THINKING OUT LOUD

Ideas To Make Money

August 22, 2018 by Rob Zdravevski

Let’s not waste time reading newsletter reviewing last year’s or last quarter’s markets.

This is my summary of what I see in macro market trends.

From this, I look for investment opportunities in specific equities

So, here we go……

The CRB (commodities) Index is moving lower and the US Dollar is rising.

Inversely, the declining trend in the AUD is intact, where I’m looking for it to test the 0.7130 mark.

Specifically, amongst the commodities;

WTI, Brent and Heating Oil is continuing its fall;
Natural prices are trending higher;
Gold is the most oversold in 5 years, so I’m analysing buying opportunities;
and Silver is also oversold.

Coffee, Cocoa & Sugar are heavily oversold;
Platinum hasn’t been this low for 14 years;
Soybean prices have halved in 6 years and now trading at prices last seen in 2008;
The price of Pork is recovering from a recent 40% collapse and now trending higher;
while Corn is building a base for a move higher.

Most concerning as a macro economic indicator, is that Copper continues to weaken and the longer term down trend is accelerating.

Coffee has fallen 28% in the past year and nearly 70% in price over 6 years and a “shakedown” lower seems likely.
Funnily, it’s not reflecting in a cheaper cappuccino.

On the equities front;
A new sell signal on the Kospi (South Korea index);
Spain’s IBEX is saying SELL, and this trend seems to gaining momentum with a larger move expected;
France’s CAC-40 is heading lower in the short-term and a break below 5,280 sees it decline further;
The DAX is clearly set to test lower levels;
Britain’s FTSE 100 also has confirming SELL signals over the short & long term,

the ASX 200 is an index where we’ll need to wait and see. The current upward trend is waning but has not flipped to a Sell, while the longer term bullish trend has not tired

While the Shanghai, the China Enterprise and Hang Seng indices all seem to heading lower as are EAFE markets.

and our best macro equity index trade idea is Shorting Japan’s Nikkei 225 Index

The NASDAQ is also set to decline and retrace part of its 16% advance seen in the past 4 months;
The S&P 500 has turned lower;
but to confuse the TRansport and BankingIndex ?? say othewise

Basically, the equities picture tells me to wait for cheaper prices;
It’s not late to sell selected holdings, as these “SELL” signals are fairly new and recent,

It seems leading economic indicators (in markets, at least) are heading lower.

It’s time to de-risk, hide a little bit and wait for better bargains.

Keep in mind….

When I make mention of price of Sugar, it’s not always obvious that we advise buying Sugar itself, but its to understand how it affects companies relative to their inputs and costs as they ultimately produce products for sale.

It is from these asset trends, coupled wth individual asset or security analysis is when we find many of our investment ideas.

Identifying trends are important part of our investment analysis. It also helps us manage our clients portfolios as to when to buy, add, trim or fully exit a holding.

Until next time,
Yours sincerely,
Rob

 

and don’t forget to refer to my disclaimer on this page.

Karri Asset – Disclaimer