A hedge fund sells stocks
We all know that rarely does anything work perfectly in this world. Especially not in business or politics. Is that a reason to make radical preparations? The world's largest hedge fund Bridgewater Associates has massively closed its long positions in the equity markets because Bridgewater analysts predict a crash year for 2019. The Bloomberg report, published a few days ago, is roughly to be interpreted. Bridgewater argues by withdrawing central bank stimulus programs. Combined with the Fed rate hike, it can be dangerous in 2019. The hedge fund therefore expects an economic downturn that will drag financial markets into the depths.
The reasoning for the crisis is not new. The forecast for 2019 seems a little surprising. A few questions arise: Why does Bridgewater close a large part of the long positions in 2018 if they only expect a crisis in 2019? Why is a fund like Bridgewater showing up is so friendly and informs the world's citizens about an upcoming stock market downturn? In this regard, Bridgewater is suspicious. First, the fund is not a charity, and isn't the purpose of the report intended to be something? Second, there is a hedge option for the fund. Why does Bridgewater close long positions if hedging on the futures markets would be possible. That is an advantage of every hedge fund. As stockbrokers, we have to be suspicious. Nobody knows the future, and anyone who claims it does suspect manipulation.
In general, Bridgewater's considerations are not wrong. However, important information is omitted. A financial crisis usually has a cleansing function. Unfortunately, this did not apply to the crisis in 2007. The central banks did everything they could to keep ailing states and banks alive. The idea would have worked if a comprehensive reorganization of the financial systems had then been implemented. However, the reality is that debt has continued to increase for more than ten years. In other words, the risk has multiplied again compared to 2007. The central banks are now barely able to act. You must continue to handle monetary policy extremely loosely in the future, thereby further increasing the risk.
Rising stock markets as an inevitable side effect
You don't have to be a prophet to imagine that in The stock markets will continue to be supplied with liquidity in the next few years. The manipulation of the financial system is dramatic. It has not been possible to speak of a market economy for years. Professional marketers like to mock the " EU DSSR".
Attractive investment opportunities outside of the stock markets will remain "undetectable" in the coming years. Unfortunately there will be a crash at some point - but not in 2019. The speculative bubble is still not big enough for this.
A look at the ADL should show us whether stocks are being distributed.
The Advance Decline Line (ADL) is calculated using the difference between the rising and falling shares. Basically, every movement of the index should be confirmed by the ADL. If there is no confirmation, there is some evidence that the index is preparing to reverse.
Image: Daily chart of the S & P500 with its ADL
The ADL is bullish on the upside. The all-time high in January 2018 has already been exceeded. No matter how negative Bridgewater argues, the internal structure of the market shows otherwise. The majority of US stocks are in an uptrend with no weakness. Warning signs usually arise from bearish divergences. A GDL100 is plotted on both the price chart and the ADL chart. The distance between the respective graph and the GDL100 can reveal a divergence. You cannot see where it should be. On the contrary, the majority of market participants have been on the bull side since April.
Intel renews itself in its business areas
The world's largest chip manufacturer is constantly looking for new business areas. The manufacture of microprocessors is still the most important source of income, but it is no longer enough to get the share price on the rise. Because the processor business is largely exhausted, Intel has been intensively trying to open up new growth segments for about 3 years. Data Center (Cloud) and Internet of Things (IoT) are the desired success segments.
Behind the "nebulous" IoT is a collective term. It is about the networking of physical and virtual objects. These include, for example, pacemakers, smartwatches or activity trackers. Intel could practically offer the infrastructure for an infinite number of products.
Smart Intel products can therefore be integrated into external devices in order to perfect them technologically. Intel achieves excellent sales growth with sensors for sales processes in retail. In addition, the inventories are compared with high accuracy. The information is then sent to the cloud and the company network is fully informed.
Intel's corporate strategy is cleverly structured. The new product segments diversify your own risk. The risk of diversification is usually that the company gets bogged down. This does not apply to Intel, because the new Intel products are in the broadest sense an addition to conventional computer hardware. Intel remains true to itself and yet the company flexibility is expanded.
Intel is a basic investment
With the Intel share it is no longer possible to achieve high returns in the short term. Nevertheless, Intel is a basic investment in long-term equity investments. The realignment to new business areas secures the future. As the market leader for microprocessors, Intel can work on the new business areas in parallel. You don't have to worry about Intel as an investor.
Depending on global growth, Intel's share price fluctuates. However, with a P / E between 15 and 20 there is no overvaluation and the new business areas can make the share price even more attractive presents solid financial data. It is a very healthy company that has development potential. If Intel succeeds in transferring its core competencies to new business areas, then Intel can advance into new sales regions. Intel can be a basic investment for any conservative custody account. Long-term investors are rewarded with an annual dividend of just over 2%.
The technical starting point for trading
From a long-term perspective, Intel shares are on an upward trend. The drawn trend fork (Pitchfork) reflects the current market situation quite well. The price hits the upper limit of the trend channel. The market geometry suggests that the market momentum is being reduced at this point.
Image: Weekly chart of the Intel share with trend fork (Pitchfork)
The upward trend is overheated
Just comparing the 2018 price patterns to previous years shows the difficulty of reaching new all-time highs. In 2018, the price movements seem tortured. Upward dynamic candlesticks are obstructed by large red candlesticks (bearish). The market participants are no longer in agreement as to whether the price should continue to rise. In other words, there are often profit-taking. It could be that the positive psychology has escaped from the stock price.
If the assumptions are correct, a slight consolidation should start in the next few weeks. The target price lies on the middle line of the trend fork. I assume a course of at least 50 euros. From there, the share price could start again. The next higher price target should be $ 63.
Key data for trading
Intel shares: WKN: 855681 or US symbol INT
Target price: $ 63
Stop loss: $ 41.60
Note: If you want to buy the stock in Germany, please note the euro -USDollar exchange rate.
If you want to benefit from the short-term stock recommendation, you can buy the stock directly or work with derivatives. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.
Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum Loss limitation.
Price target: The price target is the exit point for the forecast market movement.
Interim target: When the intermediate target is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.