This could change everything

Tuesday, 2 July 2019
Adelaide, Australia
By Bernd Struben

  • Boring no more
  • And the RBA…

Do you know what happens in two days?

A glance at your calendar will confirm that’s 4 July.

Or in the US, the Fourth of July.

It’s a national holiday, so US markets will be closed on Thursday.

Millions of dollars will go up in smoke in ear-splitting pyrotechnic displays. Cringe-worthy amounts of Budweiser will be quaffed. And the website mentalfloss tells me Americans will eat upwards of 150 million hotdogs. Or enough to stretch from Sydney to Perth more than five times.

All this to celebrate the Founding Fathers giving King George the finger back in 1776. That came with the formal adoption of the Declaration of Independence on 4 July.

Having grown up in the States, I can tell you it’s a big deal there.

But for Aussie investors, on this 4 July there’s something far more important going on. Something that could change the way you approach investing…forever.

This is the day our sister company, Agora Financial Australia (AFAU), releases the first of a four-part trading series to Port Phillip Publishing’s paying subscribers.

It’s called ‘The ASX Algo-Edge’. But what it’s called isn’t really important.

What is important is that over four days, starting this Thursday, AFAU’s publisher, James Woodburn kicks off the trading series with a very special guest…a former Morgan Stanley wealth manager.

This isn’t just any former Morgan Stanley wealth manager either. I’ll tell you a bit more about the man himself tomorrow.

Today I want to give you a peek at how the Algo-Edge trading method — detailed in the upcoming four-part series — has the potential to supercharge your gains in the stock markets.

Now if you’re a buy and hold investor this probably isn’t for you.

But if you’re comfortable buying and selling shares in six different stocks — generally adjusting your position no more than once per week — you’ll be interested in the graph below:



chart image
Source: Thomas Meyer
NOTE: All figures shown above exclude trading fees, taxes and dividends

Click to enlarge


Let me explain what you’re looking at.

The black line is the 10-year share price performance for Qantas Airways Ltd [ASX:QAN]. Those are the returns you would have gotten if you bought and held shares in QAN for the last decade.

And Qantas hasn’t done badly for buy and hold investors. It’s up roughly 100% since mid-2009.

The yellow band is called the ‘transition zone’. I won’t go into the details of why that zone is important today. That’s all covered in the upcoming trading series.

Now check out the green line. These are the hypothetical returns you could have gotten from QAN stock using the Algo-Edge trading method.

I say ‘hypothetical’, because the above data is derived from back-testing. I want to be clear on that.

But as you can see from the back-testing, your potential gains on Qantas stock — using the methods James is set to reveal this Thursday — could have outperformed buy-and-hold investors by 195%.

That works out to an overall gain of 298%. And it all comes down to buying when the trend is up, selling when the trend is down, or cashing out when the trend takes a breather.

As you can see, we’re talking about a long-term investment horizon here. This is not a get rich quick scheme. Rather it’s about learning to use a system that allows you to trade more intelligently and confidently employing sophisticated Wall Street algorithms.

Again, James and his special guest will walk you through this in their four-part trading series, the ASX Algo-Edge.

The trading series is available free to our paying subscribers here at Port Phillip Publishing. To join in, you’ll just need to register with your email address. And then remember to tune in at 1pm AEST on Thursday, the Fourth of July.

To register, just click here.

Now to the markets…

Markets

Overnight, the Dow Jones Industrial Average closed up 117.47 points, or 0.44%.

The S&P 500 closed up 22.57 points, or 0.77%.

In Europe, the Euro Stoxx 50 index finished up 23.90 points, or 0.69%. Meanwhile, the FTSE 100 gained 0.97%, and Germany’s DAX closed up 122.58 points, or 0.99%.

In Asian markets, Japan’s Nikkei 225 is up 39.12 points, or 0.18%. China’s CSI 300 is down 0.05%.

In Australia, the S&P/ASX 200 is up 1.10 points, or 0.02%.

On the commodities markets, West Texas Intermediate crude oil is US$58.68 per barrel. Brent crude is US$64.77 per barrel.

That’s a 1.4% drop in WTI and a 1.6% in Brent since this time yesterday. And that fall comes despite OPEC+ announcing a nine-month extension to existing production cuts. You can imagine the rout that would have happened if the cartel failed to reach an agreement.

But the production cuts come with a price tag for OPEC’s members. Yesterday I mentioned how the reduced crude output has slashed Saudi Arabia’s economic growth in half.

Further highlighting why I believe OPEC’s supply restrictions are doomed to failure in the not too distant future, here’s this from Bloomberg:

Originally envisioned as a short-term fix in 2017 to drain excess global stockpiles, the repeated decisions to keep rolling the cuts forward shows the challenge of controlling the oil market in the age of shale. While the strategy has succeeded in raising prices, the Organization of Petroleum Exporting Countries’ share of the global oil market has fallen to the lowest since 1991.’

In other words, OPEC’s market manipulating prowess is at 28-year lows. And with US production only set to grow for the next five or more years, I reckon their happy union will fracture in 2020…if not before.

Turning to gold, the yellow metal is trading for US$1,389.32 (AU$1,994.14) per troy ounce. Silver is US$15.18 (AU$21.79) per troy ounce.

One bitcoin is worth US$9,936.68.

The Aussie dollar is worth 69.67 US cents.

Boring no more

There’s nothing like a commodity hitting a six-year high to get everyone talking about it. And wondering whether it’s too late to pile in…

I’m talking about gold, of course. The yellow metal hit a six-year high last week.

Since then it’s pulled back a touch, currently trading at US$1,389.32.

While that represents another small drop in prices overnight in US dollars, gold actually closed up $10.75 in Aussie dollars. That’s because the Australian dollar lost ground on the greenback.

While gold is priced in US dollars in international markets, it’s important to keep an eye on its price in Australian dollars as well. That’s the price that most impacts our miners and producers.

Have a look at the five-year Aussie dollar gold price chart below:



chart image
Source: Optuma / Crisis & Opportunity
Click to enlarge

You don’t need to be a whiz at technical analysis to recognise the healthy uptrend we’re seeing here.

And since gold hit a low in December 2014, some Australian miners have been making hay. Like Saracen Mineral Holdings Ltd [ASX:SAR], which is up over 1,600%. Or Northern Star Resources Ltd [ASX:NST], which has seen its share price rocket up 1,100%.

Now as I mentioned, the gold price (even in Aussie dollars) has pulled back a bit since last week’s highs. But after its rapid run higher, that was to be expected.

Ross Norman is the chief executive officer of gold brokerage Sharps Pixley Ltd. He’s quoted by Bloomberg as saying, ‘Gold was well overdue a period of consolidation and gold bulls should welcome it. This provides a welcome entry point.

And here’s what our editorial director, Greg Canavan, wrote in The Rum Rebellion this morning:

The best hedge against the collective madness of central banks is gold. Right now, you’re seeing a nice little correction play out in the gold price. That’s to be expected after such a strong run.

But as I’ve said before, this is a correction to buy. I think gold’s move is only just getting started.

Greg has very good reasons for thinking gold’s move higher is only just getting started.

And the ‘collective madness of central banks’ and the potential for major blowouts in global uncertainties are only the tip of the iceberg.

You see, Greg’s research has led him to a shocking conclusion. One which no one in the mainstream financial media appears vaguely aware of. And one which could see gold set new price records not only in Australian dollars. But in US dollars, the Japanese yen, the euro…

He reveals all in a brand-new research report.

Keep an eye out for that next week.

And the RBA…

Cuts rates to 1.0%.

That’s another new record low following on last month’s cut to 1.25%.

And yes, that means our contrarian editorial team was wrong. Yesterday our editors (myself included) voted seven to one that the RBA would hold off for another month or two before its next cut.

Influenced by wishful thinking, no doubt.

On the ASX investors appear to be cheering the news…with a bout of selling.

The ASX 200 fell 0.4% shortly after the RBA’s announcement.

Perhaps they’re finally cottoning on that bad news is…well…bad news.

Cheers,
Bernd