Time for another portfolio update ! Belgium is in lock down mode and I didn’t leave the house except for some basic grocery needs for the past 2 weeks. It is very important that everyone in the family stays healthy and safe and don’t get infected by this deadly COVID-19 virus as it makes no difference in age, gender or medical history for possibly killing you. No more business travel for me for the next 2 to 4 months I believe…we will see. With the current IT technology, I consider working from home very efficient as meetings are prepared in advance and it requires another work attitude from everyone.Market Analysis
When we analyse the performance of the SPY (screenshot 29 March 2020 ), we are currently seeing a technical bounce. Technically the market has been bouncing the past week, the downtrend did break. We are just below it currently in a consolidation pattern. If we drop in the coming days, we will see a large technically bear flag and should revisit the inverted head and shoulders on the downside on the daily. This will confirm a dead cat bounce, meaning we should (and will) continue lower in the market. However, IF we are able to reclaim the short term EMA support, we can see further continuation to the upside.
That said, we do have quarter end here the next two days which is why this situation becomes interesting. As funds re-balance their money and put new money to work month end / beginning of April we could see more buying pressure to hold the market up. This in itself can cause more of a short squeeze if we see a trend reversal out of this consolidation setup to the upside. One last thing to note is going forward the FED said they were going to be decreasing the amount of purchases they do this week down to 60 billion, we can expect this to have an impact on the market as well. In terms of direction, it should be determined early on this week, stick with the technicals as they will be the main driver with all these working parts, speculating on direction is NO way to trade in this market. Below you can find a daily chart of the SPY.
Last thing we will need to keep an eye on is the increase in COVID-19 cases in North America / Across the world. Substantial growth in the United States will no doubt impact the decisions going forward to get the economy fully back open or not. Clearly we are still at a growth stage in the virus as there has been an inability to flatten the curve just yet, no doubt the United States will get there but it may take longer. What this means for the economy is we can expect a longer period of shut down (June 1st) going forward and maybe increased measures to force social distancing or quarantine. Most likely this will have a negative impact to the market going forward.
The key question is where are we on the curve ? Are we at the point of Return to “Normal”. Some bankers see this dip as a perfect buying opportunity. Some ETF investors stay the course and keep on buying every month as we drop lower. Nobody can predict the markets.
Personally I follow the opinion of Eric Robertson.
Attributing the recent gains in equities and emerging market currencies to extraordinary monetary and fiscal stimulus measures, Eric Robertsen, head of global macro strategy at Standard Chartered, warned clients that the risk-rally lacks sustainability.
“The full extent of the economic fallout is still unknown, and equity and credit markets still face considerable risks from earnings, downgrades and regulatory changes,” said Robertsen in a note.
Daniel Gerard, senior multi-asset strategist from State Street, agreed that more information is needed from corporations before declaring a bottom. “No one has real insight yet into the impact into earnings, the fundamental drivers of markets here, that’s the next stage to come,” he said. We will know more when the first earnings season kicks in.
Let’s dive in the numbers of my 2020 Q1 Passive Income Income Report.
My Passive Income in January & February 2020
In first two months of 2020 we received a total of 966,17 $ passive income, only dividend income. We notice a decrease in payouts from our dividend portfolio. Nevertheless easy money !
Below you see the monthly summary overview of the cash flow coming into my bank account.
My Options Trades
No option trades so far.
The Euro/Dollar trend
We keep on following the EURO/USD valuation. The euro has been dropping to the lowest level of 1,06389. Then we had a lot of volatility in the markets. The USD dropped in value, then the FED started QE and now the dollar weakens again. We haven’t traded this pair a lot the past months. There are plenty of other currency trading opportunities. Take a look at the 3 year chart.
Going forward
This volatile period with 300-2000 points drops or gains are exciting learning moments for me. Central banks intervene with quantitative easing stimuli and currencies react in different directions. Our dividend portfolio has been holding quite well in value as last year I implemented a hedge of 15%. As I expect more volatility in the coming months, I don’t want to close my hedge yet. We haven’t seen the bottom yet. Do you really think we can start a new bullish market when you shut down the economy for 2 months or maybe more ? The damage is done and the world will look a totally different place in the coming months. I hold my heart and I am scared for the COVID impact on countries in the Middle-East, Africa or India that don’t have this good health system, but major (poor) populations. This can become a global health disaster, which can lead to a global financial and economy crisis.
It’s definitely a VERY interesting learning period ! This is the end of this blog post.
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