Category: Trading & Investment

For a few years I’ve had an account with Wells Fargo $WFC, and I’ve been relatively happy with their service. Today I lamented that I already had a fully diversified portfolio with no cash, otherwise I would have bought their stock just to show support for them standing up to gun-grabber activists. It’s rare to see a bank do that.

$WFC just got added to my watchlist, and I’ll definitely continue giving them my business.

The forces driving up oil, mostly OPEC and Saudi Arabia/Russia in particular, during earning’s season, have created a unique historical opportunity. The manic exuberance of investors is not yet at peek hysteria so I believe there is still money to be made in this sector. My currnet price prediction for oil is that it will end up at $81-$84 within the next 3 months, or come very close to that.

I predict there will be a couple of bumps in the road, but that the main drivers behind the rally are desperate to raise cash in advance of geopolitical instability. Russia in particular desperately needs to balance the negative effects of sanctions against them, and the US needs as many people as possible deeply invested in the petrodollar to try and stave off China’s attempts to supplant them.

I don’t know who will win this fight, China is far more cocky than it should be, inspite of the gross incompetence of American leadership, America has historically had a margin for stupidity, whether or not the US has pushed it too far, I don’t know.

I expect socialists in Venezuela to continue running their oil production into the ground due to the upward adjustment of ideologically pure administrators. PDVSA is proud of its mixture of ideology and production, and like the Soviet Union, it will be awhile before the shit results have a significant number of people turning on their representatives. I expect Western countries to continue to try to push Venezuela over the edge, but Russian and Chinese interference is a distinct possibility throughout South America.

I expect that the failures of $TSLA are also contributing to the rally in fossil fuels, while I have started to look positively on the company for the long term future, the short term chaos in production has dealt a serious blow to the electric car activists, and that kind of rhetoric is less likely to affect weak minded investors.

The Yijing says: #56 Lǚ, Itinerant troops: 1st Changing line: The wanderer is trivial and petty, chopping up his position and seizing calamities.

A first impression is extremely important. Often it cannot be undone, and even if one can show one’s real intentions later, it will never be really convincing.

Update – $HP 10:45 AM

Holy Shit that was a scary drop no? That’ll teach me to open a position when the stock is pressing the upper Bollinger Band, I’m not much for technical analysis, but I had an inclination when looking at the chart that I should wait for a larger correction. Maybe that was my spidey senses tingling. Anyway, $HP dropped something like $1.80+ in 30 minutes. On the largest position I’ve ever opened. Yeah, that’ll do your head in.

Update – China in South America

Many people might not be aware of China’s forays into South America, as I mentioned earlier in the post. Then this comes out: China Sets Its Sights On First South American Refinery. Nobody expects The Chinese Inquisition. How do you say Struggle Session in spanish?

Update – $HP 10:10 AM

Massive selloff at the start of trading for $HP, down 40 cents in less than 15 minutes. Early volume to the downside. Man – red is scary sometimes.

Bullish sentiment returned to $HP, and I began looking favorably again at one of my favorite companies, Helmerich and Payne. After selling off my position in $DNKN for a tidy profit, I was looking for something else to trade. $HP had been ranging the day previously, and I was unsure about my Energy perspective that day (the 17th, perhaps wrongly considering the gap up of $BP), but new reports of declining inventories, and Saudi Arabia broadening it’s target price from $80 to between $80 and $100 per barrel was worth a second look.

A problem, emotionally, that I’ve been facing is lacking confidence in trade ideas. I spent so long waiting for Oil, I allowed my worries to get the best of me and was too timid to take a risk and hold a position over Tuesday. In August I was 6 steps ahead, on Mondays I was 1 step behind. I need to learn to calibrate that to only being 1-2 steps ahead of my trade ideas.

Time will tell, tomorrow could have a black swan event, or hell, just generally bad news, and I could get my face ripped off through my ass. Ah, the life of a retail trader. I’m seriously considering getting Anton Kreil’s equities course, just to have a more solid fundamentals and macroeconomic understanding of trading. I feel unsure about my positions because I can see there are gaps in my understanding about how it all fits together. Just having an opinion on world politics, or culture, doesn’t cut it. You need to have practical understanding of market mechanics, risk management, positioning and so on. And don’t say you can get it free on the internet, you can’t. I spent 2 years researching the markets and economics before I even opened a trading account and there are still fundamental gaps.

Anyway, today WTI consolidated 3.40% gains, ending up at a new high of $68.77 and closing on the gap with %BRENT trading at $73.81.

I waited for the dip at the end of the day, which is usual for $HP especially, and opened a new position at $73.99. $HP continued to fall with a massive selloff, people taking profit to consolidate gains. The end of day sell and buy volume dwarfed earlier moves, after opening my position, $HP fell to 73.48 before a final rally with 2 minutes left to trade gaining 11 cents to finish trading at 73.60.

Picking the bottom is always hard, sometimes with really bullish sentiment, $HP can rally much faster and higher at the end of the day. Chalk it up to my inexperience trading, but then again, catching that falling knife is a fool’s errand. I’m happy enough with my position as it is, and I look forward to tomorrows ups and downs. As long as the position continues to look good going into the coming days and weeks, I might stick with it for awhile.

My prediction is that $HP will make a new high before on or before Friday. I expect moves in the range of 1.5-2% to continue to be standard. Barring any bad news, $HP should do well, considering it is a favorite to beat earnings (practically a shoe in), so we’ll see how the market is affected by the expectation.

Here’s hoping the Oil Industry doesn’t rip my face off with a black swan event.

Accuracy Update 4/18/2018

Interestingly, Oil stalled, and BP didn’t go anywhere. Because I was unsure about the sector, I decided not to re-invest and have moved on to Service Restaurants sector. I am still keeping a close eye on the Oil sector, but it seems to be ranging for the time being. While Oil is progressing, stocks related to them such as $HP and $BP are stuggling.

Another reason I decided to leave the Oil & Energy sector for this week is that a lot of people became very positive/excited about Oil. I prefer to buy the rumor and sell the rally, once everybody starts being maximally optimistic (the Bulls win) I prefer to sell. This is I suppose, the Value Investing/Templeton approach, buy at the moment of maximum pessimism and sell at the moment of maximum optimism.

For the record, my stint from August 2017 to April 2018 in the Oil and Energy sector got me 20.1% return on my invested capital, which I am very happy with.


Original Article Follows

I was considering investing in $BP today. I decided to do an I-Ching and got #2 The Receptive, with changing lines 1 and 4.

When there is hoarfrost underfoot,
Solid ice is not far off.

Just as the light-giving power represents life, so the dark power, the shadowy, represents death. When the first hoarfrost comes in the autumn, the power of darkness and cold is just at its beginning. After these first warnings, signs of death will gradually multiply, until, in obedience to immutable laws, stark winter with its ice is here. In life it is the same. After certain scarcely noticeable signs of decay have appeared, they go on increasing until final dissolution comes. But in life precautions can be taken by heeding the first signs of decay and checking them in time.

A tied-up sack. No blame, no praise.

The dark element opens when it moves and closes when at rest. The strictest reticence is indicated here. The time is dangerous , because any degree of prominence leads either to the enmity of irresistible antagonists if one challenges them or to misconceived recognition if one is complaisant. Therefore a man ought to maintain reserve, be it in solitude or in the turmoil of the world, for there too he can hide himself so well that no one knows him.

Now I am curious.

My reading of the first part is that BP may not be a good long term investment. That couples with the second part which seems to indicate that BP is weak to antagonism from competing forces. As it stands now, $BP is trading at $42.78. I’ll be interested to see how and if this applies at all.

Here is an alternate reading:

Treading on hoarfrost, hard ice is arriving.

Every thing and every time has its Dao. The earlier one sees the signs of this Dao, the better one can act according to it. One’s degree of sight and insight decides about the direction one’s life might take. One’s ability to act in time decides if it actually will.
If you want to marry her, then go for it. But if you are not certain you want the solid ice, then now is the moment to save your ass. In both cases waiting a little bit too long can cause lots of suffering.

Enclosed in a bag. Without fault, without praise.

Don’t judge or choose about good and evil. It narrows the mind and makes it unfit to follow the time. Earth does not choose, it gives every being room for its own Dao.
Many things seem important but are not at all essential for life. Simply stop thinking about them and life comes back in all its splendor: because you keep silent. It is like watching wild animals, they come only if you are not-present, but part of them.

Interesting video.

How Significant Is WTI’s Breakout?

Suggests Oil might be trading in a new range. Mostly based on past data and technical analysis. Nothing original geopolitically, member of the causationsphere, thinking that trouble in the middle east affects oil, instead of oil effecting trouble in the middle east.

The Real Worry for Oil Prices Isn’t Missiles Over Syria

Pure mindless speculation. Unoriginal in every sense. Has some decent data on Syria, Russia and Venezuela. Specifically production in Venezuela and Mexico has conveniently fallen precipitously. Production from Syria has been conveniently non-existent since 2011, most of Syria’s oil needs are being met by Iran. Russia is exporting 4.5 mbd, it has actually benefited from the tensions.

Oil, gold open lower despite Syria strikes; Russian retaliation in focus

Really good article. Lots to chew on, with details on Asia (specifically Japan). I think they’re right that we are likely to see a lot of selling today. It’s monday after all.

Oil may be about to spike, and JPMorgan has trades to play it

Very good article, good details, and some interesting information about institutional positions on the Energy sector. While today and this week I think we’ll see heavy selling, I don’t think it will be enough to severely impact the gains in Oil. I agree there’s the possibility for a “golden age” of energy and energy related stocks for the next 6 months. With the Iran Sanctions issue coming up in may, there’s a nice sword of Damocles over the whole sector. Oil has been trading up long enough to have gotten people’s tastebuds wet for more oil action.

The main rumor that will be going around now is Iran and the Oil sector getting disrupted by Trump not extending the sanctions waiver. That could take Iranian oil off the market, which has already seen it’s recent oil glut conveniently dry up. With that rumor/idea circulating, and Trump’s proven ability to randomly tweet the most perfectly market quaking rhetoric, we’re in for a bumpy ride.

Oil Investors Rally Behind the Rally With Record Bets on Rise

Interesting to see shorts and longs in WTI dropping. It’s a small drop, but I think some people were shocked/unsure about oil. Long positions in %BRENT have increased

i-Ching casting for today:

16. Yü / Enthusiasm

above CHêN THE AROUSING, THUNDER
below K’UN THE RECEPTIVE, EARTH

The strong line in the fourth place, that of the leading official, meets with response and obedience from all the other lines, which are all weak. The attribute of the upper trigram, Chên, is movement; the attributes of K’un, the lower, are obedience and devotion. This begins a movement that meets with devotion and therefore inspires enthusiasm, carrying all with it. Of great importance, furthermore, is the law of movement along the line of least resistance, which in this hexagram is enunciated as the law for natural events and for human life.

THE JUDGMENT

ENTHUSIASM. It furthers one to install helpers
And to set armies marching.

The time of ENTHUSIASM derives from the fact that there is at hand an eminent man who is in sympathy with the spirit of the people and acts in accord with it. Hence he finds universal and willing obedience. To arouse enthusiasm it is necessary for a man to adjust himself and his ordinances to the character of those whom he has to lead. The inviolability of natural laws rests on this principle of movement along the line of least resistance. Theses laws are not forces external to things but represent the harmony of movement immanent in them. That is why the celestial bodies do not deviate from their orbits and why all events in nature occur with fixed regularity. It is the same with human society: only such laws are rooted in popular sentiment can be enforced, while laws violating this sentiment merely arouse resentment. Again, it is enthusiasm that enables us to install helpers for the completion of an undertaking without fear of secret opposition. It is enthusiasm too that can unify mass movements, as in war, so that they achieve victory.

THE IMAGE

Thunder comes resounding out of the earth:
The image of ENTHUSIASM.
Thus the ancient kings made music
In order to honor merit,
And offered it with splendor
To the Supreme Deity,
Inviting their ancestors to be present.

When, at the beginning of summer, thunder–electrical energy–comes rushing forth from the earth again, and the first thunderstorm refreshes nature, a prolonged state of tension is resolved. Joy and relief make themselves felt. So too, music has power to ease tension within the heart and to loosen the grip of obscure emotions. The enthusiasm of the heart expresses itself involuntarily in a burst of song, in dance and rhythmic movement of the body. From immemorial times the inspiring effect of the invisible sound that moves all hearts, and draws them together, has mystified mankind. Rulers have made use of this natural taste for music; they elevated and regulated it. Music was looked upon as something serious and holy, designed to purify the feelings of men. It fell to music to glorify the virtues of heroes and thus to construct a bridge to the world of the unseen. In the temple men drew near to God with music and pantomimes (out of this later the theater developed). Religious feeling for the Creator of the world was united with the most sacred of human feelings, that of reverence for the ancestors. The ancestors were invited to these divine services as guests of the Ruler of Heaven and as representatives of humanity in the higher regions. This uniting of the human past with the Divinity in solemn moments of religious inspiration established the bond between God and man. The ruler who revered the Divinity in revering his ancestors became thereby the Son of Heaven, in whom the heavenly and the earthly world met in mystical contact. These ideas are the final summation of Chinese culture. Confucius has said of the great sacrifice at which these rites were performed: “He who could wholly comprehend this sacrifice could rule the world as though it were spinning on his hand.”

THE LINES

Nine in the fourth place means:

The source of enthusiasm.
He achieves great things.
Doubt not.
You gather friends around you
As a hair clasp gathers the hair.

This describes a man who is able to awaken enthusiasm through his own sureness and freedom from hesitation. He attracts people because he has no doubts and is wholly sincere. Owing to his confidence in them he wins their enthusiastic co-operation and attains success. Just as a clasp draws the hair together and hold it, so he draws man together by the support he gives them.

Six in the fifth place means:

Persistently ill, and still does not die.

Here enthusiasm is obstructed. A man is under constant pressure, which prevents him from breathing freely. However, this pressure has its advantage–it prevents him from consuming his powers in empty enthusiasm. Thus constant pressure can actually serve to keep one alive.

Six at the top means:
Deluded enthusiasm.
But if after completion one changes,
There is no blame.

It is a bad thing for a man to let himself be deluded by enthusiasm. But if this delusion has run its course, and he is still capable of changing, then he is freed of error. A sober awakening from false enthusiasm is quite possible and very favorable.