I guess none of us is really surprised that Theresa May has finally gone and the most remarkable thing is that she lasted so long with an unbelievable talent to do an impression of a barnacle on a boat as many people chipped away ceaselessly until eventually the limpet fell off.
Of course it means yet more uncertainty and adds to risk with a ‘No Deal’ Brexit seeming a lot more likely and with any future PM candidate having to commit to keeping ‘No Deal’ open if they are serious about getting chosen by the selectorate. At the moment Boris is the hot favourite (the simple fact that I can just type his first name and you know exactly who he is plays to how he is probably the only Politician in the UK who has the ‘X’ Factor) and my own view is that if the Tory Party wants to see off Nigel Farage (a Politician with Castlemaine XXXX Factor !!) then choosing a Leader other than Boris is probably guaranteed to consign them to oblivion. It is not only an existential threat from The Brexit Party but also the dangers of Corbyn getting into Number 10. There are no good answers here for Stocks.
After the utter trouncing the Tory Party got in the EU Vote last night, it is pretty obvious that the Party faces a truly existential threat and faced with a choice of ‘No Deal’ or ‘No Brexit’ if they choose to not go ahead with Brexit in any form on the 31st October, then it is highly likely that the Tory Party will be entirely wiped out in a General Election by Nigel Farage. This should focus the minds of ‘Remain’ Tory MPs and without doubt it hugely ramps up the chances of ‘No Deal’.
In terms of a Second Referendum, clearly a large part of the Electorate want this but the difficulty is how they achieve it. With the big two Parties getting utterly smashed last night neither will be keen on a General Election and it is going to be difficult for Labour to win a ‘No Confidence’ Vote in Parliament as they will need Tory MPs to vote with them and that is highly unlikely with them knowing they will probably lose their Seats. It is far easier for them to look the other way and to vote against ‘No Confidence’ and to then face the Electors in a later General Election. On top of this, it is highly likely that Farage will win an MP in the Peterborough By-Election very soon. For a Second Referendum there is no Parliamentary Mechanism to make it happen and the previous Extension resulting from the Oliver Letwin/Yvette Cooper Bill was for a ‘one-off’ Extension. Remain MPs need some Legislation that they can table an Amendment to but nothing is going through (and the Tories would be insane to enable this). Remain MPs could have ‘Opposition Day’ Debates but any output of these is not binding on the Government. No doubt we will get plenty of Remain MPs like Tom Brake misleading the population about this. I’m pretty bored with Politics this weekend and I have been writing far too much about it on the Tweets. As such, I will just say that risks have risen and it makes my caution for 2019 even more appropriate and I see the potential for trouble in the Markets ahead as significant. Last Week My Portfolio was down to the tune of 0.4% for the week and when you consider the dramatic events and perhaps even more worryingly the kicking that the Markets suffered on Thursday, then I am quite happy with this. On the note of Thursday, I think that fall was quite significant and it is making the predictive power of the 13/21 Day EMA (Exponential Moving Average) look very impressive and I will cover this later in the Charts bit (assuming I ever get round to it !!). Of course the Short Positions I have helped to offset some of the damage from Thursday and I am obviously going to keep them in place as we go other the soggy Summer months and crucially into Autumn which is historically the worst time of the Year for Markets and this Year we will have the added problems of a possible ‘No Deal’ Exit from the EU and a lot of potential mess around that. It is important to realise that the EU never took Theresa May seriously when she ‘threatened’ them with No Deal but this time a new Tory PM will pretty much have to carry out a threat of No Deal and even if they don’t want to, it is very possible that the EU simply give up on the whole fiasco and do not allow the UK any more Extensions. I think that is unlikely but it is a clear and serious Risk. The Month of June tends to be a tough one (from my ‘old’ copy of the UK Stockmarket Almanac it says that June is the 2nd Worst Month and a typical June sort of rises a bit and then just falls away all Month) and the Technical set-ups seem to support this as I will cover later. So this supports the idea of being cautious and with nice weather I am very happy to be out and about and enjoying life rather than wasting time sitting in front of a Computer Screen making my eyes go funny. Funny enough, I am due at the Pub tomorrow…….. Mello Select This is an initiative that was thought up by Steve @melody9999 and is being undertaken via Twitter and Steve will pull together all the inputs from the Twitterati and the plan is to create a ‘Guest Blog’ which will appear on my Website in a few weeks. What we need people who attended Mello to do is to give us the names of up to 3 Companies that you liked the most and please also give up to 6 Bullet Points on why you liked them. Please copy Steve and myself on the Tweet (or Tweets) that you send and please use the Hashtag #melloselect. Steve will then take all the responses and create the document for the Guest Blog which everyone will be able to use as a resource for Ideas. It will take a few Weeks for us to get this done so you will have plenty of time to buy before everyone sees your brilliant suggestions !! Many thanks for helping with this. The strength of the Twitterati and Mello etc. Community is that we can all help each other and share knowledge so that everyone can achieve better things and Steve’s initiative is completely in this vein and big thanks to him for offering to do the ‘donkey work’ on it. Gaydon Museum Meet-up You can find out details about this one on the ‘Events’ page and the crux of it is that I will be at the National Heritage Motor Museum at Gaydon (it’s a bit below Birmingham I think) on Friday 12th July. Again everyone is invited and you just need to pay the entry fee to the Museum but it is well worth going and we should have a good laugh. Come and join us. I am not too worried about knowing who is coming because it is a huge venue and a public place anyway. Generally these kinds of Meet-ups tend to be smaller with perhaps around a dozen people or so which means that if you are new to investing or anything then they can be a superb opportunity to meet up with the highly experienced and successful Investors who I know are coming along. It is well worth taking advantage of. WheelieBash 2019 You can find out more details about this on the ‘Events’ page which is on WD2 (there is a Button at the top of the main Homepage on the main Website and you are actually reading this Blog on WD2 even if you hadn’t realized so if you go to the top of the Page you should find the Menu to get you to the ‘Events’ page) and it is taking place on Saturday 7th September and I can confirm that it will be held at the same venue as last year - the White Hart in Winkfield which is just outside Windsor. There is a link on the Events page to the Pub and everyone is invited but please contact me somehow if you are coming because I need to keep track of the numbers - we are allowed 60 People and it is pretty likely we will get that I think - the List is filling up fast with 20 confirmed attendees already and a lot of people at Mello said they are interested and will let me know (and that was not prompted by me). Blog Slate A few days ago I published the second part of the Blogs on Market Inefficiencies and Overconfidence. I’m pleased with how they turned out and I would recommend Readers have a look if you have not managed it yet. This week I should have something to publish as I have a couple of reasonable Drafts done but I would like to get the Blog about my latest thoughts on how I want to run my Portfolio out although despite working on it late last night, there is still a lot to do so I might struggle to get it ready. I am actually writing part of this on Saturday Night and I have just updated the ‘Little Black Book’ page on WheelieDealer2 so skip over there and you should be able to see some new Stock Ideas that need proper thorough research. From calmer times This Blog comes from early 2016 and I forgot I had written it. There are 2 parts and I have put in links for both: http://wheeliedealer.weebly.com/educational-blogs/jesse-livermores-trading-rules-how-do-they-relate-to-the-wd-approach-part-1-of-2 http://wheeliedealer.weebly.com/educational-blogs/jesse-livermore-trading-rules-how-do-they-relate-to-the-wd-approach-part-2-of-2 Onto the Charts then and in particular those EMAs. S&P500 As always the Charts I include in these Blogs are taken from the excellent SharePad Software that I subscribe to and if you click on them they should grow larger so you can see more detail. First up we have the Daily Candlesticks for the S&P500 and first note the Blue Resistance Line marked by my Blue Arrow which is important for Bulls to get the Price over if there is to be a rally. My Black Arrow is pointing to a Small Doji Candle from Friday and although it may be difficult to see on this Chart, the S&P500 was unable to hold the High which is a sign of weakness. Support at 2800 where my Green Arrow is is very important now and this must hold or we will probably head down towards at least 2700. My Red Arrow is pointing to a Bullish ‘Golden Cross’ between the Dark Blue Wavy Line which is the 50 Day Moving Average and the Lighter Blue Wavy Line which is the 200 Day MA. This is promising although it is a very ‘slow’ Indicator and therefore not massively reliable. There should be Support around the 200 Day MA which is at 2775 ish but it is often ignored.
In the bottom window on the Screen below we have quite an interesting Technical happening. This window has the MACD (Moving Average Convergence Divergence) for the S&P500 Daily and my Black Arrow is pointing to where we seem to have a bit of a ‘Skim-off’ or ‘Glance-off’ which in this case is bad. Look how where my Black Arrow is pointing the Green Histogram Bars ‘Hump’ was moving towards the positive part of the Chart but then a few days ago it turned back down again. That is Bearish behavior although I don’t find the MACD the best of indicators.
In the bottom window on the next Chart we have the RSI (Relative Strength Index) for the S&P500 Daily. Where my Arrow is we are on RSI 44 which is clearly a low level but by no means an extreme Low. We could move up from here but often when Markets are very weak they need to go down to extreme levels (30 and below) in order to recover properly – something to watch.
Next is the Daily Heiken Ashi Candlesticks for the S&P500. My Arrow is pointing to a Narrow Black Down HA Candle which is obviously of a Bearish colour but note it is not a Big HA Candle so it might be turning towards White and Bullish again. HAs are a good Indicator but they are a bit ‘slow’ as they form up over 2 days.
Next we have the Daily Candles with this Chart particularly focused on the 13 and 21 Day EMA Lines (Exponential Moving Averages). My Blue Arrow is pointing at a Bearish Cross on the 13/21 Day EMA and this is still in force. For this to change we need a Bullish Cross like where my Red Arrow is.
Now it’s the Weekly Candles and my Black Arrow is pointing to a ‘Long Tails’ Doji from last week and this is neither Bullish nor Bearish really. If we had previously had a long run down, then such a Candle could be a Turning Point. After just a few down Weeks the context is not good for such a turn up yet.
Next it’s the Daily Candles for the S&P500 and the Pink Zone marks the Upper and Lower Bollinger Bands. Where my Black Arrow is we are near the bottom Band and it could move up from here.
FTSE100
Below we have the Daily Candlesticks for the FTSE100 and my Red Arrow is pointing to an Up Candle from Friday after the big drop on Thursday. Note on Friday it fell away from the High of the Day (7303) but perhaps it can build from here. To the downside, Support at the Thursday Low of 7211 is first up and then the Support where my Blue Arrow is at 7150. My Green Resistance Line (Green Arrow) is similar to the Line I showed on the S&P500 and again the FTSE100 needs to get through this if the Bulls are to take control. However, my Green Line only has 2 ‘touch points’ so this is not great in terms of its validity. To the upside, there is Resistance at 7303 then 7370 and a bit higher up at 7528 where my Black Arrow is.
In the bottom window on the next chart we have the MACD for the FTSE100 Daily. Again we have a ‘skim-off’ but in this case it is a better example where my Black Arrow is with the ‘Hump’ moving towards positive but then glancing off and going Bearish again.
In the bottom window it’s the RSI for the FTSE100 Daily. On a reading of RSI 45 where my Black Arrow is, this is not all that low and I would expect a much lower level before a proper recovery.
Next the Heiken Ashi Candlesticks in Daily timeframe. My Red Arrow is pointing to a fairly big Down Black HA Candle – this suggests weakness.
Next it’s the Daily Candles but my focus is on the 13 and 21 Day EMA Lines. Where my Blue Arrow is we had a Bearish Cross on the 13/21 Day EMA Lines and this is still ‘in force’ and where my Green Arrow is note that the faster 13 Day EMA Line (Black) started to move up towards the slower 21 Day EMA (Red) but then with the nasty day on Thursday, it dropped away again. That could be significant.
The Chart below has the Weekly Candlesticks. My Blue Arrow is pointing to a Down Candle from last Week and this is not a Reversal Candle so I assume it probably is more Bearish than Bullish. In fact, if you look at the Candles for the 2 previous Weeks then that could arguably have been a Bullish Harami (although the context was weak) and the failure to build on that White Up Candle from the previous Week is Bearish.
FTSE250
Finally I will just chuck this one in. This has the Daily Candles for the FTSE250 and my Blue Arrow is showing that a Bearish Cross is still in force on the 13/21 Day EMA Lines. OK, that’s it for this week, good luck with your travails next week, Cheers, WD.
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Stocks & Markets WheelieBlogsThese tend to be more Markets and Stocks related and timely - the Blog Page on the Main WheelieDealer Website has the 'Educational' stuff (well that's the theory anyway !!). Archives
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