Monday, 27 June 2016

BAC, DB - financials smashed

With world capital markets still upset from the BREXIT, financial stocks remained under severe downward pressure. Bank of America (BAC) and Deutsche Bank (DB), settled lower by -6.3% and -5.5% respectively. Near term outlook threatens a brief bounce, but mid/long term outlook is dire.. due to low/negative rates.


BAC, daily



DB, daily



Summary

Suffice to add... real ugly, not least for DB that is an obvious systemic risk to the EU.

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BAC looks set for $10/9s. If DB implodes (literally).. then BAC to $5.

As central banks keep rates low/negative, the financials are going to remain under broad downward pressure. The recent geo-political upset is only adding to the problems.

Saturday, 25 June 2016

TVIX, UVXY - a third week of gains

With the BREXIT shocking world capital markets, equities saw severe weakness, with the VIX soaring into the weekend. The 2x lev' bullish instruments of TVIX and UVXY managed a third consecutive net weekly gain, higher by 6.8% and 7.4% respectively. Near term outlook threatens VIX 30s.


TVIX, daily



UVXY, daily



Summary

*first, an update on the VIX, which saw a powerful net weekly gain of 32.7%


In the near term, the VIX 28/32 zone looks a relatively easy target. If sp'1950/25, then VIX 35/45.
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As for TVIX and UVXY, the net weekly gains are not exactly inspiring, relative to the gain in the VIX.

However, Friday did show that TVIX/UVXY do have their moments of glory. If would seem another 50/60% upside is viable next week... if the main market declines by at least a further 4%.

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*I am long VIX, via option calls, and hold across the weekend, seeking my next exit in the 30s.

Thursday, 23 June 2016

BAC - bizarrely strong

Whilst the main market closed broadly higher - ahead of the UK vote, there was notable strength in financials, with Bank of America (BAC), settling +3.2% @ $14.04. Considering the Fed appear increasingly concerned about the growth/jobs outlook, a rate hike in the near term looks extremely unlikely, and that will surely keep BAC pinned lower.


BAC, daily



BAC, monthly



Summary

BAC is my most favoured of financial stocks.. at least from a 'safety' perspective.

In terms of price, BAC is a real mess, having been broadly stuck under the resistance of the $17/18s since spring 2014. Indeed, it has been a full TWO years, and with a Feb' low of $10.91, BAC remains unable to break up and away, as the Fed - along with other central banks, refuse to raise rates.

The financials are going to suffer for as long as rates remain low... or as is the case in the EU/Japan... actual negative rates.

Even Deutsche Bank (DB) has been loudly proclaiming NIRP as threatening the very social fabric of the EU.
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Until BAC can clear the 200dma - currently in the $15s, I can't take the current rally seriously.

From a grander perspective, the bull maniacs need to see BAC attain a monthly close in the $18s to have real confidence that 'everything is going to be fine' in the long term.

... and frankly... that looks almost impossible to see any time within the next few years, as the Fed aren't even going to raise rates above 1%... as market consensus would agree with.

Wednesday, 22 June 2016

TSLA - the market is not pleased

Whilst the main market closed moderately weak, there was very severe downside in Tesla Motors (TSLA), which settled -10.4% @ $196.66. The takeover bid for Solarcity (SCTY) has resulted in almost all analysts turning their backs on the once greatly favoured CEO of Musk.


TSLA, daily



Summary

A rough day for TSLA stock holders, as the big $200 threshold failed to hold. There were some clear 'bargain hunters' appearing at the open, but with renewed latter day weakness.

Just one of many analysts...



Oppenheimer have finally awoken to the fact that $385 is a rather nonsensical upside target.

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To be clear, I like TSLA as an innovative company, but the underlying (if not obvious) issue is that TSLA does NOT make money.

The fact Musk now wants TSLA to take on the debts and cash-hungry company of SCTY seems borderline madness, and its somewhat a relief to see even the mainstream recognise it.

I'd not consider buying TSLA even at the Feb' low of $141.05. Maybe the 50/40s would be tempting, but even then, until TSLA makes it clear that it intends to turn a profit, there seems zero point in getting involved.

Tuesday, 21 June 2016

NFLX - broadly struggling

Whilst the main market closed moderately higher, there was notable weakness in Netflix (NFLX), which settled lower by a rather significant -3.0% @ $90.97. If the main market can't break to the upside, and instead implodes, NFLX will decline to at least $70, with a secondary target of 50/45.


NFLX, daily



NFLX, monthly



Summary

Suffice to add... great shows.. some of the finest TV ever produced.

NFLX is set to increase fees for some of its services, and that is a good thing, even if some of the customers leave.

However, market valuation remains insane, and even Mr Market is no longer tolerant of this once beloved momo stock.

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*I would consider picking up in the $50s later this year, as I'm a fan of anything Marvel related.

Bullish the Defenders !