JB Hi-Fi: Short Squeeze Coming Or Another Peak?

I have mentioned it before, I generally don’t like to trade against large market short positions in stocks that are in strong downtrends. More often than not, the big hedge funds know something the rest of the market does not and invariably they win. Big time. Large short positions in recent years over the mining services companies, Myer, Slater & Gordon, Dick Smith and so on have all netted large profits.

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Sell In May And Go Away – Rotation

Around 80% of the time markets and stocks actually move nowhere. They gyrate and consolidate and when they do rise or fall to new highs or lows, it actually occurs in a very small window of time. Take a look at any stock or index and you will see that the vast number of time spent doing nothing. One of the factors that contribute to this is seasonal. The old saying is “Sell in May and Go Away” and as we approach this typically weak period (or at the very least a period with no direction at all), markets have enjoyed a strong comeback from the dismal start to the year.

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Extending One’s Trading Horizon In Search Of Profits – Tesla

As a proprietary trader whose income solely relies on the accumulation of profits it is important to be able to continually find new trading opportunities AND profit for them. A great trading idea doesn’t necessarily translate into profits if it isn’t executed well. Yes in my earlier years (and even still now) I have had great trade ideas that were right, but I executed poorly and lost money.

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The US Isn’t Leading The World This Time

I noted in my March 17 column of the ongoing downside risks for the US dollar against the Yen and how tentative it looked technically for another leg to the downside. The past week has seen further weakness that is also dragging the Nikkei lower. The same has occurred with the Euro rallying and now being a drag on European equity indices. The large exporters are suffering as their native currencies appreciate and this weighing on share prices.

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Next Phase For Structural Monitoring Systems

There are a few very key reasons why I am not a long-term investor. Evidence. Pure and simple. There is little evidence of companies that have successfully emerged from small-caps into mid-caps and continued to grow into large-cap companies AND stay there. Taking a guess, in my experience, I would say 95% of companies fail at some point in their growth cycle and return back to where they started.

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Media Focus On Australian Housing Collapse

I am sure most of you saw the 60 Minutes segment on the approaching housing collapse in Australia and then a similar article in the AFR on Thursday, referencing some on the ground research conducted by Jonathan Tepper of Variant Perception. The on-air segment and article highlighted some of the very key points that I had highlighted since December last year warning investors to exit the banks due to their extreme leverage to a decline in property values, volumes and construction activity. Moreover this slowdown is coming at a time.

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Beware Of Banks – Warning Number 3

Readers have probably grown tired of my consistent bearish outlook on markets since November 2015 where I warned about an impending market retreat of significant proportions. I warned that sky high prices for asset managers – like Magellan, Bankers Trust, Platinum, IOOF and Macquarie Bank – were all due for a serious drop. Blow me over, surprise, surprise they have declined almost 25% just in 2016.

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Rewind: Who Was Bearish At End Of 2015?

That’s right. Just me. Happy to be corrected but I sifted through all the research that comes across my desk and found almost nobody warning about the impending implosion in equities at the start of 2016. Not only that nobody had the foresight to tell readers what risks would be present for any potential sell off let alone tell you there would be a sell off. A major one. Worst start to the year for equities in history. C’mon fellas you can do better than that.

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Fed Hike Too Little, Too Late – Beware Of 2016!

After calling for an early Xmas rally to come in October following the August correction, we have been highlighting the extensive risks that have been building across financial markets. Some of these risks have been apparent all year long – such as our long-held view that a GFC-style collapse emerging in junk bonds and emerging markets – but now, we see more and more reasons for investors to turn cautious and in reality, bearish.

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Market Rally Fizzling, Changing Tides – Still Cautious

After calling for a short covering rally in October – the best gains of the year – a few weeks ago we suggested the market rally was fizzling and that it was time to return to being cautious. As of last night that view still remains and we continue to see some significant changes in global financial markets that are worrisome for equity markets. As we noted in that column, equities have cornered themselves to a point where under a normal distribution of outcomes are at a high probability of falling.

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Starpharma – The Next Big Australian Biotech

One of the main keys to maximizing returns from your capital is not just about riding a stock for its entire rally, it’s also about not committing capital during those periods when a stock is consolidating, resting or undergoing a lengthy consolidation. Look at virtually any stock and for at least 50% of the time there is actually no appreciation. Its typically two steps forward one step back – and that’s in the case of a share price in an actual long-term uptrend.

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Price Action That Repeats = Opportunity

As investors and traders our goal is to profit from future moves in prices of the assets we buy or sell. We obviously all use different techniques to try and predict what these future moves will be which includes anything from astronomy to economics to cash flow to technical anlaysis and everything inbetween. Some like myself like to use a combination of few different techniques and placing greater or less emphasis on any one method, depends on what my actual investment goal is – short-term, long-term or even which asset class I am trading.

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Late Stage Bull Market: Changes In Trends – Gold

Since 2009 I have been an equity market bull and since the start of 2013 when the S&P 500 broke to a fresh record high, my bullishness was turned up to “11”. That also translated to being one of the biggest haters of gold, a useless commodity during times of intense asset price inflation. Asset price inflation and normal goods inflation are entirely different concepts and one doesn’t not necessarily lead to the other. Hence, we have seen the gold market littered with the corpses of gold bugs over the past 3 years. Their view of central bank stimulus eventually leading to an asset market collapse as rampant inflation drive gold into a major boom. They may be eventually correct but being right and making money are very separate things, and one doesn’t guarantee the other. Timing is everything.

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One Week On – Is 2015 Still Like 2011?

Last week we highlighted the similarities between the performance of equity markets in 2011 with that of 2015 and it seems others this week have followed suit as I have read several articles comparing the two periods. Interestingly not all conclusions drawn were the same as mine with some chartists literally trying to follow the performance of 2015 to the day with that of 2011. Sorry guys it won’t work like that for reasons I gave in the article last week.

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Tracking Similar To 2011

Last week we highlighted the ramifications of no Fed rate hike which would be further weakness in equity markets and all week markets have been on the decline. The price action reminded me very much of what occurred back then during the European debt crisis and the S&P 500 downgrading US debt causing an aggressive correction in global markets.

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Structural Monitoring Systems – Changing Aviation Safety

In recent weeks and months I have been discussing global markets as a whole from a macro level identifying the risks and opportunities that exist as the world enters the late stages of what has been one of the most untrusted and hated bull markets of our time. This week I wanted to return back to local soil and discuss the only stock we hold in our proprietary trading book long-term.

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Miners Turning To Tech – 1999 All Over Again?

While the broader ASX 200 index has produced very little return over the past two years as miners have offset the gains seen in US dollar earners – even bank share prices are no better than two years ago – there is one area of the market that is beginning to froth. Micro-caps and in particular small miners, that are turning to buying technology companies in a bid to divert their business away from the resources collapse.

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Global Money Flows – Winners And Losers

We have been discussing some global macro themes in recent months and what we are likely to see as a result of the Fed tightening rates. Obviously one major thematic which has been a firm trend over the past 18 months is the strength of the US dollar. The repercussions of this strength falls heavily on emerging market economies – Latin America, Asia and the Middle East.

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Gold – How Low Can It Go?

Gold has been on the back foot for several years now despite goldbugs consistently telling us to buy the precious metal as it is important hedge against inflation and the eventual demise in asset prices around the world. Both of these upcoming events were apparently meant to have occurred already due to the money printing of global central banks and as we have seen none of this has occurred.

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Markets Brewing – Further Signs Of Euphoric Rally

Back on 26 June I wrote about the euphoric rally that is still to come that will be the cherry on the top of this global equity bull market, a bull market that has existed for virtually everyone except Australian ASX investors. Following the expected short-term weakness surrounding Greece and the realization that the Fed will raise rates in September, conditions are near perfect for an enormous rally – particularly in some key sectors – over the course of the next six to nine months.

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Nearmap Flying High In The USA

It’s time for me to revert back to individual stock opportunities. The past few weeks we have been discussing the global macro picture and some of the clues that other markets and instruments have been giving as clues to the future behaviour of equities. Sometimes though despite the broader market trends there are standout individual companies and one of these that excites us once again is Nearmap (NEA) which is now expanding into the US and gaining a lot of traction. Hence the share price improvement.

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