BITCOIN BTC/USD	LT-M	MT-W	ST-D
5300 (9095)
Trend	↓ (↑)	↓ (↓)	↑ (↑)
% Risk Weight	43 (50)	45 (72)	25(40)
Allocation	0% (0%)

Daily time frame shows bullish divergence and is a speculative buy at this point. Our theory is that the gap down opening from March 8 at 9100 will be filled, as still must the only gap up opening left at just under 2900. Given that the latter did not fill within a few days as is more usual, one has to wonder which one comes first. Is it the 9100 gap now $3800 away, or is it the 2017 2900 gap which is ‘just’ $2400 away at current level. The only driver speaking for the 9100 being the earlier fill is a large demand for crypto where other asset classes suffer badly from massive investort distribution and in particular equities but also real estate for every fundamental reason on the table. True speculative investors seeking an opportunity could dabble their feet on the long side as both gaps will be filled at some point and as long as the position is not leveraged to an extend that a loss of 4000 dollars on BTC means losing it all. This situation hasn’t arisen for a long time due to the 24/7 trading facility of crypto currencies. We will for now stay away from this market for the reasons mentioned in previous blogs, but it is one we will continue to follow with interest.

Last week: Attention seems to be moving away from crypto. This modern day safehaven asset needs to take a breather as other matters are still more important. Direction is very uncertain and the class remains high risk. We still believe that price needs to touch the high 2000’s or much lower before being a serious fiat contender. No Change.

Standard & Poor 500	LT-M	MT-W	ST-D
2972 (2970)
Trend	↓ (↓)	↓ (↓)	↑ (↓)
% Risk Weight	65 (70)	35 (53)	14 (35)
Allocation	0% (0%)

We have been out of this market for over 18 months and explained the continued high risk weight hanging over this market. We simply do not understand why equities have been so strong throughout January and February whilst the risk was so prominently portrayed. BTFD is over folks. Covid-19 is THE Black Swan event of the past several hundred years. Why on earth do investors continue to buy equities and why on earth are they bottom picking with S&P500 still at a massive 2500. Is it lack of experience and sheer greed or what? There may be a lot of cash in the bank but that cash will become worthless and so will equities across international exchanges. A big reset is underway and one could expect to see an economic slowdown taking the S&P down into a 800-1200 range. Equally Dow Jones into the 10000 to 12000 range and a similar 50% drop across international exchanges, possibly more after the first big shock has been absorbed. That is a realistic scenario based on histroc human behavior. These markets will first need to get seriously oversold one day. The ultimate bottom may not come until several years from now. Consumers worldwide are going to be held back from wasting money on stuff they don’t really need and things that impair healthy. Funny that the biggest hoard today Match 14 is unhealthy crisps in the wake of store closure fears. Empty shelves. Wordlwide, trillions of currency will be printed to compensate businesses for this Black Swan lquidity trap.. And because the remedy is so uncharted, the final outcome will remain highly uncertain and unpredictable yet unlikely to be positive and it just doesn’t feel right. We therefor do not see fresh investment in equities as a solution for wealth enhancement or wealth preservation. Some sectors or individual stocks excluded of course, but index followers, especially those driven by non-cyclical products should cover if they can still find the liquidity. Central banks and Pension funds are vastly overexposed in equities. we hope not, but it looks like a real bloodbath is on our doorstep right now. If liquidity dries up there is no way to re-allocate some 50 trillion dollars of world equities except into more suspect government securities offering 0.25% return or less. The latter could even be the new Executive order of 2020. That would be a reset of major proportion. Of course we could be wrong but rather Penny foolish and Pound wise. Real money should benefit, but we’ll see. Interesting times for analysts studying market psychology.

Last week: With all time frames turning negative to an extend that bullish divergence is highly unlikely, the stock market looks extremely vulnerable. We stepped away from this market over 18 months ago and even though price is still in historic high territory the risk of a sharp drop is significant. Anytone staying in this market clearly likes a very hot kitchen. Only hyperinflation could drive this market to maintain higher price levels. Stagflation, if that is the result of present world conditions, probably will not.

Brent	LT-M	MT-W	ST-D
35.10 (45.50)
Trend	↓ (↓)	↓ (↓)	↓ (↓)
% Risk Weight	17 (17)	9 (12)	14 (15)
Allocation	50% (50%)

The steep continuation of the downtrend and the size of move looks to put all time frames in an oversold condition. Our nominal small risk trade does show a relatively large loss, but the low risk weight levels may easily drive this market to cover the gap down opening at 45 last week. panicking out of this unleveraged trade is not necessary, nor it is for Aramco interesting to further flood the market at deflated prices due to a significant economic slow down. We’ll just sing this one out or even increase to full size position (10% of assets allocated) if an interesting opportunity presents itself.

Last week: This is our first higher risk trade in a long time and it sits at a loss. The advantage of zero leverage is that the nominal expense is mild and is well compensated for by (paper) gains on metals. The question is what next? Risk weight is down in all time frames and the fundamental picture is poor due to Aramco offering larger discounts. As we are in freefall and looking at a possible gap down opening on Monday 9 March, we right course is to check the gap being filled and decide to accept the loss or stay with it because subsequent action creates a serious oversold market. Oil suffers from oversupply, at least on paper, and may turnaround rapidly if the current Corona spike ends just like any flu. So, for now we let this market continue doing whatever it needs to do and await a technical reaction to either increase of decrease our very manageable small risk position. No change holding our 50% allocation (5% of total) to this class.