It’s been a stunning start to 2020 with only a shade over 2 weeks done my Portfolio is flying and I am pretty sure many other Private Investors are stacking up the gains. I am probably right in saying that this has been the best start to a year ever for me - although neither week so far has been as good as the first week of 2018 which was my largest week ever. Unfortunately back then it was totally a false dawn and the Markets were pretty miserable for the rest of the year !!
Of course we could get a repeat of 2018 but my hunch is that we won’t – there are lots of signs that Markets are in very good shape and although I expect some sort of Consolidation, either in the form of a bit of a Pullback or by going sideways and grinding out the over-bought conditions, but once we get through this, I suspect we will see Markets go higher. The normal seasonal pattern is that January and February are good months and that as we get more into March and April things can go a bit smelly - that has to be likely this year as well.
There are countless reasons why I am thinking this way and more and more I think the likelihood of a proper ‘full-on’ Bubble is increasing – I intend to write a Blog on this soon and we recorded another TPI Podcast recently which is still ‘in the can’ and that should be released soon and it is mostly dedicated to my thoughts around a potential Bubble.
Of course I am not saying a Bubble will definitely happen, and it is extremely possible that Markets tank on Monday, but my key point is that a few months ago I would have said that a Bubble was a low probability – let’s say a 5% to 10% likelihood, but if you ask me now I think the chance has risen quite a lot and maybe we are up to 15 to 20% or maybe more. The main explanation for why I am thinking this is that the action by Central Banks in the form of extremely loose Monetary Policy via QE (Quantitative Easing – in effect printing money) and NIRP (Negative Interest Rate Policy) is causing immense distortions in the global financial system and this is driving up all Assets. The nub of the problem is that it is getting very difficult to purchase Assets which give a respectable Yield – in such circumstances, Stocks are the only game in town and even after the huge recent gains, we can still find 3%, 4%, 5% Dividend Yields on Stocks quite easily and with arguably, a sensible level of Risk. Anyway, that Podcast will be out in due course but in the meantime we issued another one a few days ago and you can catch it on Soundcloud or if you use Apple or Audioboom then go to the ‘Conkers Corner’ Channel. If you hit the ‘Subscribe’ button on all these platforms then you will be notified when new ones appear and in 2020 you can brace yourself to endure a pretty hefty flow of new episodes !! Remember, the essence of our Podcasts is that both Peter Conkers3 and myself are just fairly ‘normal’ (ok, in my case perhaps that is stretching it a bit) blokes from Working Class backgrounds (sounds like we are trying to be the next Labour Party Leader !!), and if we can make some sort of success of mucking around with the Stockmarket then literally anybody can as long as they avoid the AIM Garbage and put in the effort and above all can stay calm and patient. You can find the Podcast here: https://soundcloud.com/user-479955511/conkers3-wheeliedealer-talk-boo-aapl-msft-tm17-gaw-hur-ai-sdry-mbh-sxx-lek-mtc By the way, while I think of it, you might not be aware that perhaps a few years ago Peter C3 recorded a load of Private Investor Interviews and some similar stuff (I was one of the victims !!) and if you go to his website or his Podcast Channels, then you should be able to find them and they are highly recommended by me !! There are also technical reasons (that’s Charts if you don’t get my drift), that suggest to me that we are unlikely to drop back much – if I remember I will try to point such factors out when I look at the Index Charts as usual, but in summary the US is making new All Time Highs constantly and Indexes like the DAX etc. are very near ATH breakouts – such behavior is utterly inconsistent with a massive drop. If I am right and a Bubble does take place, then it will be the opportunity of a lifetime to make an absolute mint but it is vital that we sell out either just before the Peak or slightly after – the key thing to watch out for is when your Pub Landlord, Supermarket Checkout Assistant and Pizza Delivery Driver are telling you what Shares you should buy. Note, at the moment, nobody who is not an Investor/Trader like ourselves knows anything about the longest Stock Bull Market in history………once they cotton on, Stocks could go nuts. Anyone fancy a Beemer? I put out some tweets about this and have had a few people contact me regarding my BMW Z3 which needs to go because I need space for the MX5 I have on order and I am happy to let it go at a very good price if a WD Reader wants it and you must take it as it is and sort out removal of the Hand Controls yourself (they are mechanical and I have all the old bits to put it back to standard – someone with a bit of mechanical savvy could do this in a few hours I suspect). It is a 2.2 litre 6 cylinder with a 4-speed ‘Tiptronic’ Auto box and 170bhp (it is quite powerful although a bit of a tank for a Roadster and I would say it is similar performance to a Golf VR6 that I used to own) and I am the second owner and I have had it for 10 years and the previous owner was a lady and it has full history and all that. I bet it has never been over 4000 Revs and I must admit I did push it up to 90mph once but normally I just plod around like the disabled old man that I am !! It has a removeable HardTop but that is sat in my spare room as I find it a pain because it needs 2 people to put it on and off and a while back I bought a soft cover thing for about £70 which sits on the top of the Car and protects the Soft Top over the winter. It has 4 very new tyres and the wheels are extremely good and I don’t think they have been kerbed at all. It has done 72,000 miles I think and I have only done 10,000 in the 10 years I have had it so as you can see it doesn’t get much use. Over winter it often just gets a quick drive to the Supermarket every couple of weeks but in the summer it gets a lot more use but to an extent that is mainly just nipping to the Pub and it rarely does journeys of more than 20 miles or so. Now I have the Cupra I tend to use that for eating the miles but for sheer summer enjoyment there really is nothing better than cruising around with the roof down and I must say that every time I drive the Z3 have a big silly grin on my face (that might be the wind puffing my checks out !!) It has a new battery and runs a treat. It is MOT’d until September but the catch is that the paintwork is a bit rough and that lets it down (it is black with black leather inside). From a distance it looks great but if you get up close you can see where I have mucked about with Rattle Cans and in places I have done a good job but some of it is rubbish. A future owner could just use it as it is (it polishes up really nice and there is no rust) or if you know what you are doing with a spray gun or if you know someone cheap then you could probably make it very pretty quite easily. I have all the handbooks and stuff and the spare key. The Aircon is not working as I hate cold air being blasted at me and never use it – I suspect it needs re-gassing but I can’t be sure of this. Having said that, I have run the Aircon now and again through the years for a few minutes just to keep the mechanicals turning round and the compressor works fine etc. The hood is in fair condition and I suspect it is the original because when I bought the car it had the hard roof on and the soft top was tucked away and it was so dried out that it wouldn’t even stretch to fit properly against the windscreen !! With perseverance we got it to work and once it had stretched again it has been fine. The seats have electric adjustment but sadly the Hood does not have power – it is rather surreal that the original owner did not pay a few quid extra for the motor but it is very easy for an able-bodied person to put the roof up – I can drop it no worries but lifting it up is quite a feat of physical strength for me and it is part of the reason I have decided to splash out on the MX5 which has a powered hard roof that goes up and down on the button. Not that I will be able to get out of that car very easily as it is considerably lower and I have not actually tried it yet !! I want £1000 for it and I think that is really a bargain. Have a look on Autotrader and you will see much higher mileage ones going for £3000 or more – they no doubt have better paintwork but that is what needs addressing on mine. If nobody I know wants it then I will take it to be fully valeted and stuff and will stick it on Ebay and I expect to get a good price for it – especially as we get nearer Summer. I am happy to let a WD Reader have it because it will save me a lot of hassle and I frankly just want shot of it but I won’t let it go for nothing which is what Guildford Mazda were going to allow me as a part-exchange. Anyway, DM me on the Tweets or email me at [email protected] if you want the little sweetie (her name is ZsaZsa by the way !!) Last Week As I mentioned earlier, this has been a stunning start to the year and last week my Portfolio added 2.6% which is truly massive and rather nicely for me I have already much more than paid for my new MX5, which I could never have thought possible so early in the year. It really does all seem a bit too easy. I had a small attempt at Shorting the S&P500 because things just looked so overdone, but I got Stopped Out and took a tiny hit (see my ‘Trades’ page for full details), but I will be very alert to what the Charts are saying and might put on another Short at some point soon but only if I am pretty sure the drop is coming. I did jump the gun on that one but I will try to be more patient. If we do get a drop of some sort, then I will be looking to go Long on an index and that could be a nice trade with such bullishness about. I am not really looking to buy much although I keep looking at Hipgnosis Songs Fund SONG and I might have a nibble. In theory it could make a very good Income Portfolio stock but my reservation is that it is quite new and ideally for that Portfolio I would like something that is more established and therefore a bit lower Risk. I am not too worried about the ‘C’ Shares now that I understand what is going on. I have the full WD40 now but rules are there to be broken and I might pick up some SONG in my normal Trading Account (why on earth I refer to this as a ‘Trading’ Account is a mystery to me !!). Other than that I am in a position to buy something in my Income Portfolio soon as I have nearly £3000 built up there and in coming weeks I will start looking seriously at how to deploy this cash. If you look at the ‘Scores on the Doors 2019’ blog that I published on the ‘Educational Blogs’ page a few days ago, then you can see loads of detail about my Income Portfolio and last night I sorted out the problem I was having with the resolution of the images so you should be able to see everything clearly now. UK Investor Show **IT LOOKS LIKE I WILL NOT ATTEND THIS SHOW ALTHOUGH I HAVE YET TO CONFIRM THE ALTERNATIVE SOCIAL ENGAGEMENT I MIGHT HAVE. I WILL MOST LIKELY BE AT MASTER INVESTOR THOUGH AND ALSO AT THE SHARES/CENKOS TECH EVENT** I keep meaning to mention this Show but forgetting to include it. Anyway, there are 2 big Shows that I have been to in past years which of course are Master Investor in Islington and this one that is usually in Westminster. It takes place on Saturday 25th April 2020 but at the moment I am not thinking of going to it but I thought Readers might be tempted. Anyway, you can find out details here: https://www.ukinvestorshow.com/ If you do want to go, then do a search for ‘Discount Codes’ or shout on Twitter or something and usually a FREE ticket can be tracked down. Master Investor Show Islington This is taking place on Saturday 28th March 2020 and is held at the Business Design Centre (BDC) in Islington which is in that London. I have probably been to this for most years over the last couple of decades and it can be worthwhile both for the Speakers and the chance to meet up with other Investors, although the Companies tend to be dominated by Oil & Gas and Resources AIM stuff which is certainly not by Cup of Darjeeling. Having said that, there are usually a handful of proper Companies and at least the limited choice makes it easy deciding which Stands to visit !! The Admission Fees are pretty cheap but if you use Discount Code BFMI you can probably get a FREE ticket: https://investoraccess.masterinvestor.co.uk/events/master-investor-show-2020/ I haven’t totally decided if I am going yet but I probably will and no doubt I will be mostly hanging around the Canteen area on the top floor. There is a Restaurant of some sort next door and usually we pop in there. It used to be pizzas but I think it was some sort of burger joint last year. NOTE – it looks like the Share/Cenkos Growth & Innovation Forum which is on February 11th is now full up but if you contact Dan the Editor at Shares Mag maybe he can help you. If you are lucky enough to have a Ticket already, then I will see you there (make sure you grab me and shout “Hi Wheelie” in my lughole). Blog Slate As I just mentioned, the ‘Scores on the Doors’ for last year went out a couple of days ago and you can find it on the WD1 blog page and now I have lots of ideas of what I am going to write next. It is highly likely that I will crack on with the one about a possible Bubble and that is a very easy one for me to write because it is all in my head. There is also a chance that a Guest Blog comes out but I am still dotting the ‘I’s and crossing the ‘t’s on that one so it may not happen. When I get around to looking at what to do with the £3000 in my Income Portfolio, I have a few Blog ideas to write related to this – so chances are my focus will shift that way once the Bubble one has been published. I have quite a few half-written blogs sat in my ‘working’ document and at some point I will look back at those and finish them off. So keep coming to the websites because there will no doubt be loads of new blogs in 2020. Digging in the Basement I am very much an enthusiast for Charting techniques (although it is vital to keep things simple) and this blog from early 2018 talks about how I got into it and how Readers can improve their understanding of Technical Analysis (TA) stuff: https://wheeliedealer.weebly.com/educational-blogs/how-did-i-learn-charting-stuff After that, it makes perfect connective sense to look at some Charts……… S&P500 As is always the case, the Images I show are taken as screengrabs from the superb SharePad software I subscribe to and if you click on them they should get a bit larger so you can see more details. First off we have the Weekly Candlesticks for the S&P500 and my Blue Arrow is pointing to a big up candle from last week and this is Bullish. Like the other US Indexes, the S&P500 is continually making new All Time Highs and this is very Bullish behaviour.
Next it is the Daily Candles for the S&P500 but what I am interested in here is how the Black 13 Day EMA (Exponential Moving Average) and the Red 21 Day EMA Lines are interacting. Where my Blue Arrow is we had a ‘Bull Cross’ and that is still in force. Until we get a ‘Bear Cross’ like what happened where my Black or Red Arrows are, this Index stays Bullish.
In the bottom window on the image below we have the RSI (Relative Strength Index) for the S&P500 Daily. On a Reading of RSI 79 where my Arrow is this is an extremely over-bought Index and it most definitely needs to calm down a bit soon.
Lastly for the S&P500 we have the Daily Candles with the Pink Zone marking the Upper and Lower Bollinger Bands. My Black Arrow is pointing at a small Doji Candle from Friday and this hints that the run up is weakening.
Nasdaq Composite
I had a quick look at the DOW and it is pretty much like the S&P500 but on the Nasdaq Comp I noticed a possible ‘Hanging Man’ Candle from Friday and I have highlighted this with the Blue Ellipse on my Chart of the Daily below. This could be a Turning Point and if it is, then a move below the bottom of Friday’s Candle would ‘confirm’ that a drop is likely (9346). We don’t know the extent of any drop but my feeling is that it won’t be huge. I won’t show it but the Nasdaq is on RSI 81 which is very over-bought.
DAX
I don’t want to dwell on this but the action in the DAX supports my contention that a Bubble is increasingly possible. My Chart below has the Weekly Candles and first up note my Blue Arrow which is pointing to the All Time High which is a shade under 13600. We are very near that now and if the DAX Breaks-out above this ATH that is extremely Bullish and supportive of my Bubble theory. However, my Red Ellipse is capturing what looks like a bit of a Hanging Man from last week and this could be a Turning Point down on the DAX. But the RSI is only 61 which is lower than most other Indexes and if it wants to go higher it has ‘room’ to do it. On the Daily from Friday there was a bit off a Bearish Shooting Star although the context is not great and perhaps it needs to ease a little before trying again for the ATH Breakout.
FTSE100
First the Weekly Candles. My Blue Arrow is pointing to a nice big White Up Candle from last week and this is Bullish. My Black Arrow is pointing to nearby Resistance at 7730 and if this can be cracked, then my Black Ellipse is highlighting Resistance up to the ATH which is at about 7900. I suspect we will see an ATH Breakout soon and that again would support my Bubble theory. The Red Curve (Red Arrow) is something I have been showing for many weeks and I thought there was a possible Bearish ‘Rounding Top’ formation. However, with recent price action I would say this Bearish scenario is not going to play out.
From the interaction of the Black 13 Day and Red 21 Day EMA Lines below, the FTSE100 is still in Bull mode.
On a Reading of RSI 65 on the Daily as shown in the bottom window on the Chart below, the FTSE100 is nearing Over-bought (officially that starts at RSI 70 and Over-sold starts at RSI 30) but it can still go up more. However, if the US Indexes drop back then the FTSE100 might get dragged down too.
Some interesting developments here. I think it was last week or perhaps the week before where I flagged up (geddit?) the idea of a Bull Flag and this is shown by my Red Trapezoidal thing and the Red Ellipse which is the Flaggy bit. On Friday last week (where my Blue Arrow is) we Broke-out above the previous High of the Flag which is where my Black Arrow is from 27th December 2019 and a level of 7665.
This break higher out of the Flag is Bullish but it must keep this going early in the coming week or we drop back and go back into forming up the Flag and needing to try to breakout again.
Empiric Student Property ESP
I hold these and recently on the Tweets I had been highlighting a Triangle and how it was squeezing from underneath and how this often leads to a Breakout higher. I just want to show that on a Chart so Readers and Twitter Followers know what I was bleating on about. The Chart below is a very simple and ‘big picture’ one and the Triangle has a ‘Flat Top’ where my Green Line is at about 100p and it was being squeezed by the Hypotenuse which is my Red Line marked by the Red Arrow. Where my Blue Ellipse is we Broke-out last week and this suggests more gains to come. To back this up, the Dividend Yield expected is 5% and that is very attractive in the low-yield environment I mentioned earlier. Note this Dividend is not fully covered yet by Earnings but the Forecasts on SharePad suggest it will be precisely covered in 2021. OK, I will leave it there. Good luck for the coming week and don’t forget the Podcast and the ‘Scores on the Doors’ and of course you better be quick to snaffle my Beemer !! Cheers, WD.
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