TOL @ Nov 12, 2017
Trading Break
The US Markets have not been going anywhere for the past two weeks so I think it's time to remind myself to take a trading break.
I recalled reading somewhere that trading everyday begins to dull one's judgement. In addition, if one's mental efficency drops to 90%, one begins to only breakeven only. And anything below that, one starts to lose money.
It's recommended that one should take a trading break every 5 to 6 weeks.
Taking a trading break allows one to take a detached view of the market and gives one a fresh look. Sometimes, one is so close to the forest that one cannot see the trees.
Trades for the week:-
a. Sold Standard Chartered (0288) listed in HK
b. Sold Ekovest listed in KL
c. Sold Genting Malaysia listed in KL
d. Sold JD.com listed in US
e. Sold XAR (Aerospace & Defence) listed in US
I have increased the Geopolitical Risk to 9 from 8, in view of what's happening in Saudi Arabia and Lebanon.
Market Risk Indicators; Reduced Geopolitical Risk and Recession Risk;
1. Euphoria: 9 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 9 (Peaceful: 1; War: 10) - NKorea (Sep 9, Feb 8); Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Saudi Arabia; Lebanon
Total: 52 out of 70 (74%); (Safe: 50%; Danger: 80%)
Commodities: Risk-On (Data from Commodities Live)
1. Oil - Higher. US$56.88 from US$55.73 last week from US$53.81 two weeks ago Support: US$42; Resistance: US$80
a. Glut 0.5m bpd; Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels; OECD: 5 year average dropped from 300m to 220m
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years. Released 1m;
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs doubled, Currently, 743 vs 316 in May 2016
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China (largest importer): Supply: -7% (-300k bpd); Demand 1H 2017: +14%
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO delayed to 2019?; Incentive to push prices up; Cutting 1m bpd
k. China: SPR reached 51/90 days; 2017 Imports to decrease?
l. OPEC: Cutting 1.8m bpd; 3 months extension on May25?; Cap on Libya & Nigeria;
m. Libya: -400k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria +225k bpd; Iraq +500k bpd; Kurdistan -350k bpd
n. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Venezeula: Disruption of 2m bpd supply (50% cut by 2020)?
p. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
viewtopic.php?f=33&t=7550&start=210
2. Gold - Higher. US$1275 from US$1271 from US$1265. Record US$1920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, decreased each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: -14% for 1H 2017; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. Mid-Term Bullish but Short Term Bearish?
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Higher. US$16.88 from US$16.85 from US$16.74; Vested PSLV
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Platinum - Higher; US$931 from US$923 from US$917; Vested PPLT
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Demand from vehicles destroyed by Hurricanes (1m cars)
j. 2016: 17.5m cars sold in US
5. Zinc - Higher; US$3216 from US$3208 from US$3168
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.
6. If there's a crash, Commodities would not be spared
7. The High USD is not good for Commodities
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Lower. 2582 from 2588 last week from 2581 two weeks ago.
a. Support 2400; Resistance: 2650;
b. Sold JD.com
c. Sold XAR (Aerospace & Defence)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 29121 from 28601 from 28439
a. Support: 26900; 26450; 25000; Resistance: 28800;
b. Sold Standard Chartered (0288)
c. htttp:/in/vestideas.net/forum/viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3433 from 3372 from 3416
a. Support at 2950; 2450; Resistance 3600; 3900
b. No trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade
viewtopic.php?f=10&t=6828&start=110
5. Japan Equities - Higher. 22681 from 22539 from 22008
a. No Trade
viewtopic.php?f=10&t=7138&start=200
6. Malaysian Equities; Higher; 1742 from 1741
a. Sold Ekovest
b. Sold Genting Malaysia
viewtopic.php?f=10&t=6292&start=30
Currencies- Risk-On (Data from XE.com)
1. USD to JPY - JPY Weaker. 114.13 from 113.68 last week from 114.14 two weeks ago
a. 52 week range is 76 to 126
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Weaker; 3.1078 from 3.1080 from 3.0961
viewtopic.php?f=32&t=136&start=110
3. AUD to USD - AUD Flat. 0.7665 from 0.7665 from 0.7643
a. The range is 0.70 (2016) to 1.10 (2011)
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Flat. 1.0437 from 1.0438 from 1.0471
a. The range is 0.98 (2016) to 1.36 (2012).
5. AUD to MYR - AUD Stronger. 3.2437 from 3.2434 from 3.2418
a. The range is 2.20 (2008) to 3.41 (2017)
6. AUD to GBP - AUD Flat. 0.5862 from 0.5862 from 0.5836
a. Converted some AUD to GBP; 30% rise in 2 years; Diversification
7. AUD to EUR - AUD Flat. 0.6585 from 0.6584 from 0.6582
8. EUR to USD - EUR Stronger. 1.1664 from 1.1641 from 1.1613
viewtopic.php?f=32&t=5523&start=100
9. EUR to MYR - EUR Weaker; 4.8876 from 4.9259 from 4.9254
10. USD to HKD - HKD Weaker. 7.8033 from 7.8030 from 7.8038
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40
11. USD to MYR:- MYR Stronger. 4.2316 from 4.2436 from 4.2414
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
c. Decoupling of the MYR and Oil?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
12. USD to SGD:- SGD Stronger; 1.3616 from 1.3649 from 1.3699
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD over the next few years
viewtopic.php?f=32&t=136&start=100
13. USD to CNY:- CNY Stronger; 6.6273 from 6.6491 from 6.6529
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
14. GBP to USD:- GBP Stronger. 1.3190 from 1.3076 from 1.3096
a. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
15. GBP to MYR:- GBP Weaker. 5.5267 from 5.5335 from 5.5545
a. Which is worst - Brexit or Malaysian Election?
16. Dollar Index - USD Weaker. 94.39 from 94.78 from 94.96
viewtopic.php?f=32&t=7616&start=60
Properties
a. Spore Properties: No longer monitoring on a weekly basis
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties: No longer monitoring on a weekly basis
viewtopic.php?f=10&t=4220&start=150
c. China Properties: No longer monitoring on a weekly basis
viewtopic.php?f=10&t=8150&start=30J
6. Yield on 10 Year US Treasuries - Higher. 2.40% from 2.33% last week from 2.41% two weeks ago
a. Low 1.32%; High 2.69%.
7. Yield on 2 Year Treasurues - Higher; 1.65% from 1.61% from 1.59%
8. Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US Feds: Rate Hike in Dec 2017? Three rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70
9. JNK (SPDR Barclays High Yield Bond ETF) - Lower; 36.68 from 37.00 last week from 37.23 two weeks ago
10. Baltic Dry Index - Lower; 1481 from 1496 last week from 1546 two weeks ago; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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