How to get the market to work for you

Monday, 30 July 2018
Melbourne, Australia
By Bernd Struben

  • Is oil still set to tumble?
  • Lebanon sees the light

I don’t want to work for the market. I want the market to work for me.’

Veteran stock trader, Jason McIntosh

Earlier this month, quant trading guru Jason McIntosh ran a special online seminar called ‘Trade Secrets’.

During the course of the seminar he revealed five of his top trading secrets. These are some of the same methods that enabled Jason to make millions of dollars from his own trades…and retire from the trading floor by the age of 37.

I told you all about this seven-day seminar in Port Phillip Insider before it kicked off. I hope you took the time to sign up and tune in. And I hope you learned as much from it as I did.

Readers who did sign up were also extended an offer to join Jason’s premium trading service, Quant Trader. Membership has remained closed to everyone else.

Why?

As Jason says, ‘Because if there are too many people on the 5:05 Trading System…it just won’t work.

At time of writing there are still a handful of openings left to join Jason and receive daily expert stock picks. These daily recommendations may be to go long or short, depending on how the market or a particular stock is trending.

The idea, in a nutshell, is to always keep you on the right side of any trend.

You should have received an email…or two…today letting you know that the offer to join Quant Trader has been temporarily extended to all paid subscribers to any of our advisory services. Meaning you…

Do note though that when I say ‘temporarily extended’ I’m not joking.

This offer ends at midnight tonight (AEST).

You can find out all about Jason’s ‘5:05 Trading System’ — and see if it may be right for you — by clicking here.

Now a look at the markets.

Markets

Over the weekend the Dow Jones Industrial Average closed down 76.01 points, or 0.30%.

The S&P 500 lost 18.62 points, or 0.66%.

In Europe the Euro Stoxx 50 index finished up 17.92 points, or 0.51%. Meanwhile, the FTSE 100 gained 0.50%, and Germany’s DAX added 51.17 points, or 0.40%.

In Asian markets, Japan’s Nikkei 225 is down 145.48 points, or 0.64%. China’s CSI 300 is down 0.37%.

In Australia, the S&P/ASX 200 is down 24.83 points, or 0.39%.

On the commodities markets, West Texas Intermediate crude oil is US$68.94 per barrel. Brent crude is US$74.30 per barrel.

That puts both Brent and WTI up a few cents per barrel since I wrote to you last Wednesday.

(More on oil below…)

Turning to gold, the yellow metal is trading for US$1,223.70 (AU$1,653.20) per troy ounce. Silver is US$15.50 (AU$20.94) per troy ounce.

One bitcoin is worth US$8,121.25.

The Aussie dollar is worth 74.02 US cents.

Is oil still set to tumble?

Regular readers will know I’ve been forecasting the WTI price will drop below US$60 per barrel by the end of September. But it’s unlikely to get there in a straight line.

Investors are increasingly spooked by potential supply disruptions in the always turbulent Middle East. And they’re worried that Russia and Saudi Arabia won’t be able to make up for the 2.5 million barrels per day that could disappear from the market if US sanctions against Iran work as intended.

These concerns have seen the oil bulls returning to the futures markets, betting on higher prices ahead.

From Bloomberg:

Money managers boosted their net-long position — the difference between bets on rising prices and wagers on a decline — in Brent crude by 4.1 percent after cutting them the most since 2016 a week earlier.’

You can see the precipitous fall and small bounce back in Brent long positions below.



chart image

Source: Bloomberg
Click to enlarge

It’s worth noting that the turnaround in sentiment isn’t based on any breaking news. It’s really the same fears of possible conflict with Iran, who have threatened to shut down vital shipping access via the Strait of Hormuz.

But Iran has made these threats before. And you have to imagine the regime is aware that following through on this threat would see a decisive US military response.

Over on the other side of the world, oil bulls point to bottlenecks in pipeline construction in the oil rich Permian Basin in Texas and New Mexico to support rising prices.

Noah Barrett is an energy research analyst at Janus Henderson Investors. According to Bloomberg, he had the following to say over the logjams in the Permian Basin:

U.S. production will continue to grow, but it probably won’t exceed expectations. It’s more likely it will disappoint to the downside.’

Look, anything is possible. But I expect that while production jams are keeping a temporary cap on WTI supplies, those bottlenecks won’t persist.

And according to the Energy Information Administration, the US is producing 11 million barrels of crude a day. That’s right around record levels.

In short, while oil prices could still track higher over the next month, I still expect WTI to fall back below US$60 per barrel by the end of northern summer. Well ahead of the US mid-term elections.

If you’re of a similar mind and are looking for a way to gain as the oil price falls, you might want to consider the US-listed ProShares UltraShort Bloomberg Crude Oil ETF.

This is an inverse ETF, meaning it moves in the opposite direction as the oil price. It’s also a double leveraged ETF, intended to deliver roughly a 2% gain for every 1% fall in the oil price.

Now I don’t make official recommendations in Port Phillip Insider.

You should do your own research before investing a single dollar. And be aware that leveraged investments carry extra risk.

While this ETF could double your gains if the oil price falls, you will also lose twice as much if the oil price doesn’t cooperate and rises instead.

That’s a wrap for oil.

Now we turn to the world’s newest soft commodity.

Lebanon sees the light

I’m speaking, of course, about cannabis.

Now I’m sure you know that marijuana isn’t actually a new commodity. Far from it.

As the Drug Enforcement Administration Museum (great source, eh?) notes:

The oldest known written record on cannabis use comes from the Chinese Emperor Shen Nung in 2727 B.C. Ancient Greeks and Romans were also familiar with cannabis, while in the Middle East, use spread throughout the Islamic empire to North Africa. In 1545 cannabis spread to the western hemisphere…’

That’s almost 5,000 years of recorded use. And, to the best of my knowledge, not a single death has been attributed directly and solely to the use of cannabis over that entire time frame.

If only water were as safe.

While reliable statistics are hard to come by, it’s estimated that at least a dozen people die each year from drinking too much water too fast. It’s called hyperhydration. Yet you won’t find any warnings…or images of swollen brains caused by excessive hydration…adorning your bottled water.

Cannabis, on the other hand, continues to fight an uphill battle to reverse decades of government endorsed propaganda demonising its use.

As the DEA Museum website also notes:

Having no current accepted medical use in the United States and a high potential for abuse, cannabis is a Schedule I controlled substance.’

A Schedule I controlled substance is the highest level you can get in the US. That puts cannabis right up there with methamphetamines.

Well that’s the Federal government for you. A giant bureaucracy like that will always be five steps behind the cutting edge. They’re leaving it up to individual states and other countries to blaze this trail for them.

A few weeks ago, I wrote to you about Thailand moving to legalise medicinal marijuana. It’s such a massive and potentially lucrative new market, more and more nations want their slice of it.

Lebanon is among the latest countries to be eyeing legalising its medicinal cultivation, sale and use.

The following headline comes from The Financial Times, ‘Lebanon weighs legalising marijuana as best means to lift economy’. The article continues:

In a laboratory in the town of Byblos, Mohammad Mroueh is working to unlock what some hope will be the secret to solving Lebanon’s economic woes: cannabis.

Mr Mroueh and his team at the Lebanese American University (LAU) in May launched the country’s — and the Arab world’s — first medicinal marijuana research centre. “Why do you want to leave only Canada and Australia to compete to be number one in exporting medicinal cannabis,” said Mr Mroueh. “Why not Lebanon?”

These kinds of stories are music to small-cap investing expert, Sam Volkering’s ears.

Here’s what he wrote last month:

Every time government rams a sledgehammer through cannabis prohibition, tiny pot stocks soar multiples higher.

On 24 February 2016, the Australian government announced a series of initiatives to legalise cannabis for medical and scientific purposes.

The moment that happened, Aussie pot play Auscann Group began to surge upwards. Investors who got in just as Auscann began to take off in early March 2016, are sitting on gains as high as 28,700%.

Sam’s been atop the pot stock story since the get-go. And he’s currently recommending one particular Aussie-listed pot play he believes is set to shoot up as much as 495%.

He explains exactly why this stock tops his list of pot plays here.

Finally, here’s the latest on the Super Saturday by-election, from The Australian Tribune:

‘Shorten Slips in Polls While Crowing Over By-Election Wins’

My policies are more fair dinkum than their policies.”

So said Opposition Leader Bill Shorten following Saturday’s by-election wins for the incumbent Labor members.

But Shorten should know it’s considered bad manners to crow about your perceived victories. Especially with the latest Newspoll showing the Opposition leader losing ground.

That’s right. The coalition was…

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another, then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd