I have a ridiculous amount of stuff on this coming week and the big one regarding Market-related activities is the ‘Meet-up’ at Gaydon British Heritage Motor Museum on Friday 12th July. If you skip over to the ‘Events’ page then you might find a bit more detail but the essence is that anyone who wants to turn up can do so and I expect to be there probably about 1pm or a bit before if the traffic on the M40 is unusually kind and I will go straight to the Canteen area which is sort of on the upper floor of the main Museum building.
I have little idea on how many people are coming and I reckon about 10 people look quite definite but it is very likely more will turn up. It will no doubt be a fairly small group but that is a good thing because we will be able to have some good in-depth discussions and of course at many of the London Conferences and stuff it is often the case that I barely get a chance to talk ‘properly’ to anyone. If you are fairly new to the game then this is a great opportunity for you so make the most of it and get your lazy bum down to Gaydon. If you get there well in advance of myself then it is a very good Museum and well worth a poke around. If you can’t make this one, then we have the ‘WheelieBash’ which is on Saturday 7th September just outside Windsor and again everyone is invited and all experience levels are welcome. You can find more details about that on the ‘Events’ page as well.
Last Week My Portfolio took a small hit of 0.3% over the week which is nothing much really and I can quite comfortably classify that as ‘Noise’ in the big scheme of things. I think there was a bit of damage from my Index Short positions but clearly it wasn’t much and it certainly looks like Indexes have run ‘too far, too fast’ and need to calm down a bit. I did at last get the chance to login to my Income Portfolio and I am really pleased to see it is up a shade over 13% since the start of 2019 but of course the rebound has been very strong so it is no big shock. However, it is particularly pleasing because I am sitting on a lot of Cash for that Account which has not been re-invested (this is a bit of a quandary because on the one hand I am missing out on Dividends but on the other I am not taking so much Risk and I am very cautious this year as I see the potential for disaster as immense as the UK continually fights itself over Brexit) and it is very possible that if I had invested that Cash my Return so far would have been higher although this has an enormous heffalump sized dose of Hindsight/Outcome Bias. I suspect there will be many opportunities to deploy the Cash later in 2019 maybe or certainly in 2020. There were some very strong US Non-Farm Payrolls Numbers on Friday afternoon and yet again this suggests that the US Economy is humming along nicely and validates the Policies of the Trumpster despite his numerous failings and wacky character traits. I was rather puzzled a few weeks ago when the expectations came out for 2 Interest Rate Cuts from the Federal Reserve through 2019 and this very strong Number must make the likelihood of those Cuts happening much lower. It makes no sense to be Cutting Rates when the Economy is by far the strongest of the Major Economies and if anything it would be far more sense to be raising them slowly to build up ammunition in advance of a Slowdown – it will come, but it is just a case of when and I think I read somewhere that the US has had the longest period of Economic Expansion anytime in history. This strength in the US gives a bit of justification to the strong Stockmarket over there although arguably Tech Stocks in particular are very highly valued. However, that is certainly not the case in Europe which is being very sluggish and is continually putting out weak Economic Numbers. The UK is obviously in serious trouble over Brexit and it won’t surprise me at all if we slip into Negative Growth at some point in coming months (note, a Recession is officially 2 Quarters of Negative Growth but with the way the Politicians are arseing about it won’t surprise me if we do get a Recession). It is hard to see the UK Stockmarket or those of European Economies doing well with such problems and it could easily spill over to the US especially because China doesn’t seem to be the amazing Growth Engine it has been for the last few decades. Clearly with all this as the backdrop my Strategy of being very cautious and not buying anything much and staying heavily Hedged will continue. I look forward to getting back to ‘Normal’ times but that could be some way off yet. Clearly my focus is on getting those Hedges closed but I am in no rush although the key will be to Short a small bit more so that once things do start tanking, I can maximise the gains on the Shorts and get out at a higher level. I don’t expect that opportunity to arise until the Autumn which is likely to mean late August/September. Blog Slate Strangely this section of tonight’s blog is going to contain a lot of info if I remember to write down all the stuff I wanted to mention. As I said at the start of this blog I have a lot of things on next week and these include a trip down to Portsmouth on Wednesday to meet up with a college mate who now lives in the US and he rarely comes over so this is an opportunity not to be missed. Then Friday is the Gaydon thing and then on Saturday I am off to Hyde Park to see Florence & her Machine – so it is a very full-on week for me and it will mean I don’t have a lot of time to work on stuff for the website or whatever. Anyway, the plan is to publish a Guest Blog that has kindly been provided by Paul Hawkins @Hawkeye_74 which consists of copious notes he has made from attending meetings and conference calls with PCF Group (used to be Private & Commercial Finance I think). It is very good and I have been working through it in the last few days to get it formatted how I need it and to make it easily readable. My rough plan is to publish this on Thursday night and I should be able to do that. The backlog of Blogs I want to write keeps growing and growing and sadly I doubt I will ever live long enough to get them all done !! Just in the last few days I have been thinking about this regularly trotted out line that “it is time in the market that counts, not timing the market” and the more I consider it the more I can spot the flaws and I wonder how true it really is (like most things which are ‘Folk Wisdom’ it is probably totally bollox). This is something that Fund Manager types trot out and they always have loads of Academic Research to back up their claims but we must remember that they are hardly an impartial observer. It is amazing how people can deeply believe something to be true if they get paid to do so. Anyway, my intention in coming weeks is to investigate this and flag up the pros and cons and see what sort of conclusion I can come to. Another blog idea I have is to write about what going into ‘Drawdown’ means for me because I am getting to the point where most of my wealth which sits outside of the Stockmarket which I am willing to use for day to day spending has been used up and I will be taking Cash out of my Share Accounts and this means I will not be re-investing as much as I would like and this will impact Returns. I have a nice chunk of Wealth outside of Stocks but I want to keep that as it is for Risk Management purposes and I want to also move more of my Stockmarket Wealth towards the Income Portfolio sort of approach. I think it will make a very useful blog and I hope to create this in coming weeks. On top of this I have to write a short one about Live Company Group LVCG which I bought into recently in a very small way and I will make this the priority (nip over to my ‘Trades’ page and you should find more details). They had very good news on Friday with a Trading Update and some Corporate Governance changes so I am very pleased to see that. Another idea I have is to write about common Mistakes that New Investors make and I am sure Readers will like that if I ever get it done. Some time ago for whatever reason I drew up an incredibly long list of things I thought were regular Mistakes made by Newbies and my thinking is to take each of these and write a Blog about them or maybe a Blog could contain a couple of these Mistakes. I have not decided yet but perhaps this could become a huge Blog Series and be something I work on as a ‘Winter Project’ and I might start off with the List of Mistakes and then in following Weeks I would create the more detailed Blogs about each one. We shall see but it is something I would like to do. I guess each one would be similar to the one I put out last week about the importance of defining your Approach/Style and would contains Links to other Blogs I have written related to the particular subject. In fact, failing to define your Approach/Style is a big Mistake people make. I also need to update the ‘Weekly Performance’ page for June but with all the stuff I have on it could well be that this gets slipped and I do a bumper one in August which covers June and July. I am also acutely aware that we have not recorded a new TPI Podcast for many weeks as both Peter C and I have been really busy. However, we have something special ‘in the can’ and hopefully that will appear soon. So with all that to get on with it is clear there should be new stuff regularly appearing on the website and at least I have nearly finished messing around with my BMW Z3 this year with all the exterior paintwork finished (although there is a little bit I am not overly happy with but that can wait until next year now) and today I did the old Leather Preserver thing on the seats so they look lovely now. There is a job I want to do under the bonnet where there are some bits of surface rust but it shouldn’t be a massive job and otherwise that is all I will do to it this summer. So I might have a bit more time but I am aware I have been neglecting the Pub which simply won’t do. Oh, and I have several Non-Finance Book reviews that need publishing. Vintage Blog I thought this was quite a recent Blog but it turns out I actually wrote this 5-part Series back in March 2018, which is well over a year ago now. Anyway, I am sure Readers will like being reminded of this one and Readers who are new to the website may be seeing them for the first time. There are links at the start to the earlier parts: http://wheeliedealer.weebly.com/educational-blogs/evolution-of-an-investor-part-5-of-5 Right, on to the Charts (this is supposed to be a Charts blog after all !!). S&P500 As always the Charts I include here are ScreenGrabs from the excellent SharePad Software that I subscribe to and if you click on the images they should get larger so you can see more detail. My first Chart below has the Daily Candlesticks going back about 9 months and the key thing here is that last week the S&P500 managed to get above the All Time High (ATH) from where my Red Ellipse is over at the Top Left Hand Corner of the image and a new ATH was put in on Thursday last week at 2995. This is very close to the magical 3000 and this could be a challenge to get over as it focuses minds onto just how high the Index now is. A clean break over 3000 would be very Bullish behaviour. My Green Arrow on the Chart shows the recent Low from 3rd June which was put in at 2728 and this should be strong Support if Markets do drop back. On Friday where my Blue Arrow is pointing we had a sort of ‘Hanging Man’ Candle created where the Market opened and then dropped down but recovered to be slightly up at the Close of the day. In combination with the Candle from Thursday, this could mark a Turning Point from which the S&P500 drops back a bit. The next Charts should give us more of a steer on this, particularly the RSI reading.
In the bottom window on the Screen below we have the Relative Strength Index (RSI) for the S&P500 Daily. On a Reading of RSI 67 where my Black Arrow is this is a pretty high level although as can be seen from the Chart the RSI often goes a bit higher than this. Note, back at the end of 2018 we had some really exceptional runs up in the RSI where those Red Peaks are and this is unusual. It could go that high again, but I doubt it very much at this time of year.
My next Chart has the Daily Heiken Ashi Candles for the S&P500. These are completely different to ‘normal’ Candles and are very simple to interpret. Where my Blue Arrow is in the Top Right Corner, the HA Candle is still White which is Bullish but note it has gone narrow which could be a precursor to the HA Candles changing colour towards Bearish Black. These Candles form up over 2 Days so it will be interesting to see what we get at the Close on Monday.
Next we have the normal Daily Candlesticks for the S&P500 but the Pink Zone marks the Upper and Lower Bollinger Bands. You may need to look closely, but where my Black Arrow is the Candles are moving away from the Upper Band so perhaps a Pullback is coming. However, if we do get a Pullback it would probably be healthy and I doubt it would be a huge drop………….yet.
Finally for the S&P500 we have the Weekly Candles. Where my Red Arrow is we have a decent enough Up Candle but something to notice is that the Price is now very near my Upper Green Line which could be marking an Uptrend Channel between that Line and the Lower Green Line (both of these are marked with Green Arrows).
Nasdaq Composite Index (US Tech)
Much of the Nasdaq is the same as the S&P500 Charts I have just shown but this one is of note. In the bottom window we have the RSI for the Nasdaq Comp Daily and on a Reading of RSI 63 where my Black Arrow is, this is not all that high for this Index and I think it has room to go higher now. If it does rise, it might take the S&P500 up with it.
This one is also important. This is the Weekly Candles for the Nasdaq Comp and my Black Arrow is pointing to a ‘Hanging Man’ sort of Candle so this could be a Turning Point before the Nasdaq drops back on the Weekly level.
The Dow Jones Industrials Index (The Dow) is largely similar to these other US Indexes so I won’t show that one.
FTSE100 Below I have inserted a Chart of the Daily Candlesticks for the FTSE100 going back to early October 2018. My Red Arrow is pointing to a Big Down Candle from Friday which is clearly Bearish and this has turned down off a small Doji Candle from Thursday with a High at 7622. In order to keep moving higher in the short term, we need the FTSE100 to get over that Resistance at 7622 and then if it can achieve this, there is a lot of difficult Resistance above up to the ATH which is just over 7900 I think. To the downside there is decent Support where my Black Ellipse is at about 7400 and if the worst comes to the worst, there is very strong Support down where my Blue Arrow is which marks the recent Low at 7079.
In the bottom window on the image below we have the RSI for the FTSE100 Daily. On a Reading of RSI 68 where my Black Arrow is this has turned down and is still at a very high level. This suggests more falls are likely but could just be a healthy Pullback.
Next it’s the Daily Heiken Ashi Candles for the FTSE100. My Red Arrow is marking where the HA Candle from Friday is still Bullish White but look how narrow it has got – that suggests a change to Bearish Black could be on the way.
The next Chart should be no surprise to anyone who regularly follows the Charts closely and with the Down Candle from Friday after the Small Doji on Thursday (it looks like a ‘Gravestone’ Doji by the way) my Blue Arrow is pointing to where the Price has fallen back from the top Bollinger Band.
My last Chart is the Weekly Candles for the FTSE100. My Blue Arrow is pointing to a decent enough Up Candle for last Week but note that it does have a long ‘Wick’ up above it which shows it dropped back from the High of the Week which is consistent with what we have just seen. By itself though, this is not a Reversal Candle and it is entirely consistent that we could get a Pullback in the early part of Next Week but still gain later in the Week and keep the bullish outlook suggested by this Weekly Chart intact.
OK, that’s it for this Week. Have fun everyone and I’ll see you Friday at the Museum. Regards, WD.
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