TOL @ Dec 20, 2020
Sell The Rip?
The markets have been grinding higher but I'm starting to feel that there's not much "oomph" left in it.
It's as if the traders have all gone for their X'mas holidays and have locked in their profits for the year.
If that is the case, I may need to revisit my strategy to hold my momentum stocks till early January.
And in the meantime. we also have the following:-
1. Rising Covid 19 cases in Europe
2. Record number of Covid19 cases in the US
3. Bird Flu in Korea and Japan. Will it mix with Covid19?
4. Rising Debts, Bankruptcies, Unemployment, Famine, Placements, Rights etc.
Anyway, the consensus view is that:-
1. The markets will continue to grind higher
2. The economies would start to slowly open up from the lockdowns
3. The USD will continue to weaken
4. Interest Rates will remain low
5. The Central Banksters will continue to have unlimited QE
6. Inflation will be under control
7. Biden will provide global stability
etc.
From the above, it's as if the markets are priced for perfection but I cant see any "major risk" at this point in time that can take the markets down.
If Bitcoin can be at US$23,000, why can't your Momentum stocks be trading at a PEG of 4 instead of 2?
And as long as there's a "bigger fool" to buy from you, what is there to worry about? (However, I'm still waiting for that 'bigger fool" to come along to buy some of my counters).
Therefore, if the market does rip over the next week or two, it's very likely that I may use the opportunity to lower my exposure to Equities. (Have a look at the one year chart of your stock to see how much it has recovered since March. I'm also not so good at buying high and trying to sell higher).
For next week, I will be watching the following:-
1. Brexit
2. Dec 21: Tesla's Inclusion into the S&P 500. What are the consequences?
3. What spooked AG William Barr to resign now with just one month to go? What is Trump planning to do?
4. Why is Russia now hacking so many private companies and government departments in the US?
Weekly Risk Management Progress Report:-
1. To Monitor NET Exposure To Equities (Long Less Shorts):- Safe (22% from 24% last week from 21% two weeks ago, of Liquid Assets)
Goal: 10% exposure to Equities before the next crash; Maximum 40%;
2. To Diversify From Asian Equities: Progress (86% from 87% from 86%)
Goal: To reduce the percentage of Asian Equities to around 60%
3. To Buy Inverse ETFs and Puts before the next crash:-
Current Position:-
a. TZA (Inverse Russell 3x)
b. SOXS (Inverse Semiconductor 3x)
Goal: To have a sizable short position going into the next crash / recession
4. To Increase "USD/HKD/Gold/Silver" - Progress (26% from 25% from 26%).
Goal: To be in the safe havens before next recession; (HKD may be pegged)
5. To Reduce Number Of Counters: Progress (21 from 24 from 22)
Goal: To focus on maximum 16 counters from 4 countries at any one time.
6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Asian Based Equities
b. Heavy exposure to Asian Based Currencies
c. Heavy exposure to Glove Makers
Goal: To diversify across various Sectors, Countries and Currencies
7. To diversify from "Value" into "Momentum" stocks
Goal: Exposure to 25% Value Stocks only
Market Risk Indicators
1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 9 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 9 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 6 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 5 (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 1: Danger 10) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia; Iran;
Total: 52 out of 70 (74%); (Safe: 60%; Danger: 85%)
Commodities: Risk-On (Data from Commodities Live every Saturday)
1. WTI Oil - Higher. US$49.06 from US$46.55 last week from US$46.09 two weeks ago;
Support: US$29; Resistance: US$77 (2018);
a. Demand is down about 15%?
b. Supply is also up by about 15%?
c. Crude glut until 4Q 2021?
viewtopic.php?f=33&t=9249&p=231235#p231235
2. Gold - Higher. US$1887 from US$1844 from US$1842;
Support: 1780; 1700; 1490; 1240; 1050; Resistance: 1890; 1950: 2015; 2070;
a. They cant print gold
b. In a crisis (cash crunch), gold will also be sold
c. Is Silver a better bet due to the current high Gold/Silver ratio?
viewtopic.php?f=33&t=8845&p=231236#p231236
3. Copper - Higher; US$3.64 from US$3.53 from US$3.53;
viewtopic.php?f=33&t=5598&p=231237#p231237
Equities - Risk-On (Data as of Saturday every week)
CNN Fear & Greed Index: 63 from 77 last week from 85 two weeks ago week; Greed
1. US Equities - Higher; 3709 from 3663 last week from 3699 two weeks ago;
viewtopic.php?f=11&t=7643&start=200
a. Support: 3270; 2820; 2740; 1930 (2016); Resistance: 3750
b. No Trade
2. HK Equities - Flat. 26499 from 26506 from 26895;
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120
a. Support: 24050; 22000; 21600; 19500; 16800
b. Resistance: 28000; 29000; 31600;
c. Sold Alibaba
d. Sold JD.com
e. Sold Tech ETF (3033)
3. Shanghai Equities - Higher; 3395 from 3347 from 3407;
viewtopic.php?f=10&t=7190&start=210
a. Support: 2450; Resistance 3600
b. No Trade
4. Spore Equities - Higher; 2849 from 2822 from 2856;
Resistance 3850
a. Added to Riverstone
b. Sold Prime US Reit
5. Japan Equities - Higher. 26763 from 26653 from 26645;
viewtopic.php?f=10&t=7138&start=200
a. Forward PE 13
b. Support 15575 (2016); Resistance; 29 Year High
c. BOJ owns > Half government bonds and 75% of ETFs
d. Breakeven on BOJ's ETF at 19,500
e. With the stronger Yen, would the Nikkei be correcting?
f. No Trade
6. Malaysian Equities; Lower; 1652 from 1685 from 1608;
viewtopic.php?f=10&t=6292&start=30
a. Short-Selling ban extended to Dec 31, 2020
b. Traded Supermax
c. Sold 1/2 Sports Toto
Currencies: Risk-On (Data from XE.com on Dec 18 @ 2.45 PM)
1. USD to JPY - JPY Stronger; 103.33 from 104.13 last week from 103.96 two weeks ago;
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Unlimited QE
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger; 3.0437 from 3.0303 from 3.0470;
a. Would they devalue the SGD because of the Recession?
viewtopic.php?f=32&t=136&start=110
3. AUD to USD - AUD Stronger; 0.7604 from 0.7532 from 0.7420;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. How will China further retaliate against Australia?
viewtopic.php?f=32&t=5256&start=130
4. EUR to USD - EUR Stronger. 1.2255 from 1.2120 from 1.2166;
viewtopic.php?f=32&t=5523&start=100
5. USD to HKD - HKD Strong. 7.7529 from 7.7510 from 7.7509;
a. USD Peg band: 7.75 to 7.85
b. When will they be removing the peg to the USD?
c. Strong HKD: Money flowing into HK, possibly for the IPOs
viewtopic.php?f=32&t=3529&start=40
6. USD to MYR:- MYR Stronger. 4.0391 from 4.0518 from 4.0602;
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9
7. USD to SGD:- SGD Stronger; 1.3270 from 1.3371 from 1.3325;
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country where a catastrophe can wipe them out
c. But Singapore has been managing it's finances well.
viewtopic.php?f=32&t=136&start=100
8. USD to CNY:- CNY Stronger; 6.5404 from 6.5458 from 6.5323;
viewtopic.php?f=32&t=7720&start=90
9. GBP to USD:- GBP Stronger; 1.3549 from 1.3148 from 1.3477;
a. Brexit
viewtopic.php?f=32&t=333&start=80
10. GBP to MYR:- GBP Stronger; 5.4725 from 5.3269 from 5.4728;
11. Dollar Index - USD Weaker; 89.92 from 91.02 from 90.58;
a. Expecting the USD to weaken further
viewtopic.php?f=32&t=7616&start=60
Properties:-
1. China Properties:-
viewtopic.php?f=10&t=8150&start=140
2. HK Properties:-
a. How much will it drop and for how long?
viewtopic.php?f=10&t=7785&start=150
3. Singapore Properties:-
a. How much will it drop and for how long?
b. Will they be removing the property curbs?
viewtopic.php?f=10&t=7750&start=210
4. Malaysian Properties:-
a. How much will it drop and for how long?
viewtopic.php?f=10&t=4220&start=200
Others
Market Sentiment - Irrational Exuberance?
viewtopic.php?f=16&t=9099&start=90
Headwinds:-
viewtopic.php?f=16&t=8930&p=231225#p231225
Tailwinds:-
viewtopic.php?f=16&t=8940&p=231226#p231226
Warning Signs:-
viewtopic.php?f=16&t=9909&p=231227#p231227
Risk Management:-
viewtopic.php?f=16&t=7547&p=231228#p231228
Yield on 10 Year US Treasuries - Higher; 0.92% from 0.89% last week from 0.93% two weeks ago
Yield on 2 Year Treasuries - Lower; 0.12% from 0.13% from 0.16%;
Interest Rates:-
viewtopic.php?f=16&t=7319&p=221670#p221670
JNK (SPDR Barclays High Yield Bond ETF) - Higher: 108.45 from 108.15 from 107.83;
HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 86.61 from 86.77 from 86.49;
Baltic Dry Index - Higher; 1301 from 1161 from 1189; Low 290; High 2330 (2013)
Covid19 Notes:-
viewtopic.php?f=25&t=5657&start=150
US Slowdown - How Deep & How Long?
viewtopic.php?f=11&t=9039&start=50
Risks Out There:-
posting.php?mode=reply&f=16&t=8930
The above is to from 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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