TIB: Today I Bought (and Sold) - An Investors Journal #408 - Dutch Bank, US Bank, Commodities, Semiconductors, US Consumer Staples, Solar

US markets continue to move up to new highs. Banks stand out and I am buying again. Profit taking to release funds in semiconductors and out of patience in Europe and commodities. Good to see British Pound is not as bad as people think - well it is but Aussie Dollar is worse. Good for me as I spend Aussie and invest in Pounds.

Portfolio News

Market Rally

The rally marches on with S&P 500 and Nasdaq making new all time highs.

Big move for the day came from financial stocks, especially banks. The talking heads were all over the place talking up the fear about a correction and the Federal Reserve meeting this week. A look at the European headlines shows the sentiment

3 headlines each covering 3 places markets could be going. Spain election result helps - some stability perhaps.

Bought

Huntington Bancshares Incorporated (HBAN): US Regional Bank. Some days I watch markets open and see things. Banks hit the turning point in sentiment after a long spell of being undervalued. I added a small parcel in this regional bank to average down my entry price. Dividend yield 4.42% and Price to Book of 1.43 and Price to earnings of 9.74. Quick chart update which shows options trades under water - hence adding to stock. Price has made a higher low after the selloff and now looking to push to a higher high

ING Groep N.V. (INGA.AS): Dutch Bank. Reviewed the opportunity to add sold calls to the bought calls I am holding. Noted that in one of my portfolios I am holding December 2022 strike 14 call options. I averaged down my entry price at 6.7% of closing price. With closing price at €11.38, there is a lot of delta in this trade. I chose not to convert any of the trades to bull call spreads.

Sold

In one of my portfolios, I topped out the funding available under margin rules. Made a few sales to release funds.

Lam Research Corporation (LRCX): US Semiconductors. 14% profit since February 2019. Trimmed to take profits and release funds for other purchases. Remaining position is a half standard position.

Eurostoxx 50 (ESTX50): Europe Index. Sold December 2019 strike 3100 call options against index level of 3501 - 0.6% profit since December 2013. With the index 13% above the strike and only 0.6% in-the-money and 8 months to run, time to put the capital to better use. Out of patience.

Wisdom Tree Enhanced Commodity Fund (WCOB.L): Commodities. Sold this London listed holding to release British Pounds. 0.23% blended loss since July/August 2016 and January 2018. Loss was essentially trading costs. 2016 trades were profitable. In that time the Australian Dollar slipped between 5 and 7% against British Pound making the trade a profitable trade in Australian Dollar terms.

Consumer Staples Select Sector SPDR Fund (XLP): US Consumer Staples. Sold January 2020 strike 55 call options for 187% profit since May 2018. This trade was set up as a hedging trade at a time that Treasury yields had risen to around the dividend yield on this ETF (3% vs 3.19%). The view was these stocks would rise if the market corrected. Well that is exactly what happened and I was planning to exit at 50% profit level. I did not and have got another chance after the selloff. What is happening now is dividend yield on the ETF is way better than 10 year Treasury yields - at 2.53% today. Quick update on the chart - the price at entry time was $49.66 which pretty well timed the first turning point perfectly.

Price did indeed head up and got close to 100% in late 2018 and then got dragged down in the selloff. The January move by the Federal Reserve changed the profile for Treasury yields and that has driven the trade forward again. (See TIB240 for the base trade rationale - this chart shows this trade just closed. TIB240 shows a 52 strike call)

Why exit now? The CNBC Options Action talking heads reviewed the stock performance of the leading names (weights in brackets) in the ETF (like Coca Cola (KO - 10%) and Procter and Gamble (PG - 15%) and Pepsico (PEP - 10%). All produced good earnings but their prices did not move much. With most of the constituents already reported the thought was the chart is looking topppy and relative to S&P500 performance the sector is under performing.

They were looking to go short for a shorter term move through the end of earnings - if they were short, I wanted to bank the long profits. Quick note on profit percentage - much higher than the calculated profit as implied volatility has changed and the strike was strongly out-the-money at set up

Shorts

Consumer Staples Select Sector SPDR Fund (XLP): US Consumer Staples. CNBC Options Action idea was a short term put trade - simple uncomplicated stuff. I bought June 2019 strike 56 put options across all my portfolios. Now to look at the chart with different eyes - think levels

Since 2016, price made 3 higher highs. The 2018 high was a lower high which has just been passed in 2019. Each time price has got some distance away from the 50 day moving average (red line) it has dropped back. The RSI Stochastic momentum indicator (lower window) shows also that price has dropped a few weeks after reaching overbought high (2 out of 3 times).

Income Trades

Two new covered calls written

The Kraft Heinz Company (KHC): US Food Manufacture. Sold May 2019 strike 36 calls for 0.76% premium (0.71% to purchase price). Closing price $33.06 (lower than last trade). Price needs to move another 8.9% to reach the sold strike (tighter than last trade). Should price pass the sold strike I book a 3% capital gain. Income to date amounts to 2.2% of purchase cost.

SunPower Corporation (SPWR) Sold May 2019 strike 9 calls for 0.79% premium (0.84% to purchase price). Closing price $7.62 (higher than last trade). Price needs to move another 18.1% to reach the sold strike (easier than last trade). Should price pass the sold strike I book a 21% capital gain. Income to date amounts to 5.7% of purchase cost. Trade is now on full tranche of stock and not traded since November 2018.

Cryptocurency

Bitcoin (BTCUSD): Price range for the day was $120 (2.3% of the high). Price makes a drift lower probably looking for support around the long term $4995 support level

Ethereum (ETHUSD): Price range for the day was $8 (5.1% of the high). Price makes an engulfing bar closing just below the half way mark on the daily bar. This is starting to look like a resistance level is forming on the short term level around $159 (blue ray extended in pink). Hard to say if this will hold as price did hold above the previous lower low and it could well push higher quite hard.

CryptoBots

Profit Trailer Bot No closed trades

New Trading Bot Trading out using Crypto Prophecy. No closed trades.

Currency Trades

Australian Dollars (GBPAUD): Needed to raise Australian Dollars to fund the next two months of pension payments. Sold British Pounds raised from proceeds of Wisdom Tree Commodity sale. The rate equates to an appreciation of between 5 and 7 % from the time the WCOB trades were opened.

Outsourced MAM account Actions to Wealth closed out 1 trade on GBPJPY for 0.01% profits for the day. Trades open on AUDNZD, USDCHF, GBPJPY and EURCHF (0.04% positive negative). Not happy with JPY trades open with a 10 day Golden Week holiday closing all Japan markets - thin liquidity leads to flash crashes like the one we saw on AUD in January.

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

April 29, 2019