Mechelany Advisors' WEEKLY REVIEW is a new format that combines a Weekly Review of the main events of the week, a review of the charts of the main indices and asset classes and the Weekly Updates on Mechelany Advisors' MODEL PORTFOLIO
The swift passing of Joe Biden’s 1.9 trillion adjusted stimulus plan this week is both a great political win – America is efficient again – and great economic news.
The US labor market was another positive sign with new jobs being created in the US while Europe’s Christine Lagarde has re-iterated the will of the ECB to keep buying bonds.
But it puts the FED in a quandary as inflationary pressures are building up and the bond markets don’t like what they see. And it is a massive warning signal for equity markets as valuations are becoming more unjustifiable by the day.
Equity markets rose by almost 3 %, save for Asia where China is cooling down signs of speculation, cryptocurrencies almost made new highs, commodities are topping out and BOND YIELDS are rising, sending a very negative signal to equity markets.
US 30-year treasury yields
US 10-year Treasury Yields
As can be seen from the charts above, they can rise much more before reaching a real resistance level, but they are already extremely overbought in the short term and the market is massively short bonds through the future contracts.
The US Dow Jones made a new all-time high last week as rotation into cyclicals in in full swing, the SP500 is on the verge of testing one but the Nasdaq is finding it difficult to gain momentum.
Besides this dichotomy, technically ,we had the first two Hindenburg signals that are heralding major top ahead.
SO WE STICK TO OUR PREFERRED RAOD MAP WHICH IS TO SEEE NEW MARGINAL HIGH IN THE SP500 ( 4050 or 4100 in the weeks ahead ) BEFORE A MAJOR CORRECTION UNFOLDS IN Q2 2021.
WE STAND READY TO SHORT US TECH STOCKS AT ANY TIME.
This is not the time to chase this rally, but to SELL INTO STRENGTH
MODEL PORTFOLIO 13 March 2021
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
With Tech stocks rebounding, Chinese equities falling, bonds weakening and Cryptocurrencies challenging their previous all-time highs, our MODEL PORTFOLIO lost 0.98% last week, settling for a +24.50 % performance year to date.
Our long US, European, Japanese and Chinese H share positions compensated for the sharp rebound in US tech stocks, cryptocurrencies, and the weakness of US Bonds.
We are still outperforming world equity markets significantly and our current risk profile should enable us to preserve performances and reduce volatility, while capturing alpha when equity markets top out next month.
It was an extremely busy week where we started by re-building our long exposure to European and Japanese stocks while taking some profits on our US tech short positions.
We added two new positions in Swiss pharmaceutical stocks, NOVARTIS and ROCHE and took advantage of weakness in Gold to increase our exposure to Gold Miners.
Having traded relatively well our ETF exposure to Chinese domestic equities, we increased our exposure there to 5 % of the portfolio.
We also increased our US bond exposure and cut all our short positions on March 11 as a tactical move.
Mechelany Advisors’ CHINA DEEP VALUE PORTFOLIO
Despite the weak showing of Chinese equities, our CHINA DEEP VALUE PORTFOLIO outperformed again, adding +2.92 % on the week for a year to date performance of + 13.18, far outpacing any Chinese equity Index.
China Merchant Ports Holdings was the best performing followed by Banks.
The EXANE Index Certificates’ prices do not reflect Friday’s strong showing of our Portfolio, with the 2x leveraged up 10.82 % since launch on February 10th and the 1.5 x leverage up +7.63% since launch on February 16th.
Mechelany Advisors’ US TECH SHORT PORTFOLIO
Reflecting the strong rebound in US Tech stocks and the 16 % jump in TESLA, our Passive US TECH SHORT PORTFOLIO lost -2.39 % last week.
Last week, EXANE launched an Index Certificate on our Portfolio providing investors with a great tool to both short these overvalued stocks and hedge their long portfolio through a convenient single security traded daily in US Dollars and benefitting from a 2x leverage.
Our readers can find the TERM SHEET by clicking on the image below.
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