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Messages - Bevan

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166
Shares / Re: Devastating market crash. When ?
« on: November 01, 2014, 11:28:16 am »
It is interesting. Debt is a given. It will typically always get bigger. The question becomes, at what point do the lenders get nervous about not getting their money back? This is the situation that China is in and why we will probably not see an alternative to the USD as global traded currency for some time.

I'm not sure that we will see a global financial meltdown because any debt blow-out will be controlled through various measures i.e. creditors taking a haircut, more quantitative easing, more printing of money etc. However, one cannot escape the fact that the financial system is engineered 80% of the time to rise whereas nature is much more a natural cycle of birth, growth, then death, coming back to square one again. Our financial system, together with inflation, will never accept this. It is engineered that the rich (the informed and those with access to the markets) will get richer and the poor will get poorer. We do need an alternative and I don't see cryptocurrencies (the block chain etc.) being the answer. What we need is for people to understand sustainability in nature and in the way they live their lives first. Then we can start fixing the financial system.

167
Shares / Re: Pulverized Sand Box
« on: October 23, 2014, 04:00:59 pm »
Quote from: jaDEB on October 22, 2014, 03:23:40 pm
10. Microsoft Corporation
9. BP plc
8. Bank of China Ltd.
7. Agricultural Bank of China Limited
6. Samsung Electronics Co., Ltd.
5. Exxon Mobil Corporation
4. China Construction Bank Corporation
3. Gazprom OAO.
2. Apple Inc.
1. Industrial and Commercial Bank of China Limited

Put another way....
10. USA
9. UK
8. China
7. China
6. S. Korea
5. USA
4. China
3. Russia
2. USA
1. China

10 years ago this would have been a very different picture.


168
Off topic / Live chat
« on: October 14, 2014, 05:15:43 pm »
I reckon the rest of this week is green. It's next week I'm worried about.

169
Shares / Re: Devastating market crash. When ?
« on: October 13, 2014, 10:15:38 am »
Hi Yozzi, I think the market has probably already taken most of the pain for now. Crashes happen quickly and we've seen a correction now back to around Feb-14 levels. Whilst there is certainly the potential for further downside I expect this won't be as severe as what we've seen already.

Your Orbis fund should have performed quite well over this period as I believe they hedge and thus perform well in a falling market whilst underperforming in a rising market. Coronation are probably the best of the South African fund managers, or "sheep" as some would say. So my advice would be to ride out any further downside. However, best to hold off putting new money into the market just now.

170
Shares / Re: Devastating market crash. When ?
« on: October 13, 2014, 07:39:34 am »
Markets are heavily oversold on daily and weekly charts. However, monthly chart is only getting going into downtrend. I expect sideways action for this week. If positive, upward momentum this week is not enough to pull markets out of this steep dive then we should see markets getting ready to sell off again towards end of week.

Normally what happens here is you get what's called a bear flag i.e. price goes sideways (or even dead cat bounces) whilst momentum moves from oversold to overbought. The upwards momentum only serves to exhaust the weak buyers before the stronger shorts regain control. Then when momentum turns down again you get another sharp sell-off as the weak buyers bail out.

171
Shares / Re: Devastating market crash. When ?
« on: October 09, 2014, 07:29:43 am »
Dow recovered nicely overnight. If we rally again today then I suspect we will move up for next few weeks. But the risk of a major downside move still hangs in the air, at least until weekly momentum has recovered a little.

172
Shares / Re: Devastating market crash. When ?
« on: October 08, 2014, 05:44:23 pm »
Dow just bouncing off 200 day moving average. If it holds then we could see a slow and steady recovery from here. If we go back down through this level then man the lifeboats. The lower bollinger on a weekly chart suggests there's at least another 400 to 500 points of downside from here. The monthly chart is quite horrible, suggesting that there could be around 2,000 points wiped off the Dow still. However, I don't think we're there yet.

Any trader should be in cash and sitting on sidelines waiting for confirmation of direction. Investors should still be in the market. This is not a crash (yet).


173
Shares / Re: Devastating market crash. When ?
« on: October 06, 2014, 08:12:52 am »
I would not be selling this week. This looks like being a big relief bounce on most markets. Will be clearer towards week end / next week where we go from here.

174
Shares / Re: Hindsight saw it coming
« on: October 03, 2014, 09:20:38 am »
As of about 9:20am I suspect our morning bounce has pretty much run its course now. Expect JSE to drift sideways now towards Wall Street opening, then expect market to rally again into Wall Street close under US short covering. US non-farm payrolls and PMI numbers should come in better than expected helping market to rally into close. On balance, markets should close up on the day today, followed by a bouncy week next week.


175
Shares / Hindsight saw it coming
« on: October 03, 2014, 09:12:31 am »
Isn't hindsight great? This weekly chart of IG Index's SA Top 40 clearly shows the breakdown in momentum around end July. This coincided with a wobble on Wall Street. But Wall Street was growing sensibly, not like the SA Top 40 which was clearly on crack as the ZAR weakened. I'm not sure if the weak Rand means that JSE prices must rise to compensate or if there are simply too many Rand hedge stocks that drive this action. Anyway, the SA Top 40 was clearly ready for a correction and when Wall Street wobbled again end September then the JSE bear jumped out the window. Note now that the SA Top 40 has hit the bottom bollinger and the 50 day moving average. So it's probably safe to get back in but keep it light.

The problem however is that we are still in a bull trend as evidenced by the medium term momentum line (red line) being positive still, although it is rushing to the zero line quite rapidly. If this bullish bounce doesn't last from here and we go south again (in a few weeks time) then I suspect it would be quite wise to head for the exits i.e. if medium term momentum turns south that would mean that the long term cash (pension funds etc.) are pulling out together with the short term momentum flows.

So this is a very crucial time in the market. This brief correction is a bit of a fake-out and will suck in the dumb money which usually represents the final stage of a long term bull run i.e. everyone piles in thinking the crash is over and all is well again. Then the hurricane hits. So while it's probably OK to bounce around sideways trading the markets for a few weeks now, we need to watch that medium term momentum line. When short and long term investors act together i.e. short and medium term momentum goes concurrent then you need to sit up and take action.


176
Shares / USD:ZAR and EUR:USD
« on: October 02, 2014, 07:13:55 pm »
Looks like EUR:USD forming a bottom and potential upside breakout of this medium term strong Dollar. US stocks should start recovering as USD weakens and ZAR should also strengthen a little from here. However, gold likely to fall or at best stay flat, unless news out about rate increases.

I'm calling around 11.10 for next week USD:ZAR (currently 11.22) and both US and SA equities to consolidate and bounce around sideways here for a bit. Following that, if equities go south from there we can all pack up shop because that could be a nightmare ride into the end of the year. I think the Dow should find a floor at 16650 (currently around 16770).

177
Shares / Re: Where are things going? Your opinion
« on: October 02, 2014, 07:05:15 pm »
As MoneyPenny has said, the only place for spare cash to go this year has been equities. This is because the Fed has basically closed down all other options by keeping interest rates low and frozen.

The belief is building that rates will now start to increase. US jobs are getting better and the US economy is starting to pump again. China is weak which is why most commodities are still downbeat. I expect a little more downside (perhaps another 5%) on equities but next week should be a decent recovery (dead cat bounce) for stocks. I would look to start picking up some DOW or ALSI futures from tomorrow but on the very light side. Once momentum turns positive again and confirms the recovery then would increase long position.

178
Shares / Re: Commodities
« on: October 02, 2014, 07:01:17 pm »
In terms of iron ore, all is definitely not well. There is a huge oversupply situation and everyone wants to hang onto their production just in case prices recover. Everyone knows that the majors (BHP, Rio and Vale) are trying to force everyone else out of business by oversupplying so it is a battle of egos and debt service cover ratios right now. The forward curve for iron ore is slightly positive so you will probably see some hedging of future supplies. Expect iron ore producers to be reporting flat results for many months to come. SA producers might get some uplift from weak Rand but USD:ZAR also looks like it might have had its run for now.

I also think equities should now be at a relatively safe level to start buying back in now. However, expect some bouncy price action as the market tries to find the floor here...

179
Shares / Re: Commodities
« on: October 02, 2014, 11:57:41 am »

Yup, I was head of the metals and energy desk for a large investment bank. Now I only trade commodity futures and options in spare time. I couldn't really be bothered with share trading because once you've tasted the thrills (and spills) of commodity trading there really is no other equivalent.

If anyone wants any specific insight into commodities etc. then feel free to get in touch. I am connected to all the major commodity brokers and get daily market updates from London, Geneva, Singapore etc.

Out of interest, what seems to happen in the commodity world only seems to get picked up by share traders a few months down the line. For instance, I could have told you in July that iron ore prices were falling out of bed and that all was not well in China land. However, it's only in the last month or so that share traders have sold down their holdings in Kumba, Assore etc.  I only realised this by recently checking out the share prices. I could have made a fortune by shorting these shares early on but I just assumed they would be falling and didn't bother to check....  I can tell you for free now that there are a few coal shares on the JSE that you should probably be avoiding (Keaton, Buffalo, COAL, WCC) due to their debt exposure and links to international coal price....

180
Shares / Re: Commodities
« on: October 01, 2014, 06:16:24 pm »
In terms of resource shares, Exxaro probably represents a nice play on coal and renewable energy i.e. a great hedge going forward. Eskom coal sales will provide them with nice, profitable annuity earnings whilst they build out their renewable wind and solar projects with Tata through Cennergi. Iron ore will continue to lose money for them but they have written their West African iron ore off and locally Kumba is still making money at current FOB iron ore prices, although only just....

Glencore is probably the most overvalued resource stock relative to the other resource plays. Although they have bought back shares this will probably end up losing them money and their trading engine is structurally set on bullish mode most of the time. Their acquisition of Xstrata now looks quite expensive and they have wrung as much cost savings out of these assets as they can already.

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