TIB: Today I Bought (and Sold) - An Investors Journal #117 - Philips, German Banks, Bitcoin Segwit

European Banks want to move higher. A patient wait for Dutch Electronics giant, Philips pays handsomely. And the Bitcoin price jitters may have found a base.

Bought

Commerzbank AG (CBK.DE): German Bank. I have written a lot about Commerzbank as it is one of the core planks of my European Banking investments. The long term chart since pre-GFC (2008) looks really ugly. It is hard to see where the sellers are going to come from.

The short term chart looks a lot more robust with price testing the 2013 lows in late 2016 and bouncing into a solid trend making higher highs and higher lows steadily since then.

Price has been over €10 for nearly a month. I am holding a number of strike 10 and strike 12 call options (with different expiries). Today I added some December 2021 strike 14 call options. Premium was 12% which is a litle higher than I like to pay BUT it was exactly the same percentage difference between 10 and 12 strikes to that between 12 and 14. With four and half years to go to expiry I fully expect Commerzbank to get back to and above the 2014 highs. I will take profits on the strike 10 calls when price passes the next strike up in the staircase of options.

This use of options replaces the stock that I had to deliver when the covered calls were assigned last week.

Sold

Koninklijke Philips NV (PHIA.AS): Dutch Electronics. Sold December 2018 strike 28 call options for 51% profit since April 2015. Overall series profit is 145% since August 2014 starting with strike 24 call options (same expiry). Closing price was €32.75. My initial investment in Philips was based on a Price to Book Value screen rather than a pure breakout screen. Let's look at a weekly chart going back to the time before the GFC.

Price collapsed back to the GFC lows in the European debt crisis and then made a solid move ahead to pass the 2011 highs. Those heights were a bit heady and price pulled back in mid 2014. This is when Philips appeared on a screen - price was consolidating and showing signs of life. The chart shows the options rollup process.

1. Buy strike 24 call options - Aug 2014
2. Roll up to strike 26 call options - Jan 2015 (49% profit)
3. Roll up to strike 28 call options - Apr 2015 (22% profit)
4. Sell 28 call options - Jul 2017 (51% profit)

What the chart also shows is the power of long dated options. From the time those 28 strikes were bought, they stayed out-the-money for 2 whole years AND there are still 18 months to go. It feels kind of hard to be WRONG for 2 years. Why then did I sell? I suspect it is the psychology of watching this holding look so bad for so long - I just ran out of patience. The chart does have another clue - price just passed the pre-GFC highs (the top dotted green line).

One more comment to add on the latest news headline presented below. Price has just made a 10 year high and the journalists use words like plunge - do not be duped by the language. The chart tells a different story.

Cryptocurency

Bitcoin (BTCUSD): Bitcoin news remains mixed looking at the August 1 date which is looming with only 70.6% Segwit blocks mined and 532 blocks needed for lock in. Which words should investors believe? - "not fear, chaos, fundamental conflict, forking the blockchain".

Price is giving some clues. It pushed through the 0.382 Fibonacci level and is testing the next one down (2nd blue arrow from the top) [Note: 0.50 is not really a Fibonacci level but the market does often respect it]. That level is also one of the reversals (up and down) in the last series of price moves (the dotted red line).

I am going to read all the news flow before I put in a pending trade above yesterday's high. If that is triggered that would make yesterday's bar a low test bar testing a level and it would be a ring low.

The Coin Telegraph article argues that there is no need for investors to fear the creation of two Bitcoin - Bitcoin (BTC) and Bitcoin Cash (BCC). BCC becomes another altcoin which will be exchangeable for BTC. BCC will continue to build their vision and it will develop a value proposition in its own right. Their image summarises things well

https://cointelegraph.com/news/bitcoin-investors-should-not-fear-august-1-chain-split

What they do not do in the article is draw detailed comparisons with what happened when Ethereum did its hard fork following the DAO hack in July 2016. Ethereum (ETH) price has recovered from that debacle in an amazing way and Ethereum Classic is still around. Well it is more than around - since the fork it (black bars) has gone up 817% compared to Ethereum's (orange line) 1456%. I know I still hold both ETH and some ETC created during the hard fork from my Ethereum mining activity.

Currency Trades

Forex Robot did not close trades and is trading at a negative equity level of 4.4% (higher than prior day's 4.3%). You can follow the robot live at http://mymark.mx/LiveUSITech

Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas.

Images: I own the rights to use and edit the Buy Sell image. The Philips headline comes from Yahoo Finance. The BTC news headlines come from Google Search. The BCC image comes from CoinTelegraph.com. All other images are created using my various trading and charting platforms. They are all my own work

Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers

Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices

Bitcoin: If you want a low cost way to enter Bitcoin, you can buy a package for as low as €50 (in Bitcoin) and earn Bitcoin at a rate way better than your bank could offer - think weeks instead of months. http://mymark.mx/USIBitcoin

Forex: You can start your own forex robot trading if you have a reasonable amount of capital to start (I recommend $5,000 or more as that gives you more trading pairs and lower negative equity). Software is a one-off lifetime fee of €600. Register at http://mymark.mx/USITech

July 26, 2017