Weekly market comments
This weekly write up is an excerpt of my road map for the week ahead, it's written for my own sake, but will share it for a change to see whether it generates some interest. There might be trades placed outside of this frame work which may have remained on watch my quote terminal for an extended period of time, yet most positions will derive from this write up as “plans are nothing, planning is everything!”.
Many industries, both growth and value are in a non-trending environment, or at least have been for multiple months. The broad market indices such as Dax have hit new highs in the previous week, yet the number of new highs in the total market has been in decline, especially so for small caps and technology. In order to preserve (intellectual) capital, I will have to continue to step carefully as a non-trending environment is not ideal when applying tight stops as I tend to do. This also reflects in the high amount of turnover in the portfolio as (the same) ideas keep on getting stopped out. Pleaes note I do scrap any idea after 2-3 feeble attempts. According to my electronic journal on a per trade basis dating back to 2017, a tight stop is in hindsight better than a wide stop similar to either a 20 MA or similar. The 50 MA could of course also be very effective through longer term trends, this would probably fit better with an approach dealing with smaller positions relative to NAV.
Past week did see a sharp correction for many markets, hence my attempt to gain a foothold with a long Bunds and silver as a sort of hedge. Both faded back to start or even below while the strongest stocks regained their losses by end of week. What is peculiar with silver failure is the increase in positive momentum for a handful of gold miners such as Newmont Mining and also increasing, but still at it’s infancy for palladium and platinum. Something is obviously a brew!
Not all is bad though!
Maersk broke to new highs today, after jerking my stops for several weeks.
Coffee prices, both Robusta and Arabico Coffee are yet again strengthening, I suspect this is a spill over effect from the bull market in grains. The relative strength between the two beans is in the middle of a historical range, near previous reversal points which slightly favours Robusta. Waiting for a clearer setup to emerge.
According to Yuantalk.com “Short bets in China stock market hit record amid concerns over policy tightening, antitrust crackdown on tech” an interesting observation. The Chinese market isn’t behaving well at the moment after the massive run in various growth stocks last autumn. An interesting pivot point in the A50 index futures might have developed today based on another negative price reversal, thus might buy above the futures above todays high. Previously my watch list for growth stocks listed in HK and Shanghai was quite extensive, now it’s trimmed to less than 10 of which only one may present itself as a buying idea. How the tide has turned!
Payment processors in Europe have finally started moving. Adyen is taking the lead while Paris listed Worldine released numbers in the previous week and enjoyed a solid move back to all-time highs. The latter might be added to the portfolio on the condition that it pulls back slightly before taking out new highs, the chart looks very constructive.
The reopening trade is again coming back, price action reveals very little is ready at this stage in Europe. AMS:SM / Amadeus (transaction systems for travel) might be one of the better performers.
The Russian Ruble RUB is usually outside my trading universe having only a few brief stints with the Russian equity index ETF in Europe and US past decade. After new sanctions recently and only a muted reaction in the markets, followed by buying of the RUB once Russia announced pulling troops away from the Ukraine leaves me with the impression the market is “sold out of Rubles”, ie sentiment is too negative. Exactly how a low risk approach could be expressed remains to be seen, might come back later with something on this subject if I find a high conviction idea.
Yara: Fertilizers started gaining relative strength again, earnings hampers short term action.
Maersk: At new highs, container rates very strong and will most likely continue.
Adyen: Positive price action, the strongest contender of it’s European peers.
Newmont Mining: Strong relative strength vs peers and gold.
AUDUSD: Suggests higher prices for risk assets and commodities.
Disclaimer: This article does not constitute a buy or a sell recommendation, as a market participant, one must solely rely on your own research and risk management.