TIB: Today I Bought (and Sold) - An Investors Journal #225 - US Banks, eSports

US inflation surprises to the downside. Good news for markets. eSports has been a strong growth story. I find a way to participate via an ASX listed penny stock. There are a few

Portfolio News

US Inflation US inflation data came in softer than markets were expecting at monthly rate of 0.2% (0.3% expected).

Whew!!! Everyone heaved a sigh of relief that the Federal Reserve would not have to chase through more rate hikes. I find this market to be quite amazing. I have not read anything in the Federal Reserve speeches or statements that suggests to me they are going to do anything rash. Maybe the problem is they do have a track record of over-reacting too. My senses is that they do learn and the big mistakes will not be repeated.

This more optimistic mood was good and bad for my positioning - stocks went up. Interest rate shorts went down and positions long the US Dollar went down. On balance it was more up than down. What it did do was take the eye off the Iran and Emerging Markets stories for a while. Malysia ETF shares did rise too higher than my pending order had been set - no discount for me

https://www.reuters.com/article/global-markets/global-markets-dollar-yields-slide-on-soft-u-s-inflation-stocks-rally-idUSL1N1SH22L

Or did it? Israel chose this day to attack (supposedly) Iranian targets in Syria.

Bought

eSports Mogul Asia Pacific Limited (ESH.AX): eSports. Competitive online gaming is growing. During the week Electronic Arts announced results which surprised the markets to the upside. One of the drivers of growth was eSports

Fiscal 2018 was a year of strong growth and continued transformation for Electronic Arts, as we expanded the reach of our leading franchises like FIFA, Battlefield and The Sims to more players across more platforms and geographies

https://www.businesswire.com/news/home/20180508006640/en/Electronic-Arts-Reports-Q4-FY18-Full-Year

The talking heads talked about 3 US-based stocks to consider. Electronic Arts (EA), Take Two Interactive (TTWO) and Activision (ATVI). Add to that Chinese stock Tencent (0700.HK). I am already exposed to Tencent through holdings in the Guggenheim China Technology ETF (CQQQ) which has 9.78% of its holdings in Tencent. I looked at buy:sell charts for each and felt they had already moved ahead. Here is the buy:sell for Electronic Arts against the US S&P500 for the last 5 years. [Means: Buy the first named stock and sell the second named stock. If the chart goes up the first named stock is outperforming. If the chart goes down the second named stock is outperforming]

EA has outperformed the S&P500 robustly over the last 4 years - since the start of 2014 though trading has been a little more sideways from mid 2017. This chart did not inspire me to chase EA. Context is S&P500 has gone up 66% in those 5 years

If there is an opportunity, it emerges on the comparison chart of the 3 stocks against S&P500. TTWO (orange line +612%) leads and ATVI (+387% - yellow line) lags which gives a percentage gap of over 200% points.

What makes for a winning games and eSports franchise? Like all these entertainment industries it will be quality content and subscriber growth. The next chart shows what I had in my mind. I have added in the Hong Kong listing for Tencent in green (0700.HK). Now there is a currency impact in here as Tencent is listed in Hong Kong Dollars though the HKD is pegged to the US Dollar. Using the OTC listing in the US shows the same shape. Tencent has outperformed especially in 2014 and early 2018 - its customers are in Asia which is a strong growth market for eSports.

I have previously had good resuls trading options in TTWO and holding Activision. Somehow the subject matter has slipped my attention since the last profits on TTWO were banked. I wanted to find a way back in. My wife has been talking about an eSports stock in her portfolio that is listed in Australia. The business is building a gaming platform in Asia Pacific and now Latin America. Subscriber base is growing and they are now "deeply integrated with the world's biggest eSports game, League of Legends"

http://www.esportmogul.com/irm/PDF/1524_0/QuarterlyActivitiesUpdate

The price chart shows some challenges.

Price collapsed after the completion of the reverse listing in November 2016 and tried to break out one year later. [Prior history is not relevant]. This coincides with the beta launch of the new Mogul Arena. That breakout was short lived and the lows were fully tested until the April break up which coincided with the launch in Latin America and announcement of 390% increase in subscribers. Price has since reached a high of 2.4 cents and dropped back 15 to 20% in the last few days. I added a small parcel at 2.2 cents (I took the market price) and I have a pending order to double my position at 2 cents which is were the upper support line is.

Income Trades

One of my pending roders was hit overnight with a week to go. With the CPI numbers coming in softer, bank shares jumped. This is weird too as normally bank shares would drop when yields drop.

Bank of America Corporation (BAC): US Bank. Sold May 2018 strike 31.5 calls for 0.49% premium (1.12% to purchase price). Closing price $30.72 (lower than last month). Price needs to move another 2.5% to reach the sold strike (tighter than last month). Should price pass the sold strike I book a 136% capital gain. Income to date amounts to 5.9% of purchase cost. With one week to expiry I am OK to take half the normal premium with only 2.5% to go on price. When I set the trade up 2 weeks ago, there was 5% to go.

Cryptocurency

Bitcoin (BTCUSD): Price range for the day was $406 (4.3% of the high) for anoter low volatility day.

Maybe I got excited when I posted yesterday about the succession of higher lows. Price broke that pattern and made a lower low and closed below the support line. Price does remain in the channel it has been trading in since April 18

Note: chart is a 4 hour chart today.

CryptoBots

Outsourced Bot No closed trades on this account. Problem children was increased by one with TRX (a new trade) reaching this list with -10% (>10% down) - (16 coins) - ETH, ZEC (-45%), DASH, TRX, ADA, PPT, DGD, ENG, GAS, STRAT, NEO, ETC, QTUM, ARK, BTG, XMR. This robot requires one to choose 15 coins to trade for each robot. I am hard pressed to identify 15 coins that I am comfortable to trade - i.e., that are not prone to pump and dump and that have solid business propositions. The problem children list is now one whole robot worth of coins.

Profit Trailer Bot No closed trades with 10 coins sitting on the Dollar Cost Average (DCA) list and all but EOS doing a lot worse on the day. AION dropped below 30% down.

I did open up the robot to allow 2 more trades.

New Trading Bot Positions worsened by more than 30% to 25.3% (was 19.6%)

Change driven by drops in all coins with one NEO position now over 50% down.

Currency Trades

Forex Robot did not close any trades and is trading at a negative equity level of 20.5% (lower than prior day's 23.3%). Whew!!

Outsourced MAM account Actions to Wealth closed out one trade for 0.06% loss for the day.

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. News headlines come from Google Search. 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: Get started with mining Bitcoin for as little as $25 http://mymark.mx/Galaxy. Galaxy also offers an eSports opportunity

May 10, 2018