Thursday, 27 July 2017

Is the Trump Rally Over? Part 3

When i wrote "Is Trump Rally Over?" Part 1 and Part 2, i argued that the Trump euphoria was priced into the market initially from Nov 2016 to Feb 2017, and then it gradually being drained out of the market. I showed this in terms of prices of various growth sectors in the share market.

Here's a Gallup Poll's showing the sentiment towards the Trump administration based on Economic Confidence Index covering from Nov 2016 to July 2017.

Gallup's U.S. Economic Confidence Index

It's obvious that the steep rise of this index from a low of -11 Nov to a high of 16 (a huge 27 points increase) is due entirely to the newly ushered in Trump administration. This couldn't be just an amazing coincidence. It has declined since its peak to a low of 4 as Trump administration is being seen as dysfunctional because nothing has been accomplished some 7 months since inauguration.

Still, the index = 4 is higher than pre-election of -11. The global growth picture is much more positive. And the improving U.S. company earnings are keeping the bull market climbing a wall of worry.

As this index trends lower, the market continue to trend higher because this index clearly links with D.C. while market looks towards improving company revenues, and earnings, and improving markets outside the U.S. The dovish Fed and falling dollar wouldn't hurt.

As i mentioned before, i won't argue if some small measure, like 10%  (20% at most) of Trump's growth agenda is being priced into market. This poll clearly shows much of the positive Trump sentiment is being revised downward.

I see this poor Economic Confidence Index as a positive thing because if confidence is low, meaning expectation is also low. Anything that Trump can deliver, anything at all, is a good boost for confidence, and therefore the market.

Wednesday, 19 July 2017

Crude Oil Price Bottom for 2017 ?

As i said in my article Resumption of the Reflation Trade? last week that the crude oil was probably in the midst of a bottoming process. Just an after thought on that article, this resumption of commodity reflation may simply be due to the falling dollar. Regardless of the causes, crude prices seem to be putting in a bottom based on XLE.

XLE price chart from Sep 2016 to 19 July 2017 showing breakout,  double bottom and bullish divergences
XLE price chart from Sep 2016 to 19 July 2017 showing breakout,  double bottom and bullish divergences
(Click image to enlarge)

The price has broken out of the XLE downtrend for the 1st time since 12/12/2017. The downtrend is consisted of a series of lower lows, and it has just put in a double bottom. This is a reversal signal (short term or otherwise).

I may have spoken a little early. If i were to be careful, i shouldn't be excited about one day breakout because this could very well be a false breakout. But if all 3 technical indicators show bullish divergences since March (for MACD) and since May (for Twigs Money Flow), and the forming of a double bottom, this gives me more confidence for this breakout. The large green bar and above average volume is also supportive of this breakout price action.

XLE or other crude oil related ETFs tend to lead crude oil prices. So it's possible that crude oil may fall for awhile from here before heading up. But then, maybe not. It has been trending up since 21/06/2017. You could argue that the XLE confirms this crude oil's rise. In the last 2 crude relief rallies, XLE remains firmly in downtrend.

APC (Anadarko) chart from Sep 2016 to 19 July 2017 showing double bottom and bullish divergences
APC (Anadarko) chart from Sep 2016 to 19 July 2017 showing double bottom and bullish divergences
(Click image to enlarge)

APC is showing similarly the 3 bullish technical divergences and double bottom (close enough). It hasn't broke out of the downtrend (shown in light purple). I'll be getting into this stock quite soon. I won't wait until it breaks out of the downtrend. An entry around this level provides a good risk to reward ratio (it has fallen 36% YTD), at least for a short term tradable or oversold bounce. Wait for a breakout from the centreline of the downtrend channel (indicated by dash -----) for a trade entry, and a stop loss @ $43.

Be careful that this may just be a tradable bounce, and not a longer lasting reversal. Will just have to wait and see how it plays out.

As i said before that this crude rally is helped (but not determined) by the falling dollar. If DXY is staging a come back, crude could weaken somewhat. But don't expect precise negative correlation between DXY and crude.

Tuesday, 18 July 2017

Singapore Airline's Premium Economy Class

The airline industry may rank the 2 ME airlines, either Emirates or Qatar Airways, ahead of SIA (Singapore Airlines) from time to time. I'm probably biased. To me, SIA is still the best in the world. In any case, SIA has never really strayed far away from the top 3 spot for many years.

It's interesting that the best airlines in the world come from countries that have no domestic airline because they're so small. I supposed that they're countries that happened to be transportation hubs in their regions. It's certainly true for Singapore and UAE (Singapore also has the best airport in the world, for the same reason).

1 of the reason that SIA is 1 of the top airline to me is their innovative product / service offerings. One of such service is their newly introduced Premium Economy Class. (They also one of the 1st airline to use the gigantic jumbo-jet Airbus A380. And the 1st flight they operate with it is in fact the flight from Singapore to Sydney (the very flight i'm taking right now). The other 2 airline that use it is Emirates and Lufthansa. Well, A380 is a German plane, mostly).

Singapore Changi Airport

We took the opportunity of our 7+ hours flight from Singapore to Sydney to check out their Premium Economy Class, which is perfect for me. I can't afford (or am i  too cheap ?) to fly 1st class, but likes everyone in the world, i also want comfort. Have the cake and eat it too. The Premium Economy Class makes that unrealistic cake eating goal comes true.

This is a long enough flight to shell out extra cash for the extra comfort. While we can't justify to spend on Business Class that cost some 400% over the standard Economy Class, but a 20% extra for the Premium Economy is within the budget on this trip, which we took on 21 June 2017.

Having experienced the Premium Economy Class, i have to say that it had given me more bang for my bucks.

Singapore airlines seats in Premium economy class
Seats with wide or separate armrests

The extra legroom and butt-space are of course welcoming for a long flight. But the large elbow rooms is a blessing while in the sky. In a typical economy, the 2 adjacent passengers share a narrow bar that we call armrests, where we typically have to fight over. An added discomfort to crammed space.

If the 2 neighbouring passengers are strangers, then the sharing of that little stick becomes an embarrassing shared encounter. The discomfort is enhanced if the 2 neighbouring passengers are of different genders. There has never been an instruction manual that explains the social etiquette of armrest sharing (nor can i find such instructions in the back of the airline seat pocket. I looked. Somebody should write a book/blog about it). The best we usually end up with is some uncomfortable posture. What about when somebody's body part other than their arm rest on the armrest? Again, this broad armrest cushions the awkward faux pas.

With the long flight, having a decent in-flight entertainment could also save the day. And with bigger seats, it also accompanies with larger HD screen (13.3 inch, a typical PC laptop monitor), which is considerably wider than the seats in the Economy Class  Wider seats leading to wider screens because you can't really mount a screen larger than the seat.

It comes with proper earphones instead of earplugs to reduce noise better. The touchscreen monitor is also a nice touch (no pun intended), free of wiring, instead of fiddling with a handset control.

All airlines should offer this in their long-distance flight.

3 Likes and a blow kiss from me.

Wednesday, 12 July 2017

Resumption of the Reflation Trade ?

Right off the bat of Trump Election victory on 8 Nov 2016, the market immediately put in place the so-called Trump Reflation or Trumpflation Trade, aka Trump Rally or Trump Bump. It's a stunning price rises of the whole industrial metal complex, and 10 year T-Note yield, which carries the financials higher.

You can read my article Trump Victory and the Market's Roller Coaster Ride for the explanation of this Trumpflation Trade.

But by sometimes in mid-Feb 2017, the whole Trumpflation is being questioned, and a repricing or correction has started. To read in-depth about this Trump Dump, you can read my article Is Trump Rally Over ?.

It appears that the Trump Dump is over, and the Reflation Trade can now resume in earnest.

Let's look at the evidences for this Reflation resumption.

XLF peaks on 1 March and bottoms on 13 April, and breaks out of the downtrend in 7 June
XLF peaks on 1 March and bottoms on 13 April, and breaks out of the downtrend in 7 June this year

Copper ETF peaks on 13 Feb and bottoms on 8 May, and breaks out of the correction on 8 May this year
Copper ETF peaks on 13 Feb and bottoms on 5 May, and breaks out of the correction on 19 May this year

SLX ETF peaks on 21 Feb and bottoms on 18 May, and breaks out of the correction on 26 June this year
SLX ETF peaks on 21 Feb and bottoms on 18 May, and breaks out of the correction on 26 June this year

The general trend is clear. Trump Bump starts on Nov 2016 and peaks in sometimes from mid to late Feb 2017, and then the Trump Dump starts and finishes sometimes in May 2017. By June 2017, financials, and the industrial metal complex (starring Dr. Copper) have resumed its upward trend.

Bear in mind that the financials and the industrial metals have been in the bull market since early 2016. As i explained in  Is Trump Rally Over ?. The Trump Bump is simply a transient 2-month spike within this ongoing reflation theme that started in early 2016. What happened between Feb and June 2017 is simply a correction within the context of this ongoing reflation trade. It looks like that correction is over last month, and the industrial metals and financials are in their upward path again.

Even the uranium, which isn't an industrial metal, but it's part of the commodity complex, has followed similar path. It has corrected the most, but has broken its downtrend, put in a bottom in June 2017. It has now resumed its upward path. Its bottom in June 2017 is still higher than its bottom in Nov 2016, which coincides with the election day. In fact, you could say that URA has completed its inverse head and shoulder, which is a reversal pattern.

URA ETF peaks on 15 Feb and bottoms on 22 June this year
URA ETF peaks on 15 Feb and bottoms on 22 June this year

Initially, i thought that crude oil (WTI) has further to drop until it gets bellow $40, perhaps finds a bottom in around $38. But having looked at the whole commodity complex from industrial metals to uranium, all seem to have bottomed and reversed course, i'm now thinking that crude is also doing the same thing. If you look at this chart below, the crude prices have never done this since its peak on 23 Feb this year; it seems to be trying to consolidate, rather than bouncing straight up and down between channel's edges.

WTIC ETF peaks on 23 Feb and bottoms on 21 June this year 2017
WTIC ETF peaks on 23 Feb and bottoms on 21 June this year

As a trader, i don't really need any explanation as to why this is happening. I only need to know what is happening. But if i'm pressed to label it, i'll call this the Xi Reflation Trade (as supposed to Trump Reflation, which, as far as the market goes, is dead in the water. Even CNBC has stopped using the "Trump Rally" slogan for some months). Whenever you see rising commodity prices, you can safely assume that it's driven by China.

Percentage of global copper demand by Top 5 countries

Ah yes, the Fed, which is the architect of the ongoing reflation trade, is sounding more dovish again. Let's call this the resumption of the Fed-China Reflation Trade. Leave Trump out of it. The market does fine without him (although he insists that he's responsible for this bull market that predated his election for 9 months). He has delivering nothing so far except D.C. dramas aplenty. Treat it as white noise (or is it Whitehouse noise? Or is it orange noise?).

Tuesday, 11 July 2017

Uncle Tetsu's Cheesecake and The Japanese Alley

Uncle Tetsu's Japanese Cheesecake,
501 George St
Sydney, Australia

 The Place 

This establishment wasn't here when I visited Sydney last time 2 years ago (things are changing fast especially when you're not looking).

Kitchen, Uncle Tetsu's Cheesecake, Sydney, Australia
Chicken view from the front counter

This shop is at the start of a shopping arcade (more accurately shopping lane) on George St, located next to Town Hall Station. I would like to christen this shopping lane, if I may, "The Japanese Alley" (if you want to call it "The Japanese Street" to make it sounds bigger, feel free, i won't hold it against you).

Japanese Alley, Sydney, Australia

Another reason why I call it "Japanese Alley" (I always make sure I've more than 1 reasons) is how it reminds me of those narrow alleys in Japanese cities, especially the modern parts of ancient capital of Kyoto.

Apart from the odd Malaysian out hawker-style restaurant called Sedap, nearly all the businesses are Japanese (the last time i check).

I stayed in Fraser Suites, where the lobby can be accessed from Kent St. Unless i want to go to Chinatown, i always exit Fraser Suites in their backdoor on level 10, which connects to "The Japanese Alley" to get to George St (level 10 is street level. Don't ask).

Japanese Alley, George St, Sydney, Australia
The Japanese Alley, the view i see when leaving Fraser Suites through the backdoor.

Japanese Alley, George St, Sydney, Australia
This ramen place is rather busy most of the time i passed by

While Korean food and culture - the K wave - has swept throughout SE Asia in the last decade or so. The Japanese food scene has been growing in Sydney in the last 2 decades, threatening to overtake Chinese cuisine as the most popular Asian (possibly all ethnic) dishes. At least in Sydney. Ironically or logically (depending how you look at it), it's the 2nd generation Chinese-speaking immigrants (from all parts of SE Asia) that spur this growth of Japanese food. After all, it isn't such a cultural shocking palate move for the Chinese diners to dive into Japanese food with gleeful abandonment.

 The Food 

While they have a large variety of pastries to choose from, but their cheesecakes and cheesetarts seem to be their trademark choices. I must fess up that while I eat cheeses of many kinds, i'm not a big fan of cheesecake. But i won't spit it out if one is inserted into my month gingerly. That's just a show of respect for my mouth (sorry, Mr. Mouth to me. You can call it Mouthy. It will take offense if you call it "Big Mouth").

Making cheesetarts, Uncle Tetsu's Cheesecake, Sydney, Australia
A lovely kitchen staff catching cheesetarts that were spit out of  the  machine

Making cheesetarts, Uncle Tetsu's Cheesecake, Sydney, Australia
Say "cheese" ! (or "cheesetarts")

We ordered the cheesecake (the cheesetarts looked too cheesy), original flavor, of course. Always stick with the original.

Uncle Tetsu's Cheesecake, Sydney, Australia
Original flavour Uncle Tetsu cheesecake

The texture is as smooth as a baby's bottom (just an expression, I don't eat baby bottoms), and not too sugary or too cheesy (which cheeses me off). The downside? There's such a thing as too moist.

Actually, the part near the top is just right (that's burnt to golden brown). The bottom part is more soggy (as i said before, the downside, or down under, is too moist. Who like a wet baby bottom? Ask any parent, and the answer is a definitive "eww no!". In short, the cake wasn't too evenly baked with bottom slightly under cooked. I guess it just needs a slower heat. Well, you can't hurry good food.

Overall score: 7.5 / 10. It's worth trying it out, especially if you can't pass up a cheesecake. Nice snack to go with a quick shot of espresso or a slow cup of oolong tea (or Japanese green tea if you must stick to Japanese theme). I may try their other delectable next time i'm in Sydney. Got to eat and fly (back to Singapore).

Monday, 3 July 2017

Ivanhoe Mines (IVN): Breakout of Cup and Handle

 Fireworks for Ivanhoe on the Eve of 4th July 

I stumbled upon Ivanhoe Mines (TSX:IVN, OTCQX:IVPAF) when i researched for platinum miners because i wanted to have some exposure in platinum play back in early 2016. While it isn't a platinum miner (although it has some of it, or else i would never find it in my search), i was so glad to have found it. A perfect example of trading serendipity.

I listened to all, but believed in none (well, only a few exceptions). Rick Rule is one of such commentators that i would have some faith in putting my money to work on his stock pitch. He's a shareholder and has a lot of positive thing to say about IVN. For 1 thing, the company has the world's largest copper deposit, but when i looked at the price at the time of research, it was $0.85. I immediately knew it was very cheap. But then in early 2016, every miner on earth was in deep discount (because nobody wanted to touch commodity. That was of course the best time to back up your truck). Today (3 July 2017), it closed at $4.17.

Ivanhoe (IVN) price chart showing ATH and breakout
(Click image to enlarge)

I have traded it in and out of this stock 5 times since. I can't say i had perfectly timed trades. A few times, i bought and sold a bit early. Even so, i'm quite happy with my performance because this is my most profitable stock in 2016 because if i couldn't make money during the last 18 months incredible run of this stock, i should give uptrading. I just regret i didn't put all my money into it. But then, hindsight is 20 / 20. I don't put all my eggs in the Ivanhoe basket or any other basket. And Mr. Rick Rule never says he put all his money into this company. But we both should.

After a stunning run throughout 2016 and until mid-April 2017, it has reached an ATH = $5.40. This is followed by a 10-week bullish falling wedge / flag. It had just broken out of this flag today (3th July). While i would like to see large volume to convince me of this breakout, but i'm convinced enough that this is a real rather than a false breakout for the following reasons. As usual, i can be wrong.

1.  The $3.80 support has been holding up or basing for 4 weeks.
2.  The price is up today by an impressive $7.75% (Eve of 4th July fireworks). Largest green bar for awhile.
3.  It has already attempted a breakout a day before.
4.  Bullish technical divergences have been in place for a month.
5.  Copper prices (COPX, JJC) has been basing and recovering since May this year. IVN is just playing catch-up. It's actually 1 month late, meaning the catch-up will need to be fast and furious.

 A Steaming Cup of Hot Price Action 

While i can give you the next few short term approx price targets of $4.30, $4.70 and ATH of $5.40. However, i'm more interested in showing you the target of the cup and handle for this stock chart.

Ivanhoe (IVN) price chart showing cup and handle formation
The entire (weekly) price chat of IVN from Oct 2012 to 3th July 2017.
(Click image to enlarge)

Without much imagination, this is clearly a cup and handle pattern with ATH price being the rim of the cup. After running from a ATL (All Time Low) of $0.54 to ATH of $5.40, it's only natural and healthy to have a price consolidation in the form of a handle from the top of the cup.

It's then no coincidence that IVN starts this consolidation at the ATH of $5.40. Oh, by the way, the ATH / ATL ratio = 10x (approx). If you're the genius or lucky investor who bought at ATL and has been holding it, congratulation for owning a 10 bagger. It blew the Bitcoin parabolic rise out of the water in the last 18 months.

Depending where you want to measure the price target of this cup and handle formation. Some technicians measure this C&H price target by adding the height of this cup (CH = ATH - ATL = $5.40 - $0.54 = $4.86) to the Cup Rim (which is also ATH). Others determine the target by adding the height of the cup (CH = $4.86) to the point of breakout ($4.0 on 3th July).

So the 2 possible price targets for this C&H development are,

Price target 1 = CH + ATH = $4.86 + $5.40 = $10.26
Price target 2 = CH + Breakout = $4.86 + $4.0 = $8.86

C'mon, does it matter if it end up in $8.86 or $10.26? But i have a feeling that it would reach the target of approx $10 (which is somewhere between the 2 targets, and a nice round number that market loves).

The volume in this stock has increased considerably in the last 12 months, showing the growing interest in this stock. This also increases liquidity, which makes trading less jarring. The falling flag also accompanied by declining volume, another positive sign.