Thursday, September 29, 2016

Finally, agreement in Algeria: Crude Oil soaring

Negative interest also in Germany

The market today woke up with its usual indecision of these days, pending Germany and oil. Today Germany placed negative rate bonds -0.7%, the new 'fashion' of the global central banks. Those who buy these types of bonds do so, only to sell them immediately at better prices (that is, to an even lower yield) ... a chain, which may end badly at some point. For a change, the Deutsche Bank DB shares rose today on the upside, based on rumors of probable government aid to its star bank, which I comment below. A section: about the negative interest rate, read this article of Salmon Blog, in the following link, it explains it very didactically.

Finally, agreement in Algeria: Crude Oil /CL soaring

Tremendous hike yesterday in the crude oil /CL. When I finished at noon of publishing my daily post came the news of the agreement in Algeria, and that's why that update. Yesterday's close of almost +5%, very slight rise today at the beginning of the session: there are doubts about the real scope and application of the production freezing agreement. We already know that between Arab countries and the Middle East there are always tensions and they are unclear many times. And sometimes they do not fulfill the stipulated, but see the following graph taken from Bloomberg.

Since 1998, OPEC does not usually meet the production quota agreed (in black): usually exceeds it (in blue).

I see difficult the explosion of the price of oil as some thought yesterday, but until the picture becomes clearer, although with the volatility that has been dragging the price of crude for weeks, you can not predict anything. Their variation will depend on the weekly reserve data and hence some new concrete statement from OPEC, which can be given at any time, although only on November 30 that they meet again in Vienna.

It forms an Inverse Head and Shoulder in /CL, with an increase in volume. 
Watch out if the price crosses the neckline (and there is no news that alters its rise).

German Rescue Plan for the Deutsche Bank $DB ?

I have been following closely everything that happens with the Deutsche Bank DB. The last thing yesterday were the rumors that, in fact, despite what was denied a few days ago by Merkel, her government may have a rescue plan ready for the powerful bank. It seems to be politically correct to do so, since the Americans did the same with their banks after the 2009 crisis, that precedent exists and would not be criticized by the global financial status quo. Yesterday the stock rose more than 3% based only on the rumor of the rescue. Only if it is confirmed, with an official declaration, would it be a reason to enter long in DB.

It does not prove anything, but it's just terror: see the behavior in recent years of DB 
compared to that of Lehmann Brothers in 2006 to 2008, the year of its bankruptcy.

The Recommended Reading

Regarding Trump's comment on Wall Street on the day of the debate, literally: 'Believe me, we are in a bubble right now, and the only thing that looks good is the stock market, but if you raise interest rates even a little bit, that's going to come crashing down. We are in a big, fat, ugly bubble, 'I have not found (nor will I find) any recognized federal, banking or investor official from the United States who thinks in that sense.

And many of us who followed the stock market years ago, we know that Trump did not tell any lie. It is clear, and I also, that the stock market is being artificially supported by the political class, through its Central Bank, to keep the average American happy. It is the usual modus operandi of the Democrats (read Bill Clinton). His government generated the dot com bubble in 1999, which degenerated over time in the real estate bubble of 2008, and which in turn has led to the current one, that of the bonds, that if the correct monetary policy is made, I hope it does not burst.

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Friday, September 23, 2016

After the "SuperWednesday": No Rate Hike

FED decission: No Rate Hike

At noon the bottom plate. The FED decided not to raise interest rates this month, maintaining the 0.25-0.5%, after a decision of 7 members in favor and 3 against (in the FOMC meeting in July the committee had voted 9 to 1). It falls of mature that in December the Rate Hike must be given, but I explain below because I believe it. Obviously, the rise in the stock market strengthened in all sectors, closing the SPX at + 1.09%. Despite the bad macro data, they see their economy solid because, they say, domestic consumption is. On the employment side, they also see it as strong and on the target inflation they believe that it will still be reached in the medium term. In short, everything goes wonderfully, so do not do anything, total and another government comes and better take care of our posts without risking ... The full text of today here

'I'm worried, but I better not do anything, finally another 
government is coming ...' seems to be Yellen's ultra-dovish philosophy.

The Yen, the other protagonist

After the 'Super Wednesday' Wall Street is taking a break, the actors are rearranged and clarifying the picture. Thursday was a expected positive reaction to the decision of the FED, and today Friday there was the usual profit-taking, which pushed back the SPX -0.57%. The dollar suffered the impact of the no-Rate Hike, but it seems that it can remain stable until December, where it is almost discounted that the rate hike will occur. It is very unlikely that there will be any news in November, the electoral month. Meanwhile FED hawkish members as Rosenberg will continue, as today, insisting on the need not to delay the rate hike so much ... and I give them all the reason.

A brief comment of the other protagonist of the supermiercoles: the yen. Today in Japan, the Nikkei index closed slightly lower. What measures the Bank of Japan will be able to take in these months? It is very uncertain to know, not even to intuit it. If they see that their measures do not work, they will intervene in the yen again. They continue with their rate in negative territory and try to invert the yield curve of their bonds, the yield curve, as a solution to a deflation that seems to approach the country of the rising sun.

In this regard, Ben Bernanke, president of the FED before Yellen, posted his opinion on Bank of Japan's decisions on his blog. Reading, very technical, recommended, of one of the chiefs of the macroeconomy.

2016 Chart for the pair Dollar/Yen (USD/JPY). Behavior, clearly favorable to the latter.

Pullback on Crude Oil before Algeria

Today the Crude Oil /CL had a sudden fall that knocked down the accumulated profits to many, including who writes. At noon, the sudden announcement by a representative of Arabia, in the sense that the meeting of producers of the next in Algeria was not going to make any decision, but only talk, did not fall well at all to the oil traders. They started selling immediately: in one hour it was almost 2%! Any previous technical analysis that indicated an increase in this commodity was destroyed with that comment. I support my idea that, outside the FED a couple of months, the crude will be the exclusive protagonist of the movement of the world stock exchanges until Christmas.

Europe Bond bubble !

I agree with the many analysts who oppose the hallucinatory 'negative rates' that are imposed by the various central banks of countries in crisis, generating a bubble in government and corporate bonds, which at some point will burst. With those minimum yields, they are artificially raising the prices of the bonds, without a real livelihood. Just look at this comparative chart of what happens with treasury bonds in European countries.

When the party ended in bonds? Or rather, how will it end ...

Earnings Season begins

The beginning of the last Earning Season of 2016 is coming in October, with all the exciting that this entails, since it is the best opportunity for the trader to obtain quick profits 'playing' against the results of the companies. There are other traders who are sure, as who writes, and we prefer to know the results and then buy or sell based on them. I will tell you later some of my strategies to buy in earnings.

By the way, I read this article today, a study of some teachers on how to play and win with the earnings. In summary, they argue that stocks that have sharp movements, of 5% or more, with respect to the market in the week before their earnings data, tend to revert quickly as soon as the data is given. They say it has a high percentage of efficiency ... it sounds too attractive, I'll review it. This is the link. Try it.

Twitter exploded today, more than 21%, and not because of earnings, but 
because of the rumor its probable acquisition by Google and Salesforce.
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Friday, September 9, 2016

Hawkish and Dovish members in the FED

World Markets sell-off

Day of very strong falls in Europe and the US, with the SPX less than 2% for the first time in several months and the VIX shot 32%.. And this is due to the reaction of the European markets to the declared inaction of the ECB, which sink stocks and bonds, the latter very dangerous (read: there is a bubble there that can explode). This had a strong impact on the US today, where the FED also continues its war of statements about the rise in rates, some in favor of doing so, because leaving it is risky (Rosengren), and others against it until get inflation (Tarrullo), and the worst , they declare it in the same day! On Monday another representative (Brainard, an upward opponent) will speak to continue to create discord. The ideal is to see the panorama from a far, or to make swing trading with immediate profit-taking. At least until September 21 ...

The Dollar is very strong against all currencies, after a probably Rate Hike.

British Stocks $EWU rising 

Last week, opening this blog to the world, I commented that the Brexit seemed a good investment opportunity. A week later, supported by the good English PMI of yesterday (53.3 over an expected of 49, entering the expansion field), the rise of the english etf of stocks EWU is confirmed, today + 2% with good volume. The opportunities are there, you have to be attentive nothing more ...

A week ago, with the stock at 15.60, I detected this clear
 bull-divergence in EWU: today + 2%.

Apple $AAPL falling in news

What I speculated a few days ago: AAPL no longer impresses anyone, a last smartphone without anything new originates two days of heavy falls. To this is added the Irish claim, the rejection in China to the new iphone7, a new issue of debt (for a company with so much cash, apparent), something is not right there ...

 For its 'luck' its main competitor, Samsung is in trouble for the explosions in the batteries of its Galaxy Note7 in some countries. They were few but there they are, and forced the Korean giant to replace models worldwide without cost. And today the US prohibits its use on all commercial flights: its stock falls 4% on the Korean stock exchange.

Apple close to breaking the SMA50. Notice the fall in positive feeling.

A Hawk and a Dove

A preamble: a hawk, in monetary policy, is generally in favor of higher interest rates. He believes that inflation is already high and he needs to adjust the monetary policy to avoid it, even at the expense of unemployment, and thus maintain stable prices. A dove is quite the opposite: it prefers to maintain or reduce rates because it fears the high rate of unemployment and does not believe that the current inflation rate is high enough to worry about. Conservative and liberal, right and left, republican and democrat, all is the same...

Well today followed the statements, hawkish vs dovish: early Neel Kashkin, official of the FED of Minneapolis, contradicting a dovish Rosengren and stating that there is no urgency to raise rates. Lockhart (is neutral), from Atlanta, has preferred not to take sides and only talks about 'serious discussions' within the FED. The market took the upward direction when at noon the dovish Brianard, the last statement allowed before the FOMC meeting next week, called for caution in the issue, i.e a tacit message of No to the rise in rates. That a dovish says to be in favor of the Rate Hike is what the market fears, and that happened with Rosenberg, on Friday. Consequence: sell off in Wall Street, dragging almost all the stock markets of the world ... so the market is sensitive, a simple statement moves everything!  This link will help identify the actors of these days, the FED members.

Finally, JP Morgan banker Dimon, appears and say that sooner or later Rate Hike will be given ... what a novelty, no? But every time they weigh less declarations of members of the private bank because its interest in influencing in the subject is obvious ... the SPX today hovering + 1.5%.

So is the panorama today among the members of the FED (Source: CNBC)

September: usually most bearish month for the S&P500 $SPX

As I mentioned in a previous post, September is usually a bear month, and this year before elections in the US, it can be more. You have to be careful this month. This graph of the SPX is very illustrative: in September and October of an electoral year the variations are more marked.

May and September are usually months of falls. (Ref:
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Thursday, September 1, 2016

The Brexit generates investments opportunities

Brexit: an opportunity

Reviewing the European macro indicators, I see that investing in stocks and English currency can be profitable today, after falling these to a minimum for the Brexit (24.06.16). Is that the recent decline in the i-rate and emission of pounds (QE) by the Bank of England (25.07.16), does not seem to have affected its macro numbers. On my radar, a pair of British ETFs that I am following, both in currency and stocks: FXB and EWU.

That Morning Doji in FXB chart (August 16th) gave the purchase signal. 
However, I prefer to wait for what Yellen says tomorrow.

Markets still ranging

The stock market began Monday with one, little credible, rise, but due to an uncertain market, which does not know where to go, that to a solid foundation. It is already known that when there is a low volume of transactions, the stock market rises, and yesterday on Wall Street it was the lowest volume of the year.

This week, I estimate, will continue that side market, erratic, that we have had since mid-July, until Friday 2th, which will give the monthly data of employment in the US that if it is favorable, will motivate the Federal Reserve to raise rates, even in this month. If this happens, the dollar will be reinforced worldwide (and obviously the American banks: attentive these days to the XLF sector, it is an indicator), and rather the materials and natural resources can continue with their slow downward correction. It comes from July. The inverse relation of the dollar with commodities is known.

The performance today of the nine main sectors in Wall Street. Finance leading.

Here in Peru, as a mineral exporting country, it is favored by an expensive dollar because it will receive payment in that currency, which, when exchanged, translates into greater new soles. Hopefully, that data on Friday and the reaction of the FED, meanwhile, the ideal is to swing trading this days with ETFs that there are no longer corporate earnings.

Ulta $ULTA: bearish technical signs

Today, Tuesday, ULTA continues its fall, this time -3.6%. It was important to see if today it recovered, sign of formation of the double floor. It was not like that, it is still under my observation until it shows technical signs of recovery, which can be immediately, because it is a company with very good fundamentals and reviews.

Apple $AAPL lost its magic?

Apple ... I stopped trading the apple stock a long time ago. I think that with the departure of Jobs, AAPL lost a lot of that magic, that beauty that its only mention had. In the particular case of smartphones, I use Android and I do not see how I can change it, and that is a worldwide trend. I do not think it's the case with Blackberry BB, but those in Cupertino require an urgent change of rudder, something new already ! 

And today they have a European Union claim for $ 14,500 million (!!!) for taxes not collected. It seems exaggerated, but there they go, fighting the issue ... in the end I fear the american taxpayers will be harmed. If I believe the EU should be more cautious, they have already left the United Kingdom recently, they are not going to go now to large corporations to other more favorable tax regimes.

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