Monday, August 28, 2017

Bounce of Biotechnology Sector

In March I noticed on the blog that the XBI Biotechnology sector, followed by the IBB etf, was once again gaining popularity, but technically it had a $303 resistance that took months to overcome. This week he did it and confirmed the breakout, for a 10% weekly advance, supported by Trump's declarations of smoothing regulations for pharmaceutical products.

This has also generally favored the Health XLV sector, which is shaping up to be the leading sector in 2017, leaving it unclear ifTrump's initiative achieves Senate approval these days, which would be the 'green light' required to invest in this sector. If so, I recommend long positions in IBB, but in the short term, because of the usual swings of the Trumponomics. And for those who like the highest risk-reward is the triple-speed LABU, with more than 40% profit (!) this week.


One company in the sector that should be followed is the giant Gilead Sciences GILD. One of the lowest Market Cap is Clovis Oncology CLVS, which had an incredible week after the success of its ovarian cancer inhibitor Rubraca, already approved by the FDA, which caused its stock to rise 46.5% on Wednesday, a rise that strengthens more to this sector.

Everything looks favorable for the rise in the Biotech sector to continue. The MACD crossing confirms the rise.
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Wednesday, August 23, 2017

BVL, la Bolsa de Valores de Lima: Perspectivas 2017-II

Iniciándose la segunda mitad del año, creo útil dar una vistazo a la bolsa local, y esbozar una perspectiva para los próximos meses. Como introducción, reproduzco parte de mi post de octubre del año pasado donde explicaba porque me es tan poco atractiva la Bolsa de Valores de Lima IGBVL para hacer trading.

"Como habrán notado, comento muy poco la bolsa local. Es debido al enfoque de mi blog (Wall Street) y a las sabidas limitaciones de la BVL, que simplemente no van con mi gusto y estilo de trading: poco dinamismo al ser muy pequeña, pobre volumen diario negociado con escasas transacciones, alta volatilidad, pocas compañías tradeables, ausencias de options como medio de inversión, pocos brokers online, excesiva dependiencia de un solo sector industrial (minería), poca influencia de nuestro acontecer político y económico local en el movimiento diario, etc. Es curioso, pero el país lleva años de crecimiento en todo aspecto y mientras tanto la BVL sigue manteniendo en esos años su iliquidez inalterable, tan es así que estuvo a punto de pasar a mercado frontera hace solo unos meses.

A que se debe? Creo que hay un desconocimiento general sobre que es y cuales son las ventajas del Mercado de Valores. Por otro lado, las Sociedades Agentes de Bolsa independientes poco pueden hacer frente a las principales SAB que son manejadas por los principales bancos locales, lo cual no es malo, pero lamentablemente ellos le dedican nula promoción a su linea bursátil, como si lo hacen con sus otros productos como depósitos a plazo fijo, préstamos o cuentas de ahorro (!).  El principal acceso del ciudadano común con excedentes de dinero que desea invertir en la bolsa, es vía los fondos mutuos de renta equilibrada y variable, o también el fondo 3 de las AFP. Olvidaba agregar el "genial" impuesto de 5% a la ganancia en acciones desde el 2013, desmotivante para cualquier inversor. Complicado panorama para ponernos a la par de otras bolsas latinoamericanas."



Hoy, el complicado entorno político local, inviable en estos meses, puede si repercutir esta vez en el mercado, pues hay que notar que no salimos de las inversiones entrampadas, y por ende la economía se viene estancando como lo demuestran todos sus indices, entre ellos el PBI, (disminuyendo gradualmente a niveles que no se tenia aquí hace 8 o 9 años). Además el déficit fiscal va a crecer por las obras de reconstrucción del Niño, rumoreándose que Moody podría bajar nuestra calificación crediticia de A3 a BA1, por ese motivo.


Por otro lado el etf que sigue a la bolsa peruana EPU, atento a este panorama, viene redimiendo su número de unidades (shares outstanding) progresivamente desde abril. Como señal, no es buena, pero no veo que sea un factor decisivo en la tendencia del indice IGBVL pues como se vé abajo en el gráfico comparativo, al contrario, su performance viene relativamente al alza. Se necesitan más motivos que ese para mover un mercado de acciones.

Y es que nuestra bolsa siempre dependerá de los minerales. A las mineras locales les irá bien, y por ende a nuestra bolsa, si el precio del commodity sube, y esto no depende de su producción local sino del entorno geopolítico mundial. Mi estudio fundamental apunta ahi, veamos brevemente: 

- el cobre es el que mineral que mejor viene en el año y con buenas perspectivas ante la sostenida alza de demanda china. El futuro /HG a $2.68 es el mejor precio en 4 meses. Ademas si Trump cumple su promesa de Rebuilding America's Infrastructure, el cobre, material clave en la construcción, subirá su demanda y por ende su precio. 
  
- el oro /GCel activo financiero de refugio por excelencia, hoy está en mínimos de 6 semanas, se entiende por la relativa calma mundial y por el alza de tasa de interés de la FED, la cual refuerza al dolar y el deseo de activos mas riesgosos de parte de los inversionistas. Hoy quebró el promedio SMA200, y sigue bajando, comenzando a testear el psicológico soporte en $1,200.

- la plata /SI en igual situacion, pues generalmente acompaña al precio del oro, siendo más volátil, tiene un soporte clave en $15.80 en el corto plazo.


Como se vé, el tener commodities con precios unos en alza y otros en baja, hace que el indice de la BVL se mantenga en un rango lateral desde mediados de mayo, como se ve en el gráfico inferior. Si las variables políticas mundiales de hoy se mantienen un tiempo (algo improbable dado el impredecible entorno: Rusia, Corea del Norte, Siria, etc), el analisis técnico puede ayudar a encontrar los puntos de entrada. Veamos:

 
A la derecha, el IGBVL (en velas verdes y rojas) en rango lateral. Con el cobre a la alza, seguirá en ese rango mientras no despegue el oro.  A la izquierda, ver la poca influencia que viene teniendo la disminución de shares del EPU, pues el IGBVL, incluso con menor float, no ha acompañado su caida.

El analisis tecnico, muestra que el precio se viene moviendo 2 meses dentro de su rango lateral, cerca a la zona superior de la Bohlinger Band (en morado), habiendo superado los 3 promedios SMA (en celeste) y además con un reciente cruce al alza en el MACD el viernes, todas señales bull. Además ha formado un claro symmetrical triangle, con 3 lower highs y 3 higher lows, estando a puertas de un aparente breakout al alza, que primero debe ocurrir, y luego confirmar su validez o no en estos próximos días, por lo que conviene seguirlo. Mi sugerencia final es esperar dicha resolución del gráfico para hacer trading a corto plazo a través del EPU.


El analisis fundamental y el tecnico van de la mano. Ese aparente breakout en el grafico del IGBVL podria venirse abajo con alguna noticia que hunda el precio del cobre o el oro. Recomiendo trabajar todo a corto plazo (swing trading).
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Monday, August 14, 2017

Stocks to Watch: Blue Apron $APRN



Blue Apron ($APRN), $8.27.


Expanding the recent post about the unicorn companies and their future, it does not stop calling attention the terrible performance that the recent IPO of the Unicorn Blue Apron APRN is having, almost 20% below its starting price. Comparisons, in this sense, with Snapchat SNAP, Fitbit FIT or Groupon GRPN are immediate: all very original, very
technological, with many followers, but in a few years have seen their stock sink to negligible levels. And, while it is premature to draw conclusions by similarities, there are already several interpretations of the market: are these technological companies really worth so much? Are they part of a slow and different bubble dot-com 2.0? Is the influence of its new competitor Amazon AMZN, after its purchase of Whole Foods WFM? Was not it more comfortable to continue as a private company?


Think that Blue Apron thought to leave to the market with an IPO of $ 17 ... excess of confidence?

Already since I wrote about Snapchat I expressed my doubts about these fashion technology companies, and more for intuitive reasons as I wrote there. Excessive optimism and overvaluation can play against them. Blue Apron, a company dedicated to the new item of programmed delivery of food kits to prepare and that only operates in the USA, is of almost family origin, its sales growth since its creation in 2012 was exponential, it uses sophisticated refrigeration systems, control of quality, packaging, shipping, all supported by advanced technology. As a concept, all very interesting, but the market seems to show another face: its distrust in these new ventures (or will it be the exhaustion of the model?). My reading is as follows: Wall Street often fixes a lot on the details, and therefore interpreted the tremendous downturn in its IPO price from $ 17 to $ 10 the attitude of a company too ambitious (or arrogant) that thought was very astute, until they made her 'step on land'. Sentiment trading, what they say ...

Personally I see it as a stock only for speculation, that is to say buy the dip when a technical indicator indicates me (as in these moments) or some brief dead cut bounce (temporary recovery after a long fall of the stock) also like in these moments, but never as a long-term investment. Too much risk as described above, in addition to belonging to a sector saturated and super regulated such as Health.

As an additional, this good report in The Motley Fools gives a better idea of ​​the history of Blue Apron and its projections https://www.fool.com/investing/2017/06/08/blue-apron-becomes-the-latest -unicorn-to-pursue-an.aspx
Read more »

Thursday, August 3, 2017

Bonds: the most attractive market today

Undoubtedly, for a trader, the most attractive market to follow since June is the primary one, of fixed income or debt issuance. Thus, today in Europe, a weak auction of French bonds deepened the fall in the price of these, raising its yield 10 points. The same happened in Germany (9 points), the United Kingdom and Spain. The Bund, a 10-year German bond, the European benchmark for this market, comes with its yield up more than a week ago, reaching its maximum in 18 months, this since Draghi made his hawkish comment on European bonds.

The truth is that it is already necessary for the health of the European market that this immense debt be deflated, I had already commented it months ago here, but the disaster can take on epic dimensions. After seeing his ambiguous minutes today, it remains the feeling that the ECB does not have total control of the situation ... very dangerous.

In the US, by contagion, its counterpart TNX follows the same bull path. We will see what happens tomorrow with the official data of Employment Situation, because the returns tend to react abruptly with this data, although the market already assumes that the US is in the phase of 'full employment', as it says the very low unemployment rate 4.3 % of last month. Also look at the now important average hourly earnings data, which moves inflation, is expected 0.2%.


 If you follow this blog, and did trading (via TLT or TMV) when we notified the upward trend in TNX (two weeks ago at 2.19%, today at 2.37%), tomorrow may be a day to collect benefits, prior to the data. Even more so considering that today's ADP private employment data, which is generally aligned with that of tomorrow's employment, was quite weak.


After breaking the multi-year trendline in November 2016 (Trump effect), the TNX rate
 has been recovering strongly towards its next resistance by 2.6%. Tomorrow the 
employment data will be key.

Read more »

Tuesday, July 25, 2017

The VVIX / VIX ratio in all-time highs

Today the VIX, known as the 'fear gauge', which measures the frequency and intensity of changes of the SP500, closed near to its multi-year minimum, at $ 9.79, fifth consecutive day below the $ 10.00 level, demonstrating passivity (or permissiveness, or complacency) of the current market, faced with events like yesterday's. What happened was that the repeal of Obamacare (one of Trump's key proposals, which moved Wall Street upwards when they were announced months ago) failed in the US Senate, suggesting that the next big goal of its plan, the tax reform , it can have the same outcome. Even so, the SPX was not aware of the matter, raising 0.54% to $2,473.83, a new all-time high.


On the other hand, the VVIX index measures the volatility of the VIX volatility index, it is also at a minimum, since both indices travel together. However, if the ratio between the two is plotted, we see that it is at historic highs. That is to say, never a market so calm, so little fearful, as the present.

The ratio VVIX / VIX in maxima tells us that the frequency and
 intensitywith which the VIX varies, it is extreme. 

The concern to a sell-off is evident, the big investors understand this and they begin to look for coverage for their assets, taking advantage of the very low value of the VIX of the market.


Natixis Global Asset Management, an excellent reference blog, proposes an interesting trade based on time combinations of SPY puts options and VIX calls. First buy hedge through VIX calls, waiting for the rise in volatility before the sell-off arrives, and at that moment finance the purchase of SPY puts. Later I will detail this strategy.


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Friday, July 21, 2017

Goodbye to the Rate Hikes in 2017?

Flat CPI and dissapointing Retail Sales.


Today's data confirms Yellen's dovish tone on Wednesday: CPI monthly inflation that remains un-raised (flat, when expected + 0.1%), and Retail Sales again with negative numbers in all its headings, that is, consumption does not rise, something I mentioned previously was already a worrying trend. Its index XRT to the downside, although recovering at noon, however I keep my short position in it. With these two data, I see the promised Promise Rate Hike unlikely in the next FOMC session in September and even difficult in December if those macro numbers do not improve.

Bull momentum in markets


The other expected event, the opening of the earnings season, with the "Big Four", yielded poor reports that knocked down these banks and the XLF finance sector. At midday the tone changed and they recovered, I understand by the euphoria in the new records in the main indices of Wall Street, happy to know that for now they do not expect more rate hikes: SP500, Dow Jones, Russell 2000, and probably soon on the Nasdaq (it had its best week of the year), on all-time highs. I appreciate a bull momentum in the markets, I think this trend may last a few days more.

After today's events, assets such as the dollar close on firm downward, and gold upward but stabilizing. Meanwhile, the Treasury10-year rate and the Finance sector recovered their initial decline.


Arabia says that OPEC agreement is totally fulfilled...


And regarding Crude Oil /CL, Arabia estimates lower oil exports in August and affirms that the OPEC agreement is being fully complied ... do we believe it?

To this report it is necessary to add the low data of inventories of the EIA on Wednesday. With both favorable data, the outlook for this commodity changed completely, as shown by the easy overcoming of the SMA50 average at $ 46.5, which could be expected to continue for some days, as it has bounced evenly among the Bohlinger Bands for months. You have to be vigilant if you break them, as it could be your take off at quarterly highs.


Technically, the price of crude oil has been bouncing in the Bohlinger Bands since the beginning of the year, so the $ 48 can be your next resistance, after surpassing the SMA50 today.
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Monday, July 17, 2017

Yellen returns to her usual dovish tone

Tapering begins soon and gradual Rate Hikes


Well, with Yellen you never know what can happen ... this time radically changed the hawkish tone that she had been carrying since the beginning of the year, due to her usual dovish thinking, betting on limiting the Rate Hikes, confirming what Brainard said yesterday, that the current growing economy with slow inflation progress, does not show clear signs of where it will evolve, and in those doubts it is better to be careful with Rate Hikes. I think it's a good decision, prudent.


She also reiterated that the reduction or tapering of the US balance sheet, of $ 4.5 trillion, will begin sometime during the year, but again without specifying dates. It is understood that, doing so, would mean stopping the Rates Hikes, to avoid an excessive rate increment in the debt markets. Although with the FOMC you never know ...

And on the rate of federal funds (which banks charge each other when they lend money, similar to Libor), estimates that this 'something low', so it is expected next increases there, to a neutral level, which don't accelerate or discourage economic activity.


The markets around the world happy with these statements (SPX + 0.75% at the moment), that is, can continue with the party. The same happens with the bonds as the TNX benchmark rate plummets to -1.86% at this time. We'll see how he reacts after today's bond auctions.

Immediate reactions of the markets today: dollar, rates, SPX and XLF finance sector.

Yellen speech


I think it is important to insert the summary of what Yellen said today in the Senate, taken from econoday.com. Highlight the main thing, which can give topic for future analysis in this blog:

There are no surprises in the text of Janet Yellen's testimony this morning as she repeats that tapering will begin sometime this year and that a limited number of gradual rate hikes will extend over the next few years. Yellen said the long-run level for the balance sheet, now at $4.5 trillion, is still unknown and that the Fed does not intend to use unwinding as a policy tool. On rates, she said the neutral rate is "quite low" by historical standards and that the funds rate doesn't have far to go to hit a neutral stance for policy.

She repeated that inflation is being held down by unusual factors (cell phones, drugs and gasoline) and that uncertainty remains when inflation will respond to high levels of employment. Yellen also warned once again against using monetary tools in a "mechanical" way. On the economy, she said odds are 50-50 whether growth proves stronger or softer than expected and she gave an upgrade to the global economy, saying it has improved.

In questions and answers, Yellen said the FOMC intends to return to a Treasury-only portfolio following the unwinding of its $1.8 trillion in mortgage-backed securities holdings. Regarding the timing of when unwinding will begin, which is generally expected at either the September or December FOMC meetings, she would only add that it should be done "relatively soon." She did, however, offer an indication on how long the unwinding will take, saying she expects it to end around 2022. On rates, she said one more hike is likely this year. She also expressed commitment to achieving the Fed's 2 percent inflation target and attributed recent price weakness to special factors, factors she warned that will hold down inflation rates until they drop off. Yellen further noted that unemployment, current at 4.4 percent, is running below what the FOMC considers to be sustainable. On her own status, she said she hasn't given further thought on her own reappointment and conceded that this may be her last semi-annual testimony (her term as chair expires in early February next year).



Read more »

Tuesday, July 11, 2017

Guide for Stock Trading this week: Crude Oil, Bank Earnings, Retail Sales

Crude Oil /CL


On Wednesday there is the monthly report of OPEC, at times when the stock, at $ 44.57 after the brief rise at the beginning of the month, has been falling to new supports, making the Energy XLE sector remain the lowest of 2017, with - 15% YTD. The truth is that while on the one hand no one trusts OPEC and its output cuts, as I said months ago, on the other hand, production in the US also rises again: number of rigs and inventories upwards. In other words, none of them fulfills anything ... so, difficult the crude rebound as expected. And if the report is not favorable, the decline can be serious. If this happens, shortly it would enter shortly the etf USO that follows it, watching the support at $ 42.50. The other option is the etf 3X UCO, for lovers of higher risk-reward.

A bad report can bring Crude Oil to new lows, technically reinforced by 
being under the 3 SMA averages and the imminent crossing in the MACD.


"Big Four" Earnings


Early Friday, three of the 'Big Four' Wells Fargo WFC, JP Morgan JPM and Citi C, open the fires of this season. I am interested in the latter, it is good (15% YTD) recovering its pre-crisis levels of 2008. I will always say that I prefer to wait for the result of earnings and then trade according to it. The other is gambling, valid if one accepts a high risk-reward.


Retail Sales 


With the retail sector XRT in crisis (today -2.34%), on Friday comes its monthly report, in which another bad result (a consensus of 0.1% is expected compared to the previous -0.3%) could be catastrophic. It is already at levels it had during the crisis of 2008. Yesterday, another iconic brand such as Abercrombie & Fitch ANF sank -21% pulling giants like Macy M -7%, WalMart WMT -2.8% BestBuy BBY -6.91% among others .

In a previous post I recommended going short in XRT, because I do not see any improvement in the medium term. Amazon, one of the culprits of its crisis, even reinforces its policy with its next Geek Squad service.
Read more »

Friday, July 7, 2017

Guide for Stock Trading next week: T-Bonds, FED Speaks, CPI

After this beginning of the month where the fluctuations and correction of the Nasdaq-100 QQQ and the increase in bond yields marked the path of the market, other events and factors will be the new protagonists of this exciting week. Attention to:


Treasury Bonds


To the usual weekly auctions of bills are added this week the major auctions of 10-yr notes and 30-yr bond, which move this market, specifically the futures /ZN and /ZB, both in weekly decline as they follow the price of the bonds , inverse to the yield. In addition, the Mortgage Requests Index MBA complements this important week for fixed income assets. Although today there was a correction (German Bund included) because of the profit-taking of investors, I believe that the yield increase of these Treasuries will continue, except Yellen change of tone, because the conditions, fundamental and technical, are given .



FED Statements


Several statements by FED members this week (Brainard and Kashkari among them) and on Wednesday the head of the FED, Janet Yellen, who will move the world markets when she comments on growth, rates, inflation, the US tax debt and when the following rate could be given Hike We will see if she confirms her hawkish thought that shows since the beginning of the year, and as in previous times, the tone of your message will be the key.


The FOMC members. Who is who: hawkish and dovish.


Consumer Price Index


The inflation data CPI will be decisive to clarify the path that the FED can follow. The dismal data of last month (-0.1%, expected on Friday + 0.2%) made rethink everything that was done in 2017 and questioned whether it was necessary to have given the Rate Hike in June, here I thought it was not the moment. Attention that day to the TNX rate and etf like TLT or TMV to do swing trading.


Tomorrow complement with other assets to follow this week, and during the week I will be deepening them.

Econoday summarizes weekly all economic activity in the US and the world. Not mentioned above also highlights the PPI data, prior to inflation, and Industrial Production.
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Monday, July 3, 2017

The Apocalypse of the Retail sector?

The purchase of organic giant Whole Foods WFM by Amazon AMZN at $13,700M continues to generate headlines within a week of its announcement. The immediate repercussion is the reinforcement in the fall of the Retail XTR sub-sector, which was already terrible in 2017 with news such as the closing of giant stores in the sector (Sears: 19 of its stores and 72 more on the way, JC Penney, RadioShack, Macy, among many others), Experts estimate that we are witnessing the beginning of the end of the retail as an economic model and lifestyle in the US, exported to the whole world. This good article by Francisco Jiménez for El Economista covers what I( say.

The YTD performance of the retail sector is around -18%. As a trader, 
you have to look for purchase opportunities in companies that survive this crisis.

Grocery supermarkets, direct competitors, felt the blow, it is enough to see a week their falls in the price of their stocks:
Kroger KR -25%
Target TGT -13%
Costco COST -10%
WalMart WMT -5%

The new strategies, promotions and loyalty chains will be everything for these companies if they want to lose part of their market share to the technological giant, because now the shopping experience at WFM will improve with the unique Amazon online platform. For the moment I suggest entering short in the retail sector, through the XTR etf, or triple-speed RETL. This situation is for a short time, because the idea is to look for the business opportunity that appears in every fall. Putting the mentioned companies on radar, today it is premature and risky to say what their destiny will be: their news, strategies, earnings of the next months will be those that define their future and subsistence.


The table shows the PE (Price / Earnings) in the main US supermarkets. Costco's high value is worrisome, above 20.03, which is the average PE of the retail sector.
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Tuesday, June 27, 2017

Unexpected news moves Wall Street

Unexpected news in Crude Oil and T-Bonds


A very special day today on Wall Street, those with unexpected news that move the entire market, commodities and different industrial sectors, and set the pattern of those who can continue in the following days. It is from those days where I prefer not to trade and observe the panorama with patience. Let's see:

- The crude oil /CL resumed the rise (today + 2%) exceeding $44, this time for reasons different from the usual: the news of a fierce cyber attack to the systems of the Maersk shipping company and the largest Russian oil company, Rosneft, moved the price of crude immediately. Without even knowing the details, there is already talk of a WannaCry virus, which attacked the entire cybernetic world in May. And tomorrow comes the weekly report of the EIA and Rig Count, another reason to wait before trading.


- After many weeks, the rate of 10-year Treasury Bonds TNX had a good rise (today +2.85%), almost 7 basis points (following the line of European stock exchanges where the increases were 14 points in France and 13 points in Germany), as a result of Draghi's unexpectedly hawkish comments, which were understood as the early end of the QE. To this is added a poor 5-year bond auction, with high-yield and buy/cover values ​​almost similar to the previous month, reflecting little interest in them. Already in a previous post commented on this possibility of rise, is more, I think will continue to give more steep to the curve of rates.



Second strong tech sell-off in less than 3 weeks


The Nasdaq closed today -1.61%, first time below its SMA50 since December, caused this time by the fine of 2.420 million euros imposed on Google GOOG (today -2.62%) by the European Commission for altering search results to favor. Bad regulation such a regulation, and of course Google is already in the process of appeal. How will the Nasdaq come next: Buy the dip? or more downside? I suggest also wait.

Curious divergence between the Finance and the Nasdaq-100 sectors throughout this month. They are the most popular Wall Street and do not usually follow that behavior.


Health Bill postponed


- The Health Bill reform was postponed by the Senate, which took strength from that sector XLV -0.91% and other annexes such as Biotech XBI -3.53%, and again doubts if the ambitious Trump proposals, that lifted the market to successive all-time highs, will really succeed in being approved. Read: tax cuts, infrastructure expenses, deregulations, etc.


 - Consequence of everything described above, the VIX volatility index that had been hovering and below 10 points, reacted to the upside today, +11.72%, which means paying attention on the following days, as the complacency of the market may be decreasing, and a rotation of sectors may be starting.


The protagonists of today's session, in my opinion, the most important of the
month in the world markets, because they will mark their route in the coming days.
Read more »

Saturday, June 24, 2017

Crude Oil, Gold and Treasury Yields: Outlooks

While the Dow Jones and the SP500 SPX are still in all-time highs, Wall Street is not talking about anything other than the return of the XLK technology rally and the million dollar purchase of Whole Foods WFM by Amazon AMZN, which opens a new scenario, still indecipherable, for the beaten retail sector; topics that I will review in future posts.


In the economic agenda this week only highlights the PMI data on Friday. The weekly Jobless Report I believe that it ceased to have relevance for the market, because the 119 consecutive weeks (!) it remains under the 300,000 requests, indicate that the US labor market is at a high point. This week of 'no-news' gives me the opportunity to comment on commodities, currencies, bonds and volatility.

Crude Oil /CL


Remains in the side range $42-54 for a year, approaching $43, his minimum of 8 months. The causes are still the same that are being discussed in this blog: The US and the non-OPEC countries are not complying with the output cut set by OPEC in November last year. Their inventories, reserves and platforms (rigs) continue to rise, and if they are reduced, they are lower than the estimates. This slows down the purchases of investors and affects the fiscal plans of the euro zone and the US as it generates that its inflation is advancing very slowly.

The price is temptingly low, but I still suggest waiting for the EIA data on Wednesday, which sometimes brings surprises: if inventories fall, it should go up. One option is to use the etf USO, with a guarded swing trade.


Important crude support at $ 43 on its weekly chart. As a data, the lines blue
represents its 'value zone', or interval from which it is suggested to do trades.


Gold /GC


It comes down from the $1,300 level after the Rate Hike of the FED, which reinforced the weak dollar. Technically he has broken the SMA50 average and is fighting today against the SMA100 and soon the SMA200. Breaking them could lead to new lows of 2 months. Attentive to any geopolitical event that causes regional or global instability, since gold is the first safe haven to which investors and traders go. On my radar.

US Treasury Bonds $TLT


The comments, dovish and hawkish, coming this week from the various Presidents of the State Reserve Banks (Fedspeaks) can give a better idea of ​​where the fiscal balance and securities backed by MBS mortgages are going (mortgage-back securities), that other giant fixed income segment. Already the slow inflation, is putting the yield curve flat, with risk to bring the market to a bear flattener phase, usually a sign of beginning of a recessive cycle. 


It is expected that the FED with the application of its monetary normalization plan (via progressive ceilings for the reinvestment of treasury bonds) will force the sale of the portfolios in the long term and therefore encourage the increase of their rates of 10-year TNX notes, today at 2.19%, its annual minimum. I estimate that is the trend. 


The yield curve begins to get dangerously flat, by the Rate Hike (affects the short term) and the slowrise in inflation (in the long term). If the curve is reversed it is a sign of early recession.
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Monday, June 19, 2017

FED applies 2nd Rate Hike of 2017, interest now in 1.25%

Summary of FED decisions after FOMC meeting


- As expected, the FED raised the interest rate by 25 points, bringing the range to 1.00-1.25%, the third increase in 6 months, second of this year.

- There will be a RateHike more in this 2017. I say, is it really necessary to do it before the current regression of inflation?

- He repeated what 'current weak inflation is something momentary' (the same speech as Draghi and the ECB).

- Indicate that the labor market continues to strengthen and economic activity grows moderately. The growth projection was increased from 2.1% to 2.2%

- Maintains price stability through the 2% target for inflation accompanied by maximum employment.


- They outlined the plan to normalize the balance sheet, that is to reduce its fiscal debt of $4.5 billion, which would begin in the 4th quarter, with the progressive expiration and non-renewal of existing bonds, without selling any.


As predicted by analysts, despite the dismal inflation data (supported by the persistent low price of crude oil and the slow takeoff of the Trumponomics), the FED decided to give the Rate Hike, although it is estimated that if the trend continues, the next hike will hardly be give in September, month of the next FOMC meeting. Maybe it was not the best decision to give the RateHike yesterday after a weaker 2nd semester than the first, since the risks of recession or falling economic activity are latent (it is assumed if the GDP falls 2 consecutive quarters).

While the indices closed mixed, in the sectors led the 3 defensive par excellence: Staples XLP, Utilities XLU and Health XLV, giving an idea of ​​what may come in the following days. Today he opened session with the same tendency. And with the dollar strengthening, in these days the gold /GC and the Japanese yen may be the best niches to trade, to the downside.

After the announcement (2pm), the dollar and gold abruptly changed their trend. Not so the bonds that reversed at the end of the session the slight fall of the afternoon. The poor CPI inflation data came out of them.
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Friday, June 16, 2017

Apple running the market on technical day

Today there is a session where the technical analysis in the trading is prime: it is that before an important event, as it is tomorrow the announcement of the FOMC, it is when the technical indicators and patterns work best. Obviously from tomorrow the situation will be completely different since the economic news is what sets the course of the market: you also have the monthly inflation data CPI and Retail Sales, as well as meetings of the Bank of England and Bank of Japan, where, Unlike the FED, both are expected to keep their interest rates unchanged.

Therefore, I always maintain that trading must take the best of both opposing currents: you can not be 100% fundamental, or 100% technical. Each one has its space and time, you just have to know when one premium over the other. Today at least, it is an ideal day for day-traders.


Yesterday, for example, the Apple APPL chart closed with a hammer located just above its significant SMA100 average, a clear signal of bounce upward. And as we know that Apple moves the entire technology sector, today they recover after the largest sell-off since the end of 2016, with the Nasdaq reaching +0.80%. And this in turn pulls the entire SPX market by 0.40%.


The hammer, with its handle touching the SMA100 average, marks a technical rebound, which we have no idea how long it will last since tomorrow is the news that marked the course.
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Wednesday, June 14, 2017

Inflation and Retail Sales, both downside

Surprise the monthly data in the US of inflation CPI -0.1% when expected to remain flat, but even more the fall of Retail Sales, with -0.3% far from the expected +0.4%. This sub-sector, followed by the XRT etf, has been hit hard since last year, and I will analyze its problem.

The signal is clear: both bad results indicate that the US economy is still weak, it is reacting very slowly, so that the tone of the FOMC today can be somewhat dovish (it is perceived by the SP500 SPX which is in slight rise early +0.10%).


The market assumes with these numbers that there will be no more rate hikes than the two assumptions, and therefore the immediate reaction of the 10-year Treasury Bonds TNX, dependent on inflation, which fell very strongly reaching the rate at 2.1 % breaking its average SMA200 support. Obvious, the dollar /DX also felt the blow, and safe haven values ​​such as gold /GC and the yen FXY are on the rise. Everyone waiting for the decision of the FED in a few more minutes, which is discounted will give the Rate Hike, and maybe the graphics will be reversed.


In this 10min chart you see the immediate reaction today to the announcement of 
low CPI and Retail Sales: TNX rate and dollar DXY in fall, TLT and gold /GC upwards.
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Tuesday, June 13, 2017

FOMC: Rate Hike on Wednesday?

This week it is presumed that the FOMC will raise the interest rate by 25 basis points for the 2nd time this year, bringing the range to 1.00-1.25%, despite the slow but sure progress of consumption and inflation, something that the FED considers transitory.

What the market is finally interested are the perspectives that the FED proposes until the end of the year: how the fiscal deficit will be handled, whether there will be reductions in inflation and growth expectations (following the ECB's line in Europe last week, although lately I see that both markets no longer converge as they used to do) and above all, the tone of the message (hawkish or dovish). This determines the movement of the SP500 and the commodities.


My favorite stock in those 'FOMC days' is usually the gold /GC (in its 'normal' GLD or 'fast 3X' JNUG variants) and the TLT Treasure Bonds, both shelter elements that traders use when there is indecision in the market, the same the yen, through the etf that follows it, FXY.

In addition to the FOMC meeting, pay attention to the inflation data (CPI) on Wednesday and the Price Index (PPI). Another data in a critical sector these months is Retail Sales.
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Friday, June 9, 2017

SuperThursday: like any other session...

Yesterday was the dreaded SuperThursday (elections in the UK, meeting of the ECB and the Comey case in the US, all the same day), and the markets did not suffer any visible excess, I would say that it moved like any normal day.

- In the United Kingdom, May did not have the expected success with his election advance. While he won the elections, he lost his conservative majority in parliament, and this new scenario can complicate his path to Brexit, and even his tenure in office. To continue these days the FXB, etf that follows the sterling, today reacting in fall -1.6%, tendency can continue until May defines its negotiations in favor of the parliamentary majority, because it is understood that the pound does not suit the Brexit.


The etf of British stocks EWU accompanies this fall (-1.3% today): these tend usually to diverge, which reveals even more the weakness of the currency today. On the other side of the ocean, we will see how much these events influence the FOMC, which will meet next week.


- The Comey case, former director of the FBI that appeared before the courts today, was just one more blow from the Democratic press that wants to lie down Trump. It did not bring anything new and it did not interest the markets. It does not give for more the analysis here: Trump continues and reinforced even more, the same as the dollar and the banking sector.

- The decision of the ECB was to maintain interest rates and the QE, before the loose progress of inflation and low wages, noting that the European economy is doing well. There are even rumors that Draghi intends to take the rates to negative territory, to boost the economy ... I would expect the quick and sure recovery of the price of crude oil before proceeding to drastic measures like that.


Already on Wednesday Bloomberg announced that the ECB planned to cut inflation prospects, a fact that weakened the euro, and strengthened the dollar and the Finance XLF sector (+ 1.55% at the moment). As I do not trade with futures, I prefer to follow the FXE etf that follows the euro, and which has been bouncing from its resistance at $109.

The euro can stop its 2-month rise, because in addition to the news, it is bouncing from 
its significant resistance at $109, is oversold and with its MACD crossing to the downside.


The Recommended Reading


For any trader that, as in my case, follows the world economy before deciding my purchases, I believe that the Brexit, and its outcome, will be the event that will mark the markets in the coming days or weeks, I have no doubt. To understand well how this will affect the English and European economy and trades (its relevance, the right of passport, its legislation, its consequences, etc.) I recommend this didactic article by Toby Clarence-Smith, written for Toptal, which will clarify the many doubts that exist with this topic.

The link is: https://www.toptal.com/finance/market-research-analysts/el-impacto-de-brexit-en-el-sector-de-servicios-financieros/es


The transfer of offices and brain drain can be one of the consequences. 
Immediate negatives of the Brexit. The banks have already started with it.
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Friday, June 2, 2017

Stocks to Watch: Lennar Corp. $LEN

Lennar Corp. ($LEN), $53.68.



In a November 2016 post, I analyzed how attractive it was to invest (not to trade) in Lennar Corp. LEN, given the post-Trump situation that was coming. Time gives me the right, the construction firm continues its progress supported not only in the environment but in its soundness and good accounting numbers.

Technically it is observed that, since April, its chart entered in a distribution cycle (pressure to sell, low volume, significant resistance at $53.50), with the stock in a lateral range that has allowed him to form a clear inverse head-and-shoulder , one of the most bullish figures known. Today closed +1.84% overcoming that resistance of 3 months. It can be said that today he entered the 'action' stage of a breakout. Subtract the confirmation of the same (reaction and resolution) in the coming days.


Conclusion: if you invested, as me, in LEN in November 2016, keep more time your shares. If you want to invest from now, wait the following days that a false breakout is not formed under $53.50. The confirmed improvement of this level will be the signal to invest long in this company.


From the notice in this blog (yellow circle) with the stock at $ 43.50 the advance has been solid and the inverse head-and-shoulder breaking the resistance is auspicious. I'm still bullish in LEN.

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