Archives

All posts for the month September, 2015

No matter how witty we are in general, there are certainly some points in time where we yearn for directions, especially these days when we are in this highly volatile market and had just experienced the lowest volume turnover in Asia since February this year.

Volkswagen and Porsche had suddenly plunged nearly 20% yesterday after the German carmaker admitted it had rigged emission tests of diesel-powered vehicles, we can clearly see that on the Core Dashboard view that these two stocks top the highest drop in 1D % change (in the auto & component sector):

1

2

3

What does that mean to the Asia automobile stocks then? Volkswagon brand power may take a hit, in which consumers may start to consider other brands and it could potentially increase the market share for these names in Asia (below). We can see that most of them are flagging green positive signals below, highlighting to us the hidden opportunities in these stocks:

4

We see from the Core Summary that one of the biggest Korean names Hyundai Motor, for instance, has a positive performance recently and that an OTAS RSI ( – ) signal just fired upon yesterday’s close, which on average generates about 4% return over the following 20 trading days with a fairly high success rate of 70%.

5

Remember that you can always get access to all of the above information easily by going to the Express App, where we would highlight to you the top stocks in your watchlist, or the sector/region you care about. Most of you have already got the App on your smartphone but for some of you who haven’t done that yet, here’s the link again: https://apps.otastech.com/express/7

Hope this can bring you some degree of serenity in your trading hours these days.

Unusual moves in sentiment risk indicators such as credit default swaps and vol markets may typically go unnoticed by equity investors, yet can be excellent leading indicators to potential future share price performance.

By benchmarking current levels of volatility and credit in single stocks relative to their sector and normalising them over multiple time frames, OTAS highlights those shares which are behaving contrarily to peers.

One current example of this is SAB Miller.

SAB is currently experiencing unprecedentedly high levels of absolute implied volatility, currently trading around 40 vol points versus its longer term average of around 25. This implies a move in the shares over the next 3 months of circa +/- 20%.
SAB

Given the recent down move in equity markets implied volatility has increased across the curve, so to establish whether this phenomena is centric to SAB we need to benchmark its implied volatility vs industry peers. This particular chart is what OTAS is flagging in the Stamp.
sab1

Having had extremely low relative levels of expected volatility around the last week of August(post sell off) the chart has now completely reversed with the vol markets pricing in high degree of share price uncertainty for SAB Miller going forward. Perhaps those in the options market are putting more credence on the recent SAB-Diageo merger piece by Nomura analysts than the equity market ?

sab2

As well as Implied volatility, other Core Summary factors are arguably supportive for the shares at the moment :- positive technicals, directors recently buying stock, undemanding valuation and contractions in both short interest and CDS prices over the last week.

Below are 2 examples of how the Alerts and Microstructure give you an immediate insight into unusual behaviour in stocks across an order pad or watchlist.

Alerts in both ITV and IAG fired simultaneously indicating the absolute share price move over the first hour of trading was exceptional compared to how it would normally trade. As is evident from the Microstructure charts below, these abnormal returns occurred on volume characteristics well below the expected curve(indeed, the volume is slowing further) indicating that the buyer(s) have clearly adopted the wrong strategy and have now significantly impacted the stock.

The OTAS Alerts that fired identify, almost to the second, intra-day reversion points in both shares. Alerts such as these allow first mover advantage to capture these anomalies and can prompt adjustment your trading behaviour accordingly.

In the case of ITV and IAG someone clearly used this ‘edge’ this morning.

op

op2