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MCR Asset Class Rotation Portfolio - Current Holdings August 10, 2018



Last Closed Trade: BUY November 16, 2017 @$7849 / SELL December 20, 2017 @$15,600 - Gain of 98.75%

Previous Bitcoin Trade closed November 11@$6339 with a 54.5% gain

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  • 01 July 2018 4:14 PM | MCR Market Report (Administrator)
    Stocks closed lower for the week as the tech-heavy NASDAQ Composite and smaller-cap indexes fared the worst after outperforming the previous week.  The Dow Jones Industrial Average lost 309 points last week closing at 24,271, a decline of 1.26%.  The NASDAQ Composite retreated -2.37% closing at 7,510.  By market cap, the large cap S&P 500 finished down -1.3%, while the mid cap S&P 400 and small cap Russell 2000 were off -1.9% and -2.5%, respectively.  For the month of June, the Dow Jones Industrial Average fell -0.6%, while the NASDAQ Composite was up 0.9%.  The large cap S&P 500 added 0.5%, the mid cap S&P 400 rose 0.3% and the small cap Russell 2000 gained 0.6%.  In the second quarter, the Dow Jones Industrial Average rose 0.7% and the NASDAQ Composite gained 6.3%.  The large cap S&P 500 added 2.9%, the mid cap S&P 400 rose 3.9%, and the small cap Russell 2000 surged 7.4%.

    In international markets, Canada’s TSX retraced all of last week’s gain falling -1%.  Across the Atlantic, the United Kingdom’s FTSE retreated -0.6%, while on Europe’s mainland it was a sea of red.  France’s CAC 40 ended down -1.2%, Germany’s DAX was off -2.2%, and Italy’s Milan FTSE finished down -1.2%.  It was a similar story in Asia.  China’s Shanghai Composite fell an additional -1.5%, its’ sixth consecutive down week.  Japan’s Nikkei 225 retreated -0.9%.  As grouped by Morgan Stanley Capital International, developed markets were off -1.2%, while emerging markets finished down -1.3%.  For the month of June, Canada’s TSX finished up 1.3%.  In Europe, the UK’s FTSE was off -0.5%, France’s CAC 40 fell -1.4%, Germany’s DAX lost -2.4%, and Italy’s Milan FTSE fell -0.7%.  In Asia, China’s Shanghai Composite plunged -8% while Japan’s Nikkei added 0.5%.  Developed markets finished the month of June down -1.6% while emerging markets were off -4.5%.  In the second quarter, Canada’s TSX rose 5.9%, the UK’s FTSE added 8.2%, France’s CAC 40 rose 3%, Germany’s DAX gained 1.7%, while Italy’s Milan FTSE retreated -3.5%.  China’s Shanghai Composite plunged -10.1% while Japan’s Nikkei 225 rose 4%.  Emerging markets lost -9.7% while developed markets were off -2%. 

    In commodities, precious metals traditionally thought of as a safe-haven in times of market distress failed to live up to their expectations with Gold falling -1.3% last week closing at $1254.50, while Silver gave up -1.6% ending the week at $16.20.  Energy, as measured by the price of West Texas Intermediate crude oil, surged over 8% last week finishing the week at $74.15 per barrel.  Copper, seen by some analysts as an indicator of world economic health due to its variety of industrial uses, retreated a third week in a row, down -2.0%.  In the month of June, Gold retreated -3.4% and silver was off -1.5%, while oil added 12.7%.  Copper finished the month down -4.2%.  In the second quarter, Gold retreated -6.1%, while silver was off -1%.  Oil surged almost 20%, up 19.5% while copper lost -2.9%.

    In economic news, the number of applications for new unemployment benefits rose for the first time in a month last week, according to the Labor Department.  Initial jobless claims climbed by 9,000 to 227,000 in the week ended June 23.  The reading exceeded economists’ forecasts of 220,000 new claims.  Despite the slight increase, initial claims remain near their lowest level in almost fifty years.  The more stable monthly average of new claims rose by a lesser 1,000 to 222,000.  Companies continue to report difficulty in finding qualified labor.  Continuing claims, which counts the number of people already receiving unemployment benefits fell by 21,000 to 1.71 million.  That number is reported with a one-week delay.

    Sales of new homes rebounded last month as healthy demand lifted sales 8.8% higher than in the same year-to-date period last year.  The Commerce Department reported new home sales ran at a seasonally-adjusted annual rate of 689,000 in May.  Consensus forecasts were for a selling pace of just 668,000.  The median sales price of a new home in May was $313,000.  At the current sales rate, there is a 5.2 months’ supply of homes on the market, down slightly from April.  The biggest challenge for the housing market continues to be the lack of supply on the market.  Stephen Stanley, chief economist for Amherst Pierpont Securities noted that the average sales pace for 2017 was 613,000 per month, and that “it appears that a gentle uptrend remains in place.”

    Along with sales, prices of homes are also on the rise.  The S&P/Case-Shiller national index rose a seasonally-adjusted 0.3% in April and is up 6.4% for the year.  The more narrowly-focused 20-city index rose a seasonally-adjusted 0.2% and is up 6.6% compared to a year ago.  While April’s pace of growth is still robust, with home prices exceeding inflation and wage growth, both the national index and 20-city index were down one tick from March’s reading.  In April, three cities saw double-digit annual gains—Seattle, San Francisco, and Las Vegas.  As of the latest reading, 10 out of the 20 cities tracked were higher than their peaks reached in 2006.  In its release, S&P Dow Jones Indices, the producer of the indexes, noted that Las Vegas is “the city with the longest road to a new high.”  Adjusted for inflation, Vegas is 47% lower than its bubble-era peak, despite being one of the hottest markets for several months recently.  The only metro area to show a monthly decline in April was New York, where recent tax law changes and a glut of new apartment supply may be weighing on housing.

    The National Association of Realtors index of pending home sales declined 0.5% to a four-month low of 105.9 in May.  The index tracks real-estate transactions in which a contract has been signed but the transaction has not yet closed.  The reading missed the Econoday forecast of a 0.6% increase and is down 2.2% from the same time last year.  It’s the fifth straight month of negative annual readings.  The NAR’s Chief Economist Lawrence Yun noted the story in the housing market continues to be about supply, not demand.  “Realtors in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.” 

    Overall growth in the U.S. economy remains strong, just not as much as originally reported.  In its latest revision, the Commerce Department reported growth in the first quarter was trimmed to 2% from 2.2%, in large part due to lower spending on health care and a somewhat smaller buildup in inventories.  The softer GDP reading in the first quarter is essentially a moot point now that the U.S. economy roared back in the spring with some estimates predicting it will achieve its fastest quarterly growth in 15 years.  Of note, consumer spending, the trendsetter for the broader economy, was revised down a tick to 0.9%, while nonprofits spent less on healthcare and households spent less on financial advice and insurance.  Business spending, however, was revised upward as fixed investment rose 7.5% instead of the 7.2% previously reported.  Most other figures in the GDP were little changed.

    Inflation has finally hit the Federal Reserve’s 2% target for the first time in six years.  The Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, rose 0.2%, along with the core rate that strips out the often-volatile food and energy sectors.  The rate of inflation over the past 12 months rose to 2.3%, its fastest pace since March 2012, while the core rate hit 2%--the Fed’s longstanding target.  In addition, the Commerce Department reported consumer spending rose 0.2% in May after a 0.5% gain in April.  Economists had predicted a 0.6% increase.  Economists had expected inflation to hit the Fed’s 2% target but not until later this summer.  Fed Chairman Jerome Powell welcomed the pickup in inflation at his last press conference and said that inflation may rise above the 2% target over the next few months given higher oil prices.  The Fed is picking up the pace of interest-rate hikes – it is now penciling in four increases in total this year, up from the three projected in March.

    A measure of nationwide manufacturing activity turned negative in May for the first time since January.  The Chicago Federal Reserve’s index of national activity came in at -0.15 last month, a significant decline from the upwardly revised 0.42 reading in April.  The Chicago Fed index is a weighted average of 85 economic indicators, designed so that zero represents trend growth and a three-month average below negative 0.70 suggests the country is entering a recession.  Last month, 39 of the individual components made positive contributions, while 46 were negative.  In the details of the report, the production-related indicators, meaning factory activity, weighed a negative 0.29 to the index, down sharply from the positive 0.33 it added in April.  The index’s less-volatile three-month moving average came in at 0.19 in May—also its lowest reading since January.

    Orders for good expected to last longer than three years, so-called durable goods, fell in May as demand for autos weakened.  The Commerce Department reported orders for durable goods fell 0.6% in May, following a revised 0.1% decline in April.  The second straight decline in demand appears to be due to the biggest drop in new orders for cars and trucks since 2015.  Stripping out the often-volatile transportation categories of vehicles and aircraft, orders were off just 0.3%.  Orders for autos and parts shrank 4.2% in May, the biggest drop since the first month of 2015.  President Trump has threatened tariffs on Canadian and European cars amid ongoing disputes over free trade.  Overall business investment slowed a bit, but the longer-term trend was still fairly healthy.  So-called core orders, which strip out defense and aircraft, slipped 0.2% in May, but they are up 6.8% over the past year.

    The nation’s consumers are still very optimistic about the U.S. economy, but a little less so than they were a month ago.  The Conference Board reported its consumer confidence index slid to 126.4 this month from a revised 128.8 in May.  Economists had predicted a reading of 128.  The index is down slightly from its 18-year high of 130 hit earlier this year.  In the details, the present situation index, which measures how the economy is doing right now was essentially flat at 161.1, while the expectations index that measures respondents’ views six months into the future declined four points to 103.2.  Lynn Franco, director of economic indicators at the board noted, “While expectations remain high by historical standards, the modest curtailment in optimism suggests that consumers do not foresee the economy gaining much momentum in the months ahead.”

    Stephen Poloz, governor of the Bank of Canada, stated the impacts of both an escalating trade fight with the United States and new mortgage rules which tighten standards for borrowers will “figure prominently” in the central bank’s decision to raise interest rates at its next meeting.  The central bank, Poloz said, has been incorporating into its projections the fallout from U.S. steel and aluminum tariffs along with retaliatory measures taken by Canada and others.  In the lead up to his July 11th rate announcement, the bank is also studying incoming individual-level data showing the effect of Canada’s new lending rules on the housing market.  Before U.S. President Donald Trump imposed the tariffs, experts had widely predicted Poloz to raise his trend-setting rate at the upcoming July 11 policy meeting.  Since then, however, there have been growing doubts Poloz will hike at next month’s meeting.

    Confidence in the U.K. took a turn for the worse this month as both businesses and consumers became more pessimistic on the economic outlook.  Lloyds Bank reported business optimism dropped to its lowest level this year citing Brexit and increasing global trade tensions as particular areas of worry.  In a separate survey, research firm GfK reported its index of consumer confidence fell 2 points to -9, with Britons declaring themselves “markedly more gloomy and unwilling to make major purchases”.  Client Strategy Director at GfK Joe Staton stated, “Consumers are yet again feeling less upbeat.  Shoppers are holding on to their cash and consumers in general seem set on their path of self-imposed austerity.”

    Munich-based research institute Ifo stated Germany’s economic boom times are over and Europe’s largest economy is now on the way to a more normal growth path.  Ifo economist Klaus Wohlrabe reported the institute’s latest survey showed a deterioration in Germany business confidence due to concerns over a global trade war and slowing of the global economy.  Ifo’s business climate index fell to 101.8 in the month of June.  He added that uncertainty among German companies was growing and export expectations had fallen even further.

    Italy has stalled an EU leaders’ summit this week until a deal is reached on migration.  Italy, along with Greece, has bore the brunt of the migration of millions of people from North Africa and the Middle East to Europe.  While initially accepting hundreds of thousands of migrants, France has been detaining and returning migrants to Italy in border cities such as Menton and Ventimiglia.  Rome blocked decisions on the economy, security and digital issues in the meeting’s opening session in Brussels as it sought “concrete” help to deal with its own influx of asylum-seekers.  If this time we do not find any willingness from other EU countries, this Council could end without the approval of shared conclusions,” warned Giuseppe Conte, Italy’s prime minister.

    As trade tensions continue to rise, China’s manufacturing activity has begun to slow down.  China’s National Bureau of Statistics reported its Purchasing Managers’ Index, a key gauge of factory conditions, declined almost half a point to 51.5 in June, pulling back from the eight-month high set in May and missing economists’ expectations.  Although the number was a setback it still held above the crucial 50-level that separates expansion from contraction.  In a statement, NBS analyst Zhao Qinghe noted, “the manufacturing industry's fundamentals are on the whole trending positive” and that “manufacturing and demand are expanding at an overall steady pace.”  In the details, while large firms continued to expand in June, small and medium-sized businesses were experiencing contraction, with both groups dropping below the 50 mark.

    In an ominous warning, Japan’s government stated this week that higher U.S. tariffs on auto imports could backfire, jeopardizing hundreds of thousands of American jobs created by Japanese auto-related companies, raise prices for U.S. consumers, and “devastate” the U.S. and global economy.  In a position paper submitted to the U.S. Department of Commerce by Japan’s Trade Ministry, Japan noted any trade restrictions, if imposed, would increase costs for U.S. consumers and “could seriously affect” U.S. jobs.  In addition, it stated U.S. automakers would lose competitiveness and export markets for U.S. vehicles would shrink undermining the entire U.S. economy.  A recent study by the Peterson Institute for International Economics warned up to 624,000 people could lose their jobs in the U.S. if a 25% tariff were levied on automobiles and auto parts if other countries took retaliatory measures.

    Finally, one measure of the health of the U.S. economy just logged its worst losing streak ever.  The most popular banking sector exchange-traded fund, the Financial Select Sector SPDR ETF, marked its 13th consecutive drop—its longest losing streak ever and an indication of the headwinds facing lenders despite a strengthening U.S. economy and the repeal of unfavorable regulations.  The ETF holds shares of some of the biggest banks, household names like J.P. Morgan Chase, Citigroup, and Bank of America.  Along with the weakness in bank shares, analysts have been observing a “flattening” yield curve in the benchmark Treasuries market, where short-dated yields have been narrowing the spread with long-dated yields.  An inverted curve, in which short-dated yields actually exceed longer-dated yields, has preceded every recession for the past 60 years.  Where are we now?  Currently, the spread between the 10-year Treasury and 2-year Treasury is down to just 0.31 basis points—its narrowest since 2007.

     

  • 03 May 2018 2:29 PM | MCR Market Report (Administrator)
    Following the close above $8400, we are back in Bitcoin at a price of $8877.08, with all 3 indicators indicating BUY.  We will provide a more detailed post this weekend, with any pertinent news.  




  • 02 April 2018 5:11 PM | MCR Market Report (Administrator)

    It's been a while since we've posted a deeper look into the variety of indicators we use, so we thought we'd take the time to do that today.  At its most basic level, Bitcoin has just undergone what is termed a "death cross", defining that the 50-day simple moving average of prices has just declined under the 200-day moving average.  We point this out only for completeness sake because, we assure you, that buying simply on a 50-day MA crossover above a 200-day MA and selling on the opposite is not profitable when looking at Bitcoin or almost any other investment for that matter.  


    Another charting technique we look at is known as Cloud charting.  Stockcharts.com provides a pretty good explanation of this technique available here.

    Looking at the cloud charting, it is also bearish with the price of Bitcoin trading below the cloud (the blue and pink shaded areas), along with the lagging line (solid blue line), that is also below the cloud.  Cloud charting is also a good longer-term chart analysis that should keep you on the right side of the trade overall.  


    In addition, we analyze point-and-figure charts.  Point-and-figure charts have stood the test of time being used by traders on Wall Street for over 100 years.  The continued practice of PnF charts today is a testament to their usefulness.  The MCR Market Report is the only source of this valuable charting technique available to retail/individual traders today.  Point and figure charts are simply column's of X's and O's, defining uptrends and downtrends, respectively.  The multiplier is the number of boxes that must "retrace" before an up column of X's turns into a down column of O's.  Traditionally the multiplier is set to 3 times the box size, however it can be any integer the analyst chooses.  The MCR Market Report uses percent change box sizes in its Point and Figure charts as it presents a true price comparison throughout the entire data set.  Let's take a look at a simple point and figure chart of Bitcoin:


    We'll point out a few things of interest here.  After hitting over $20,000 last year (note the price target that was indicated in March of 2017! predicting that move), Bitcoin has been in a rather steady downtrend with a handful of retracements.  We admit to being "tricked" a handful of times since then going long into the rebound, only to be stopped out when prices reversed.  Overall, we have avoided the brunt of this downtrend.  The second item of interest is that Bitcoin has consolidated at around $6900-$7000, almost precisely where it bottomed in trading in February.  This price level is also close to a long-term point-and-figure trendline that is currently at around $6200.  This area should be considered very strong support going forward.  Although also of note, there are two downside targets at $5133 and $5393.  So unfortunately, while there is some bullish hope based on the fact that we haven't broken through February's low, the majority of indicators still indicate weakness going forward.

    Subscribers can get our latest proprietary indicator readings in the Inner Circle.

  • 17 February 2018 5:31 PM | MCR Market Report (Administrator)

    Now that both of our indicators, codenamed "Spa" and "Monaco" are now on BUY signals, we have transmitted a BUY for Bitcoin at a close above $8400, that triggered at $8908.10.  A few notable changes have occurred since our two previous (failed) attempts to catch the bottom of Bitcoin's price.  Most notably, when trading markets, news known is news discounted, which means that fears of the unknown scare market participants often much more than the news itself.  It turns out that many of the concerns over regulation and cryptocurrency appear to be overstated.  At the MCR Market Report, we agree that some form of regulation would be good for Bitcoin as perusing the message board Reddit shows us the absolute naivete of a multitude of bitcoin investors--taking out second mortgages to invest in crypto, etc.  In addition, some regulation will be necessary if Bitcoin is to achieve a status of being its own asset class, one in which we believe it rightfully deserves. 

    Latest Chart, both indicators on buy signals:

    We appreciate our subscribers, if you have any questions or comments please don't hesitate to reach out to us at tr@mcrmarketreport.com

     
  • 21 December 2017 3:57 PM | MCR Market Report (Administrator)

    We recommend subscribers exit Bitcoin positions this evening as both Quant-1 and Typhoon indicators have turned negative.  Also notable, is that virtually the entire established cryptocurrency space is negative as well, suggesting money is flowing out of crypto in general.  Prior to today, some of Bitcoin's fall could be attributed to the rise in price of Bitcoin Cash, but as of this writing Bitcoin Cash is down almost 15% today.  Current state of the indicators:

    We're still a little curious as to why Charlie Lee felt the need to liquidate his entireLitecoin holdings.  Given the weakness across the entire crypto complex, along with other suspicious activity, there's no harm in taking profits and waiting for a new entry point with a higher probability of success.

    At current prices we've recorded a gain of 98.99%on the latest trade.  Congratulations!

    We hope you enjoy your subscription and find it useful in your crypto trading and analysis.  As always, if you ever have any questions, comments, concerns, or tips, don't hesitate to email us at tr@mcrmarketreport.com.

     
  • 09 December 2017 8:34 PM | MCR Market Report (Administrator)

    Yesterday we noted our concern over the possibility of a blow off top, and future impending weakness (here).  Furthermore, we noted that we'd be carefully monitoring our Quant-1 indicator (which is the first to react to strength or weakness, but more prone to whipsaws than our longer term Gemini and Typhoon indicators).  With the close of Saturday's trading session London time, we note that Quant-1 has now turned negative.  Given the extremely volatile trading over the last 3 days, even by Bitcoin standards, along with the apparent "blow off top", and the negative Quant-1 indicator, we now recommend taking partial profits NOW at $14,411. Note our Quant-1 indicator on the bottom pane.  We've highlighted each period with an ellipse where it had indicated future weakness in Bitcoin.  Whatever level of core holdings you wish to maintain rely on your personal risk tolerance.  Luckily with our buy in at $7849, we have plenty of room to let our profits ride.  However, overall, we see no reason to not take at least some profits at this point.


    We appreciate having you as a subscriber!  If you have any questions, comments, or concerns, please don't hesitate to contact us at tr@mcrmarketreport.com

     
  • 08 December 2017 11:11 AM | MCR Market Report (Administrator)

    Volatility might be an understatement.  Bitcoin had a high of $19,697 on GDAX yesterday (although their site went down amidst the flood of trading for a multitude of clients) and low of $13,500.  The 6,197 point spread translates to a 45.9%(!!) peak to valley move yesterday alone! We thought it a good time to make a quick post for subscribers with an indicator update and one concern we have.  

    First off, even with the weakness today, all of our indicators remain on BUY signals with the shorter-term Quant-1 indicator the only one showing weakness.  Quant-1 is traditionally our "distant early warning" indicator that we use to lighten up positions, or go aggressively long, with our longer-term Typhoon and Gemini indicators for position trading.  


    However, one scenario we wanted to bring to the attention of Inner Circle members is the possibility that we may have just witnessed a "blow off top".  Investopedia explains a blow-off top this way:  

    A chart pattern that indicates a steep and rapid increase in a security’s price and trading volume followed by a steep and rapid drop in price and volume. The rapid changes indicated by a blow-off top, also called a blow-off move or exhaustion move, can be the result of actual news or pure speculation.

    A blow-off top usually indicates that a security’s price is about to fall, while a blow-off bottom suggests that a security’s price is about to rise. A security also can enter a blow-off period during which its value remains inflated for weeks or months. Often times, momentum stocks experience blow-off periods during their violent upswings and downswings.


    With this possibility in mind, should Bitcoin break below $13,500 either today or in the next few days, we recommend exiting speculative positions and maintaining a core long position to your level of comfort.  Note that $13,500 would still represent a gain of 72% for our trade initiated on November 16th at $7849.  That area would most likely trigger a SELL signal on Quant-1, with both Typhoon and Gemini remaining long.

     
  • 07 December 2017 5:01 PM | MCR Market Report (Administrator)



  • 05 December 2017 10:22 AM | MCR Market Report (Administrator)

    First of all, we wanted to point out that back in October, we looked at a seasonality study that overlaid the annual price of Bitcoin on itself , and averaged it over several seasons to see if there was a seasonal pattern to Bitcoin's price movements.  We noted that the October/November timeframe was quite positive (article here), and that according to that particular study we should see an upward bias in Bitcoin.  That has indeed occurred with Bitcoin closing out the October/November time frame with a gain of 128%.  However, while we still follow our indicators for our primary trading, it is noteworthy that the month of December has traditionally been negative for Bitcoin.  (Note the weakness on the bottom pane starting in the beginning of December.)  So what do we recommend?  With all 3 of our indicators still on BUY signals, stay invested to your comfort level, however we do not recommend being on margin, or using risky or speculative money at these high levels with a potential negative seasonal effect on the way.


    Secondly, following JP Morgan's Jamie Dimon's comments that Bitcoin was a "fraud", we suggested that perhaps he was talking down Bitcoin while buying it up himself.  We noted that Wall Street has a long history of deception when it comes to what they tell public versus what they are doing themselves.  Well the latest news out of JP Morgan is that JP Morgan analyst Nikolaos Panigirtzoglou, publicly stated that bitcoin has the potential to become an emerging asset class, given that CBOE and CME, two of the world’s largest options exchanges, will list bitcoin futures by mid-December.  “The prospective launch of bitcoin futures contracts by established exchanges, in particular, has the potential to add legitimacy and thus increase the appeal of the cryptocurrency market to both retail and institutional investors,” said Panigirtzoglou.


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