Thursday, 28 September 2017

Funny Caption 51: Donald Trump Versus Kim Jong Un

Donald Trump versus King Jong Un

"Demagogue and Dictator."

"Dotard and Rocket Man."

"No sticks Vs no stones."

"Border wall Vs DMZ."

"Post-truth Vs propaganda."

"Russia collusion Vs U.S. collision."

"Bully and the Beast."

"Whirlwind comb-over Vs sit-tight hair-cut."

"Chjaina Vs neighbor."

"Golden shower Vs black rain."

"'My button is bigger than yours' Vs 'Your hands are smaller than mine'."

"Hot lover of daughter Vs cold killer of uncle and half-brother."

"3rd generation of Trumpire Vs 3rd generation of Hermit Kimdom."

Monday, 25 September 2017

Trafalgar Spanish Tour Day 1: Madrid

Our Spanish trip involved a combo of self-directed and tour package. After spending 3 days in Madrid, we started our Trafalgar's Spanish Wonder tour (9 days, 10 cities. Maybe i dunno how to count. I come up with 8 days, 9 cities from the follow itinerary map). The tour ended in Barcelona, which we would spend another 4 extra days by ourselves.

Madrid - the capital city - and Barcelona are the 2 cities that worth digging a little deeper. For the rest, we thought it would be easier to avoid the hassle and join a tour.

Itinerary for the Spanish Wonder tour by Trafalgar. Numbers denote number of nights of hotel stay
Itinerary for the Spanish Wonder tour by Trafalgar. Numbers denote number of nights of hotel stay
(Click image to enlarge)

Today, we were being driven to the hotel for our 1st night stay in Madrid. We stopped a few places on the way.

We made the 1st quick stop at Santiago Bernabeu Stadium. This is the home of Real Madrid. If you're a citizen of CANZUS, Real Madrid or this stadium doesn't mean much.

Don't confuse CANZUS with Kansas. It's all in shouting upper case. CANZUS is an acronym for Canada, Australia, New Zealand, and the U.S. The shorthand is strictly my own coinage for this purpose, there's no official recognition. The only interest and knowledge about this place to the CANZUS people (of whom i'm one. Guess which one. Hint: look at my spelling) is that the only discussion we have about this place is the clarification between the word 'football' and 'soccer'. Yes, you know i'm talking about you...

Santiago Bernabeu Stadium, Madrid, Spain
Real Madrid insignia

Outside CANZUS, soccer is the most popular sport in 200+ countries, and Real Madrid is 1 of the most prominent team. So this is a hallowed ground, the cathedral, mecca of soccer. Million fan around the world make their pilgrimage here. To our tour group, where majority of the members are denizens of CANZUS, our gaping mouths are probably yawn, not awe. It might as well for we were given about 3 mins to absorb the magnificent indifference. Just enough time for me to snap a few, and wasn't even enough time to look for the gentleman (what gentlemen? Any gentleman. I'm not picky).

Now that i think about it, CANZUS is simply the English-speaking Anti-Soccer League of Nations. Instead of reaching for conspiracy theory - a pastime we enjoy all too much nowadays - i want to appeal to my rational side and explain that these countries are simply belonged neatly to the continents of N. America and Australasia. This geographical (c)lumping explains why UK, albeit an English-speaking country like CANZUS (in fact, the mother of the English mother tongue), is nuts about soccer because it isn't part of N. America or Australasia. It's part of Europe, the epic centre of soccer fever (although the Spanish Fever (in soccer) is greater).

Panorama, Santiago Bernabeu Stadium, Madrid, Spain
Dottie, I've a feeling we're not in CANZUS anymore...
(click photo to enlarge. You must !)

The 2nd and final brief photo stop we made was the Monument to Calvo Sotelo, which locates on a traffic island in Paseo de la Castellana (The Castillian's Mall), aka La Castellana where we were dropped off to admire the view. La Castellana is noted for being the longest and widest avenues of Madrid.

La Castellana as viewed from the Monument to Calvo Sotelo, Madrid, Spain
La Castellana as viewed towards south from the Monument to Calvo Sotelo

This place is 6.2km from the centre of Madrid as the crow flies (since we didn't get there riding on the back of crows, the actual distance covered by our tour coach is considerably longer).

The 2 modern Leaning Towers of Madrid provides a nice backdrop for framing of the Monument. These 2 provide a nice juxtaposition between slanting inward (convergent) vs slanting outward (divergent) structures, glass and steel vs masonry, airy and light vs solid and heavy, dark vs light shades, the modern vs past, finance vs politics (although Sotelo was a minister of finance). It's like saying, "look at the progress of Spanish modern history, from the fascist minister of finance of the past to the capitalist free market enterprise of today and tomorrow". The leaning towers might be interpreted as vanishing lines that symbolize a vista into the future.

In the opposite direction, you get the vanishing horizon of La Castellana, over this direction, you get a vanishing point skywards. Almost like a cathedral ceiling effect, drawing your eyes to the heaven.

Monument to Calvo Sotelo, Madrid, Spain

Whatever your interpretation, together they give you a forceful visual impact. It's a nice pleasant surprise.

Unlike the Leaning Tower of Pisa, which suffers from weak foundation issue; this tower duo was designed this way because the architect drew his plan with a crooked ruler (i'm thinking Francisco Franco).

Monument to Calvo Sotelo, Madrid, Spain

The hotel we stayed for the night is at the outskirt of Madrid. A business hotel, meaning it's decent but without bells and whistles (be serious. they're here for business, not for fun). I don't mind it at all except no views or sights of interests for you to wonder around by yourself.

Hotel, Madrid, Spain

I had to take care not to get off at the right side of the bed in the morning daze so as not to walk straight into the pillar. In this case, the right of the bed is the wrong side of the bed. So beware of being whacked by the Madrid Morning Post if you stay in this room.

Thursday, 21 September 2017

Apple (AAPL): Some Support Targets

Just a quick follow up on my previous post about the Apple stock's some support targets. The stock price has indeed breaks down from the 12-month rising channel decidedly.

Apple (AAPL) stock chart showing support target
(Click chart to enlarge)

Let's consider one price target at a time.

The 1st most likely support target is around $143 level where we have some congestion as well as the 200dma. This represents about 13.5% drop from its ATH. This is a quite reasonable drop considering that the other tech giant Amazon (AMZN) has already lost some 12.5% from its ATH last month (and could possibly fall further towards the 200dma, and that would be a 15.5% fall).

If the price of AAPL breaks down from there (~$143), the 2nd probable target would be around $127 at the Feb 2017 upper gap. This is a 22% price fall.

If the Great Dip that described in the previous post plays out fully (nobody can say it will for sure), it could fall by as much as some 27% from its ATH to the eventual target of around $120, which happens to be the Feb 2017 lower gap. That won't happen until sometimes next year (if it happens).

Apple (AAPL) Stock Chart on the Verge of Breaking Down ?

Apple share has done some medium term dips from time to time (in the shape of Great Dipper (that flips along the vertical axis)).

The Great Dipper Constellation
The Great Dipper Constellation

The chart below shows its last 2 of such dips. Are we expecting the start of the next dip? Such dip provides great buying (or shorting) opportunity.

AAPL weekly stock chart from 2012 to 2017
AAPL weekly stock chart from 2012 to 2017
(Click chart to enlarge)

Apple share have been showing bearish divergences in all 3 technical indicators since Feb 2017 (see chart below). Would this divergence finally play out to cause the share to start its next dip? The last time this happened, it broke down from the 14-month rising channel (marked by light purple colour) that sustained from Apr 2014 to Jun 2015.

If we're breaking down from the current 12-month rising channel that sustained from Oct 2016 to Sep 2017, the technical argument would be stronger for the start of such stellar Great Dip.

The 2012-2013 correction led to 44% price drop for 7 months, and the 2015-2016 correction led to 30% price drop for 12 months.

AAPL daily stock chart from 2016 to 2017
AAPL daily stock chart from 2016 to 2017
Chart as of 20 Sep 2017
(Click chart to enlarge)

Will keep an eye on price action and let it, and it alone, to decide the Great Dipper thesis.

Of course, you can have the scenario where the prices break down from this rising channel, but then comes back into the channel, and only to form double or trip tops (the handle of the Great Dipper) like it did the last time. Likewise, prices could go up a little bit more before breaking down from this rising channel. Will see.

Tuesday, 5 September 2017

Big Picture of Inflation, Reflation and Deflation, So Far

This is something of a follow-up of Resumption of the Reflation Trade ? article.

TIP to TLT Ratio chart showing market expectation of inflation
TIP to TLT Ratio chart showing market expectation of inflation
(Click chart to enlarge)

The TIP to TLT ratio provides a nice picture of how the the bulls and bears of inflationary forces are being played out since Trump won the election. If the ratio is trending up, the market is expecting rising inflation; if it's trending down, deflation (or disinflation).

I remember the market euphoria after Trump election when the noted hedge fund manager and billionaire Stanley Druckenmiller excitedly told CNBC (inter)viewers to short bonds because it's going to burst by Trump's fiscal policies. When inflation picks up, bond prices will drop. Many other well known investors also chimed in and called the Bond Bubble Burst.

This Trump fiscal euphoria sent bond yields soaring (bond prices plunging) within a month in a stunning fashion (indicated by the oval in the chart). As the markets started to digest the news coming out of new administration from Washington in the following 3 months, the inflation expectation was in a trading range (indicated by the rectangle in the chart).

By mid-March, the markets have digested the news (that are mostly D.C. dramas) and decided that either the Trump Team isn't going to deliver the fiscal policy soon, or that the confidence in Trump Team to carry out these policies successfully is slowly being eroded. This leads to Trump Dump (indicated by the downtrend line in the chart).

By mid-June, the inflation expectation - as described by this chart - is completely rewound, or that Trump Dump is complete. That is, the TIP/TLT ratio is back to same level as the Election Day (indicated by the horizontal green line). It's as if Trump has never being elected, as far as inflationary expectation is concerned.

When i wrote the article about the resumption of reflation in July, the inflation was trended up into August. But it has since dripping down. Interestingly, 4 trading days ago (29 Aug), this ratio bounces off strongly, forming a double bottoms. If you look closely at this chart, it's no coincidence that this come at a juncture with 2 supports (the Election Day level + Uptrend line from July low of 2016).

This strong bounce could just be a technical bounce, but if i'm pressed for explanation in terms of fundamentals, i'll say it's either due to the recent strong Chinese data (accompanied by rising industrial metal prices: Dr. copper, zinc, and aluminium). But it could also due to the Trump Team's talk of tax reform and other fiscal policies that re-ignite the rally.

We're approaching the apex of the triangle - another critical juncture. Whatever the fundamental reason, it's important that the ratio would hold this Election Day level. A breakout of the descending triangle is a sign of positive inflation expectation and is bullish for equity market. A break below this Election Day level would be messy.

My feeling is that it would break out of the triangle because despite the rewinding of inflation expectation since mid-March, the ratio is trending up since Mid-July last year. With synchronized global economic growth, while i don't expect rampant inflation, it's pretty hard to sell deflation expectation.

But then, who cares about my feeling? It's not made of pure crystal. We just have to wait and see...

Keep a close eye on this chart in the next few weeks for clues in the direction of inflation expectation.

The Fed could put a spanner in the works. But that would also reflect in this chart.