside Petroleum (WPL.AX - orange line) always the benchmark for Australian oil. Over two full oil price cycles (since 2012 lows), Oil Search has outperformed Woodside. My fund manager bought Woodside in May 2014 and the two stocks have performed in line since then.

The next chart goes back 12 months (a daily chart) to time just before the earthquake. Oil Search has lagged Woodside by 7% percentage pints. That gap will close.

Dividend yield is a low 1.21% compared to Woodside 5.43%

Sold

UBS Group AG (UBSG.VX): Swiss Bank. Sold December 2021 strike 18 call options (in error) for a 91% blended loss since Jan/March 2017. Ouch!!

Shorts

McDonald's Corporation (MCD): Fast Food. Following two successful trades going short in-the-money puts at a price I would be happy to buy the stock, I sold a March 2019 strike 167.5 put for premium of $0.53 (0.3% of close). I did move the strike up from $165 to a level that is 7% below close of $179.25. The chart shows the new sold put which is below the last cycle low. With price half way up the current price channel, I feel quite sure that price will stay saely above $167.50.

I have tweaked the price channel and moved the down price scenario (right hand red arrow)

Income Trades

I was slow setting up covered call trades overnight and only one was executed on a market up day.

FireEye, Inc. (FEYE): US Cybersecurity. Sold March 2019 strike 18 calls for 1.33% premium (1.60% to purchase price). Closing price $16.52 (higher than last month). Price needs to move another 9% to reach the sold strike (tighter than last month). Should price pass the sold strike I book a 31% capital gain. Income to date amounts to 5.45% of purchase cost.

Cryptocurency

Bitcoin (BTCUSD): Price range for the day was $160 (4.2% of the low). I said price wanted to test $4000 - it did exactly that to the cent and then drifted back forming a seller high test bar. Do not be surprised to see price pull back before it has a go at clearing $4000.

Ethereum (ETHUSD): Price range for the day was $7 (4.9% of the low). Price took a breather after the big rush up into "no mans land". Do not be surprised to see a pull back to support around $132 before price has a go at touching $160.

CryptoBots

Profit Trailer Bot Three closed trades (1.32% profit) bringing the position on the account to 5.84% profit (was 5.76%) (not accounting for open trades).

Dollar Cost Average (DCA) list drops to 4 coins with XLM moving off and onto profit after one level of DCA.

Pending list remains at 12 coins with 6 coins improving, 6 coins trading flat and 0 worse.

This is a typical catch up after BTC and ETH surge.

PT Defender continues defending 12 coins with ETC and XLM defence trades being won.

New Trading Bot Trading out using Crypto Prophecy. DCA trade on FUEL closed for 1.80% profits. I was tempted to split the take profits to test if price could make the top of the bands. I am pleased I did not as the chart shows.

Added one new DCA trade on FUEL. Stochastic indicator is not quite as oversold but it has turned up and given a buy signal.

Currency Trades

Outsourced MAM account Actions to Wealth closed out 9 trades for 0.16% profits for the day. With more trading pairs, there is inconsistency emerging in trade directions on specific currencies - example 4 trades short NZD and 2 long at the same time. The trader is not trying to trade out correlations. 3 open trades on USDCAD, GBPAUD, GBPNZD all profitable for now.

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

Wal-Mart Stores, Inc.TheNewPhobia at English Wikipedia.Later version(s) were uploaded by Griffin5, Estoy Aquí at English Wikipedia. [Public domain]

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 Prophecy provides a useful tool to identify oversold and overbought coins - https://mymark.mx/CryptoProphecy

February 19, 2019