Sideways markets are always times to tread warily. A quiet trading week with only a few very specific additions in mining areas and a few crypto trades.
Portfolio News
In a week where S&P 500 rose 0.28% and Europe rose 0.23%, my pension portfolio dropped 0.83%. Apart from transferring funds out to pay pensions, the drags were uranium, marijuana and a few specific US stocks like Fiverr International (FVRR) down 6.5% and CleanSpark (CLSK) down 15%. Drop in Bitcoin price on selling from Binance as they locked down Palestinian assets.
Big movers of the week were Euro Manganese (EMN.AX) (55.6%), Pantera Minerals (PFE.AX) (33.3%), NeuRizer (NRZ.AX) (25%), Sun Silver (SS1.AX) (22.2%), Premier American Uranium (PUR.V) (20.9%), Blue Star Helium (BNL.AX) (20%), AML3D (AL3.AX) (16.7%), TechGen Metals (TG1.AX) (15.6%), CoreNickelCo (CNCO.CN) (14.3%), VHM Limited (VHM.AX) (13%), Seven West Media (SWM.AX) (12.5%), Loop Industries (LOOP) (12.4%), Bayhorse Silver (BHS.V) (11.1%), Zinc of Ireland (ZMI.AX) (10%)
A mixed bag of only 14 big movers of which 10 are listed on ASX. The long term themes seem to have one stock apiece apart from battery metals (4 stock) - critical materials (1 stock), lithium (1 stock), alternate energy (1 stock), uranium (1 stock), rare earths (1 stock) and there are two silver miners.
Nervous week for US markets ahead of Nvidia (NVDA) earnings and GDP and inflation data due at the end of the week. Data was all good enough and markets bounced out of the nervous state.
Crypto Sags
Crypto markets dip on news that Binance took action on accounts linked to Palestine. That triggered something of a flight from Bitcoin and from Binance. The details of the action are less clear - supposedly enforcing anti-money laundering rules.
https://cointelegraph.com/news/binance-seize-funds-palestine-israel
Bitcoin price drifted lower all week with one large drop on 4 hour chart at the time the Palestine story broke (the blue arrow). Price ended 9.5% lower on the week with a peak to trough range of 11.1%
Ethereum followed suit ending the week 10.3% down with a peak to trough range of 12.6%. The chart looks a little different as price dropped below the range it was in for most of August
Worst in my portfolios was Polygon (MATIC) dropping 23%. They are in the process of migrating the MATIC token to POL token. This will be a 1 for 1 automatic process - many holders get nervous and sell.
Going against the trend was Helium (HNTBTC) bouncing off the 50 day moving average and popping 34%
Litecoin (LTCETH) has a similar bounce with a pop of 12% up on the week
Uranium Holdings
The buzz in uranium markets from the Kazatomprom earnings on Aug 26 disappeared as investors focused on a small slide in spot prices. Did make a few small additions - cannot help adding a little when the market shows signs of life. The overall portfolio dropped 1.9% in value.
Overall weighting of uranium in the portfolios is a rounding difference at 16.6% - still a bit high. Global X Uranium ETF (URA) went up one place pushing EnCore Energy (EU) down. The share of Others went up 0.5 percentage points with all 3 additions made in those counters.
Changes in the stocks by stages were small with 0.4 percentage point drop in ETF's matched by the same increase in Explorers.
Saw a tweet in the week asking whether we are early in this trade. That got me looking at charts of uranium prices. It is important to look at long term contract prices rather than spot. Found a set of charts on Cameco website. They publish both using a monthly average. Term prices are based on UxC and TradeDesk data.
Focus on the top chart first - it shows the recent run up in prices. Note the divergence between the contract price (lower line) and the spot price. The drop in the spot price certainly spooked investors who do not grasp the important of the term price in contracting. The answer to the are we early question all hinges on whether the dip in price is going to keep going. The term price chart tells the answer - it is still rising.
Now focus on the bottom chart going back to the last cycle. Its peak is higher than the current cycle - that suggests to me we are not early - we are in the right time. AND there may still be time to join the trade before the long term contracting cycle kicks into gear again
Been a while since I compared total holdings to the Sprott Uranium ETFS - first table looks at Sprott Uranium Miners (URNM). Under invested in the Top 3 and over-invested in a few (the ringed ones). Given the challenges facing Cameco and Kazatomprom, that is probably not a bad thing. Of those, two are producing or close to producing and one is physical (YCA.L) which makes up some of the gap. The notable part is the Top 15 account for 89% of the ETF and only 53% of my holdings. One of the important differences is these ETFs do not invest in enrichment stocks.
The next table compares with Sprott Junior Uranium Miners (URNJ) and shows 2 ae a little higher (the first 2 ringed) and IsoEnergy (ISO.TO) is a bit high. Portfolio holdings are less than half the 89% in the Top 15. Lesson from this is when prices start to move the time is to start making the switch and consolidate into the top 10 of the URNJ list (5 to 15 of the URNM list).
Alternate Energy Holdings
Alternate Energy stocks were also a little hit this week with a drop in value of 0.5%. The additions include 30% of one stock as it has a wide range of other base metals in the portfolio and the inclusion of one ASX stock. The fact Panther Metals (PFE.AX) made the big movers list had me reviewing it. It has purchased disused oil well tenements in the Smackover and are starting the process of testing the salt brines for lithium. Inclusion was at market value (well below purchase price). It is the largest non-oil player holding the tenements. Watch out for Exxon Mobil and the likes entering lithium from their oil well tenements.
Holdings as a percentage of the portfolio creeps up a little to 11.3%. No change in the ranking of the Top 10. Found an error in the chart - Others has 21 counters with the addition of one this last week (last week should have been 20).
Bought
Mineral Resources Limited (MIN.AX): Base Metals/Lithium. Added to position in personal portfolio. That was bad timing as results came out after trade time and were worse than expected on the back of falling prices.
Read a report from Intelligent Investor (whose idea it was) arguing that the long run view is appreciably better than the number suggests as this is a lot more than a lithium and iron ore play. It is a mining services play. What they do is get a development opportunity to production and win the services contract - that is where the cash flow is.
Uranium Royalty Corp (UROY): Uranium. Saw a tweet highlighting a "bullish kicker candle"
Without looking at the charts any further, added a small first parcel the managed portfolio looking to follow up the Kazatomprom news momentum. Now to look at the chart in the cold light of day
Two levels of support below current price come from a weekly chart one of which is at the bottom of a multi-month down run. There is also a support and resistance line from the daily chart which has support levels from the recent down run and both support and resistance in 2023. Short term trends are down (downward sloping red lines) but price has made higher low and higher high since reversing (upward sloping trend line). Nothing says a lot about direction to come other than there is strong support down below and a reversal off one of those levels.
**What is Uranium Royalty? **
Uranium Royalty Corp (URC) is focused on gaining exposure to uranium prices by making strategic investments in uranium interests, including royalties, streams, debt and equity in uranium companies, as well as through physical uranium transactions.
Through opportunistic market purchases, the supply stream with CGN Global, and its strategic arrangement with London-listed Yellow Cake plc, URC holds interests in physical uranium, acquired at cyclical lows. And the option to purchase physical uranium from Yellow Cake
These options is what had me categorise holdings in UROY as close to physical uranium. The profile of royalty projects is quite mixed with 4 in production, 4 near to production and 4 in advanced stages probably producing from 2027 onwards and 6 in development with no indications of when production might begin. (My analysis)
https://www.uraniumroyalty.com/portfolio/
ASX listed uranium stocks could not follow up the Monday momentum after the Kazatomprom earnings and drifted all week. Some buyers emerged just before close of trade (also close of month) on Friday (Aug 30). Added to two holdings in personal portfolio to average down entry prices.
DevEx Resources (DEV.AX): Uranium/Rare Earths. Explorer. Alligator River Uranium Province (ARUP), Northern Territory, Australia and Kennedy rare earths explorer in Queensland. Latest announcement is solid leach test results on Kennedy. There are also a few base metals explorations.
Bannerman Energy (BMN.AX): Uranium. Developer. Etango, Namibia. Latest investor presentation points to potential of increased life of mine at higher throughput levels.
ASX Portfolio
The segment reports trading in ASX fractional share portfolio. Trade entries are made based on stock screens looking for undervalued stocks (price to book, price earnings, price to sales) that are showing technical signs of breaking a downtrend. Exits are made at 35% profit or 25% if 52 week high is lower than 35% advance. New buys are in $400 lots. Scale ins and top ups in $200 lots
Top Ups
Sims Ltd (SGM.AX): Steel. Dividend yield 1.10%. Ex date Oct 1
Chart shows price has made several touches of the support line and has broken the downtrend. Trade averages down entry price. Will be looking to exit at breakeven should price get back to the early 2024 highs.
Resimac Group Ltd (RMC.AX): Financial Services. Dividend yield 8.50%. Ex date Sep 5
Chart is a bit of a repeat of a post from January 2024 with price making a run and not holding momentum, 3 times in a row. Those numbers were put on the chart last trade. The red support level comes from that time too - good to see price did reverse after dropping below that level and starting to move higher. Latest Australian inflation numbers are still a little high which means there could be another month before rates are cut - Resimac needs rate cuts.
TPG Telecom Ltd (TPG.AX): Telecom. Dividend yield 3.90%. Ex date Sep 12
Chart shows the weakness of the strategy with first trade entered toward the top of a longish cycle up (even though it was at the first buy signal). As the idea is to find stocks that are breaking up, this entry was a bad choice. Best left alone. Price could not hold the momentum to break out of the descending channel. The process of topping up helps in recovery some of the time with 3 buy signals all averaging down entry price (even though each one is near the top of a mini-cycle)
Sold
Bega Cheese Ltd (BGA.AX): Food. 39% blended profit since Decemvber 2022/March/April/November 2023
A chart to show the strategy running a full cycle. First entry when price broke the post covid lows and then had one more attempt at breaking up and failing. Then the last entry shows my preferred entry type - reversal off the lows and then breaking upwards. The tough call is whether price could go back to make new highs - too bad.
Hedging Trades
The Technology Select Sector SPDR Fund (XLK): US Technology. Nvidia (NVDA) is scheduled to deliver earnings after close of August 28. Options trades in the market suggest there is a potential for a $300 billion swing. Now the article suggests the swing could be to the upside and the options traders do not want to miss out.
https://finance.yahoo.com/news/nvidia-results-could-spur-record-162916666.html
What I have learned over time is market always over-reacts and if there is any downside surprise the swing could be ugly the other way. Two of my portfolios are already short strike 210 sold puts with September 13 expiry. With price opening at $219.78 (Aug 27), that is 4.65% away.
Entered a September 20 215/207.5 ratio put spread to provide some cover in the event that price did drop. Wanted the bought put (215) to be above the existing sold put strike (210) and to slot in a sold put at a lower strike. This provides protection for a drop in price of 3.5% and 5.9% from the $222.49 close (Aug 27). The risk in the trade widens to a move 7.2% lower. What this leaves is 3 sold put contracts that are naked at two strikes and one bear put spread.
[Means: Ratio Spread. Sell more options than one buys with sold premium funding bought premium. ]
Cryptocurrency
A few purchases to start the week
Decentraland (MANAETH): Virtual Reality Platform
Chart shows the downtrend broken and the formation of a short term uptrend. Good chance the moving averages will cross over. Previous trade entry some time back is off the chart (up)
The Graph (GRTETH): Ethereum Indexing Protocol
Chart shows price has dropped since the last entry and traded sideways for nearly two months and sagged again and then reversing with a break higher taking price above the top of the last consolidation zone.
**IoTex ** (IOTXETH): Internet of Things Ecosystem.
Chart shows price reversing off level similar to the last entry (left hand blue ray) and pushing higher without the moving averages crossing. Last high is a higher high and the moving averages just cross over after the one month high is made
Income Trades
Quiet week with only 3 covered calls written across four portfolios (Europe 1 US 2)
Naked Puts
ChargePoint Holdings (CHPT): Electric Vehicles. With the expiry of the call spread risk reversal this month, figured that the most effective way to trade ChargePoint was to sell naked puts at the strike used there (1.50). In the whole of 2024, price has spent only a few weeks lower. Business is either going to go bust or take off. Return 4.7% Coverage 24%
Credit Spreads
No spreads in place - exercise risk is higher than cash available in the pension portfolio.
With 3 weeks to go to options expiry, work needed to kick the can down the road on a few sold puts. There are some that can be closed out profitably. There are also a few long standing positions that can be reduced - take the losses and move on.
ResourcesCautions: 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. Crypto tickers come from TradingView
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
Investing: Interactive Brokers provides comprehensive global markets coverage with very competitive commissions. Open an account to earn up to USD 1,000 in IBKR stock. https://mclnks.com/ibkr
Crypto Trading: Binance offers a wide range of coins to trade, tight spreads and low fees if you use BNB to pay https://mymark.mx/Binance
Kucoin offers a wider range of altcoins than many of the other exchanges. I do like to diversify my holdings in case an exchange gets knocked over. Grab 15% discount on your trades when you open an account on this link https://mclnks.com/kucoin15
Gate.io offers a solid range of coins many of which have been delisted elsewhere. Have chosen to share the commission rebates. 40% is the rate - split 30% for me and you get to keep 10% for any people you invite. https://mclnks.com/gateio
Tracking: Keeping track of your crypto trades is a whole lot easier with CoinTracking.info. Get 10% off all your account upgrades https://mymark.mx/CoinTracking
Aus/NZ Investing Sharesies provides low cost, fractional share investing for Australian and New Zealand residents covering stocks in those countries and US. Start investing with as little as $20 https://mclnks.com/shares
August 26-30, 2024
Very good market analysis, thanks for the update
Thanks - I keep writing it down so I can come back and learn from the good and the bad