SNBA

Although banking stocks in this economy are not really the safest investments (unfortunately most people think storing cash in those same banks is), some banks still seem to be too cheap an opportunity to pass. The one that I’ve particularly noticed is Slatinska Banka (SNBA). Technically, there is really no relevant pattern to mention, except one almost horizontal trendline. The chart still seems interesting, and what’s interesting about is the fact that the stock dropped pretty drastically. Such drops are usually related to companies that have gone bankrupt, but this is so far here not the case.

snba

Here are fundamentals, which are interesting to say the least. Also of note is the fact that cash per stock is somewhere around 33kn, which is not bad for a 45kn stock.

P/S 0,42 
P/E 31,65 
P/B 0,23

Overall, what we have is an extremely cheap company with not so great earnings. Yes, the risk of state bankruptcy exists, and such an event will likely drag down the banks with it if it happens. But that same risk exists in government bonds as well, and they really don’t have any chance of doubling in size overnight.

 

ZVZD

 

 

Although I’ve already said pretty much everything there is to say about this stock, both fundamentally and technically, I believe we are currently on the verge of interesting development. The stock has been sliding down the trendline for a while, but it really looks as the resistance has in fact been breached. We’re now at the support level, and although things can always go both ways, the strong resistance suggests there is a greater likelihood of this actually being a final turning point.

zvzd

GRVG

 

Although I consider this stock to be a great long term investment, I believe there may be a short term cause for concern. The whole idea is best summarized in the following picture.

grvg

Basically, we’re dancing on the supportive trendline, and may have even breached it already. The next few days will likely be crucial in deciding whether that breach is real or just random white noise on the trendline verge. Should that breach happen, what we have in front of us is a pretty nice example of a head & shoulders pattern. The target of that pattern is approximately 0.7 euros below the trendline, which amounts to approximately 5.8 euros. Furthermore, it is also a support level formed by the preceding two tops (and perhaps one bottom which forms another close resistance at 5.5 euros).

In the long run, this drop would be the completion of a wave 4 of a standard 5 wave growth pattern. I believe such a drop might correspond to a long awaited correction of US indexes. But even though such a breach may bring the stock down somewhat, I consider this a short term event, which is actually a good trading or late entrance opportunity in the 5.5 to 5.8 range.

Bitcoin

I haven’t written about bitcoin for a while, as it was on a downward spiral for quite a while. That seems to be reversing now, and it’s actually just one more confirmation of an upcoming USA market downturn. People are looking for other places to invest, and bitcoin is likely to be one of them. The results may well end up being huge, as the bitcoin system is tiny compared to other sectors, so a sum of money which may seem trivial in comparison to, say, housing, can be quite significant in the world of bitcoin.

I’ve included a chart which shows the standard 5-3-5 (red, green, red) correction, with marked corresponding subwaves. As we can see, the black trendline has been breached, which means the upturn is coming. Now, the first resistance line seems to be at around 500$. Although there have been several one-day drops below 400, they are irrelevant and have already been breached. The 500 resistance is unfortunately quite vague and approximate, because there aren’t many clear cut turning points. I would consider it more like a resistance zone, which covers everything from 450 to 550. I believe bitcoin may move sideways for a while in that zone, after it cools down from the recent 300->450 rise.

After that, I believe the resistance points of interest are around 700 and 1000$. Unless something horrible happens in the bitcoin world, I think those levels are likely to be reached quite soon.

btc

 

USA on the downturn?

I believe the growth period in the US is about to end. There are two primary reasons for that – positive media frenzy on one hand, and ominous looking patterns on the other. So let’s go about the first one.

Whenever media gets crazy about investing, that means the cycle is about to end. I’ve seen many overly optimistic news stories in the last few days, as well as an occasional one warning of an imminent crash. Overall, I believe that such a combination is indicative of a downturn.

The second one is, of course, technical. But it’s composed of many different signals which all point to the same thing. They are, in no specific order, a very long growth phase, broadening top, and bearish divergence.

dji

Now, even though the market may continue upward still, I believe the chances of it really doing so are slim. And this is precisely the reason why I believe investing in Croatian market is currently a better idea. It has never made as strong a recovery, and consequentially the stocks are much cheaper. Now, while it is true that a renewed global recession may bring it down even further, culminating in a double bottom from 2009, I don’t consider that to be the most likely scenario. The first reason for that is the fact that Croatian citizens have stored vast amounts of cash which is about to get taxed. The second reason is the fact that mutual and retirement funds are too heavy on bonds, which means that they are likely  to rearrange their portfolios as soon as they see the market starting to rise. Finally, even if the market does make a W (quite possible in case of state bankruptcy), I think it is likely to rebound soon. The reason for that is the fact that many of the stocks are quite cheap already, so it’s simply hard to believe they’ll go even cheaper and stay that way forever. Yes, some companies may falter and go bankrupt, such as the ones I’ve mentioned on occasion, but others are unlikely to experience any sort of downturn. ZVZD is, again, a great example of such a stock. It’s basically making its money on low cost food items, and those are basically the epitome of inflexible demand. Yes, the margins may suffer and the profitability may go to zero, but it’s just extremely unlikely that such a company will go bankrupt even in the worst case scenario.

So to make long story short, I believe the US market is ripe for selling, which means investors will need to find new business opportunities. And Croatian market may just be one of them.