My personal portfolio: A new medium-term trade opened
David Fuller's view Although I have been thinking about buying the ASX 200
(weekly 10-yr, weekly
5-yr & daily) for a while, this
is partly an intuitive trade following the election result which should be good
for the economy. Also, I have previously mentioned that the cyclical mining
sector should see a late, partial catch-up recovery as we have often seen in
previous bull markets. There are risks in any position, not least at this time
given the uncertainties which have roiled most markets (more on this below).
The ASX 200 is testing previous resistance from its May highs, although it has
been consolidating earlier gains, in my opinion, by ranging higher over recent
weeks. I bought shortly after noon today (GMT), paying 5228.5 including spread-bet
dealing costs, for a September position which will face a rollover on the 19th.
I opened my Nikkei (weekly & daily) long too soon on 1st August but it has moved back into positive territory in recent days. I hold the September position which expires early next week. However, I am likely to roll it forward because the pattern looks like a medium-term consolidation and is only the first real pause in Japan's bull market. I continue to regard Japan as one of the more promising markets, given Shinzo Abe's reflationary efforts. I may also reopen a yen short, possibly against the USD, shown inversely (weekly & daily) because I expect an eventual upward breakout from the current range. I also hold a China long via the JPMorgan Chinese Investment Trust (JMC LN) (weekly & daily), for which I have a December contract. This was purchased way too soon on 17th May but is now close to breakeven and has a 10% discount to NAV.
Inevitably, markets have been churned by the USA's proposed strike last week against Bashar Assad's military supplies in response to his regime's probable gas attack against its rivals. First, markets understandably took fright because the strike appeared imminent. Then it was postponed pending US Congress' vote. Now it could be permanently off, given Russian-led efforts to persuade Assad to surrender his chemical weapons. President Obama certainly seems more relaxed following this proposal and understandably so. However, in news jargon this is still a breaking story. For instance, who will hold Assad accountable? Nevertheless, the immediate risk of a strike has been postponed. Some significant short covering has been underway this week, followed by some opportunistic buying, not least in markets that were at least temporarily oversold. Interestingly, IG Index now shows the percentage of short versus long trades in popular markets, held by their clients who are mainly institutional. From what I saw yesterday and today, there were clearly more short trades for stock market indices that I saw. They are proving to be contrary indicators.