Did you profit from KUTE last night?

Good morning,

My Taiwanese friends are in town and we had a few nice rounds of merlot and whisky at my bar. These friends are derivative arbitrage traders trading the Taiwan indices and have made good money trading the difference between the SGX futures and Taiwan futures. It’s always an enjoyable time when traders gather and talk about the markets and trading strategies, especially with rounds of alcoholic drinks. The key topic we discussed was obviously the future direction of the markets. Some predicted the continual V recovery; a few believed the W recovery and the rest are honest enough to say that they do not know at all. So what is my view?I believe the markets will continue to rally for the near future but I will be cautious after the New Year. The economy is flooded with excess supply of money and I am sure the Fed will increase the interest rates to counter possible inflationary pressure once the economy growth stabilizes. I always remember what I learned in my finance graduate class that the main policy of the Fed is to control inflation and manage employment rate. With the unemployment rate exceeding the market expectation, I am sure Fed will continue its stimulus plans to fight unemployment and bring the rate down before they embark on the battle to control inflation. So till we see unemployment improving as the economy recovers, we still have some upside to make money with equities.

The week started off with the stocks rallying once the markets opened. Gold hit a record high, financials rose and the Group of 20 nations said they would keep economic stimulus programs in place. Also helping the mood was the Conference Board Employment Trends Index, which rose in October for a second month. US dollar dropped after the G20 decided to maintain the stimulus with gold soaring above $1100. At market open, the stocks KUTE system selected last night advanced along with the markets. NOV was up more than 4.45% in the early session, already achieve the target returns. MIR was a good bet as it advanced more than 3%. MGLN was up 0.28% and TAP advanced 2.2%. So it was an early night for me since the positions were closed once the targets were achieved.

At the end of session DJIA closed at 13 month high and was 2.03% higher at 10226.94 for the session. The broader S&P 500 was up 2.22% to close at 1093.08. The market was bullish with NYSE 82% advances against 26% declines; Nasdaq closed with 67% advances against 20% declines. For the 2 stocks I planned to buy NOV was up 4.56% to close at $45.67 and MIR gained 2.76% to close at $14.54. I managed to sell 1 more position of PTEN at $16.28 and still holding on to 1 more position. MGLN closed 1.3% higher at $34.23 and TAP advanced 2.55% at $44.97.

So did you make money from KUTE’s selection?

Have a great day.

Francies Cheng
BBus MAppliedFinance