AI-Research Update November – “Yin & Yang“

Dear Readers,

In our October outlook “Risk & Reward” we postulated a clear opinion: Hold investment levels and use the price weakness for acquisitions, despite the high risk around Evergrande and the interest rate and tapper fears. Our CAESAR-optimized analysis hit the bull’s eye and the stock market rewarded courageous investors with proud price gains: The S&P 500, for example, was up +5% for the month, and the Nasdaq was up as much as +6.5%. Our AI Global Opportunity Fund, which invests in growth stocks, gained +7.5% and our newly issued Alpha AI US leveraged certificate even +11%.

News like the one from Evergrande is part of the stock market and catches many investors on the wrong foot again and again. Our systems, on the other hand, do not take headlines into account, as we rely fully on our data base. Our goal is to give you a transparent view of the key indicators that influence the stock markets.

November 2021 could again be a special stock market month and no less challenging than October. Our capital market outlook, should once again bring light (Yin) into the dark data jungle (Yang), so that you are optimally positioned for the year-end spurt.

Outlook November: Yin & Yang

What guidance does CAESAR give us for the final weeks of what has been an excellent 2021 stock market year so far.

Basically, the majority of monitored indicators such as interest rate spreads or FED money supply remain comfortably in the green. As always, we have brought you key indicators in the Leading Indicators section. The yield on the 10-year US Treasury bond fell again to 1.57% in the last week of October. (Chart 1. 10 year US Treasury) Falling interest rates are supporting the highly valued tech sector in particular to maintain safe high levels. In October, many indices have technically recovered significantly, and again left your short-term downtrend. Our system tracks, among others, the MSCI World Index, which covers all major world regions. As long as the index is trading above the 50 day average, the positive investment environment remains. (Chart 2: MSCI World Index). The metal price index is currently showing a negative trend. (Chart 3: Metals). Since mid-October, a price decline can be seen, which suggests a weakening economic performance. However, the indicator is currently still in the green zone.

Our early warning system, which is optimized for market risk indicators, also signaled the all-clear again on 13.10 and catapulted us back into the markets in our yield-optimized strategies with leverage.

Conclusion:

Our overriding market assessment remains bullish. However, investors who are very risk-averse may well consider taking profits on hot stocks at the current price level. The resurgence of euphoria after the phase of fear in October should rather be seen as a warning sign. The much-watched CNN Fear & Greed Index has recently returned to the greed zone.

However, looking at seasonality, the strongest weeks of the year may well still be ahead. November is one of the best months of the year, averaging nearly 2.5% returns. Currently, high valuations coupled with a dash of euphoria are hitting the market for the seasonally strong months ahead.

For our Private Alpha investment experts, who have decades of experience in private banking, the pendulum is now right back in the middle. Yin and Yang are currently very much in balance. We expect normal market returns in the coming weeks. After the great uncertainty, many investors have returned to the market. Renewed explosive price increases, as in recent weeks, would therefore be more of a surprise.

In our strategies, we continue to be guided by CAESAR, maintain our high investment levels, but are always ready to reduce them if our highly agile risk early warning system should generate a warning.

Leading Indicators:

Indicators are used by CAESAR to define an ideal investment ratio and risk analysis for global equity markets.

Chart 1: 10 Year US Treasury 

Conclusion: The 10-year interest rate of the U.S. government bond is an important indicator for the S&P 500. The increase in September is to be classified as negative in the short term.  At the start of November, the interest level is at 1.57%.

Chart 2: MSCI World Index 

Conclusion: The 50-day moving average on the MSCI World Index is an important indicator that shows the technical situation in the market. This indicator shows that the bulls are currently back in control, as the indicator has risen above the uptrend.

Chart 3: Metals Index

Conclusion: The metal price index is an important indicator that shows the economic dynamics in the market. This indicator currently signals a slightly weakening price trend. An economic slowdown could therefore be ahead.

Market risk: The market risk measured by CAESAR for a significant correction is a low 8%. This analysis is based on mutually independent risk indicators evaluated by CAESAR. From a risk perspective, investments can currently continue to be made with an overweighted investment ratio. The leverage in our return-optimized strategy is used.

Product Update: 

Private Alpha AI Global Opportunity Fund:

The AI Global Opportunity Fund was able to build significant alpha to the market in October. Over the month, we achieved 7.5% returns, beating the benchmark Nasdaq100 index by 1%. Our stock algorithm, which was improved again in June, let us invest in time in Tesla and Nvidia, which are currently showing explosive price increases. Our portfolio is populated with digitization winners. We expect prices to continue to rise through the end of the year.

Alpha AI Sustainable:

Our Alpha AI Sustainable certificate gained 8.5% in October. Since launching the strategy 16 months ago, we are now up 59%. Our rock star with a price triple (3x) after 6 months is currently Standard Lithium Ltd. The entire renewable energy sector and technologies to stop climate change are fully in investors’ favor. The UN Climate Change Conference, which starts in Glasgow in early November, should generate additional tailwind once again. We remain convinced that high-yielding months lie ahead.

AI-optimized Index Tracker Certificates on the leading equity indices

On September 22, we issued our new Alpha AI US leveraged certificate on the stock exchange. The certificate is a smart index tracker on both the S&P 500 & Nasdaq 100 indices with risk protection provided by AI monitoring. In short, the certificate is designed to participate twice in the upside of the benchmark indices: S&P 500 & Nasdaq 100 during good market phases, while also providing additional protection during major market corrections. Market exposure can vary from -20% to 200%, with double leverage in “normal phases”.

The start continues to be excellent! October brought explosive gains of 11%. An ideal portfolio addition for risk-averse investors.

Our strategies Alpha AI US 500 and Alpha AI US Tec 100 also made convincing gains. All our strategies are clearly in the profit zone over the year!

Performance Update:

Status 10/29/2021

We wish you a good start into October.

Your Private Alpha Team