Mechelany Advisors’ MODEL PORTFOLIO has been running in a fully transparent way since January 1st 2014. Its Purpose is to implement the conclusions of our research analytical process in a portfolio managed using institutional liquidity, diversification, risk management and asset allocation processes. In our TRANSACTION UPDATES we keep our reader informed in real time of the transactions in our MODEL PORTFOLIO
Equity markets started the second quarter with a bang with the SP500 marking a new all-time high, closing above 4’000 for the first time in its history, the Nasdaq adding 3.87 % and each and every index in positive territory.
Bond yields are making a pause on their upward trajectory while commodities ended the week higher led by oil.
Joe Biden’s proposed 2.25 Trillion infrastructure plan and more than 500 million people having got the vaccine worldwide are sending positive vibes for what is proving too v^be the sharpest V-shaped recovery in history and strong job creation in the US point to an improving labor market now that activity re-normalizes.
Europe is the lagging area with France enacting a new total lock-down for a month and Italy and Germany in the middle of de-confining.
Our main equity scenario is playing to the dot with an April rally that we expected to bring new all-time highs in the US before a serious correction unfolds in May and June.
Being disciplined, we cut all our short positions last week and our timing of re-entry into China and some biotechnology stocks is playing well.
Our MODEL PORTFOLIO lost -0.79 % last week for a year to date performance of +21.74 %, still keeping us well ahead of the world indexes over the 87 months of management
During the week, Chinese banks published strong results for the 4Q and the full year of 2020, being analysts expectations and delivering record high revenues and profits with a + 11 % increase in interest income revenues. A major breakout has now happened and Chinese banks will now enter a lasting bull market in our views.
TESLA published its sales of vehicles for the first quarter of the year, with 188’000 vehicles sold, beating analysts expectation for 172’000 vehicles. The Company should sell 800 000 vehicles in 2021 according to analysts.
We are becoming bullish again on Biotechnology stocks and have increased our weighting there, in line with strong buying activity from insiders.
China Construction Company was one of our best performers together with Chinese banks and Bank of Communication in particular.
On the negative side, China Zheng Tong published drastic earnings for2020, taking major loss following its illegitimate financing activities. The stock ended the week 10.5 % lower. Mots of the bad news is now out and we will analyse the prospects going ahead.
Chinese equities have now bottomed and should be a major positive contributor going ahead.
Technology stocks were on the verge of a significant breakdown, but the short positions built there called for a sharp rebound when failing to break down.
During the week, we added into IQIYI and NETEASE following the debacle of ARCHEGOS, we added long positions in INTERCEPT PHARMA and averaged down on EPIZIME while re-instating our position in our preferred BIOTECH ETF.
We initially increased our short position in TESLA, but ended up cutting ALL OUR SHORTS in the US and in EUROPE, writing for another entry point to re-establish our short exposure. However, we re-instated our Short position on the Russell 2000 and will increase it during the month.