I really don’t get on with tech and IT in particular. This was highlighted this week when Peter @Conkers3 and myself recorded another TPI Podcast and we thought it was all in the can, only to find that nothing had recorded and we had to do it again. Exasperating.
The sad thing was that the original recording (that wasn’t actually a recording !!) was utterly brilliant and without doubt the best thing we have ever created. In fact, I would say it was the best Podcast in the history of Financial Podcasts and it was incredible as it contained loads of future multi-bagger ideas and now we can’t remember what they were !!
Anyway, we managed to knuckle down and record something again and we caught pretty much the essence of the first one although yet again the Technology Gremlins bit us and we ended up having to record it in two chunks because my Wifi connection decided to drop out. All this was particularly irksome because it was the first official run of my new USB Microphone which I am certain is going to transform the sound quality of the Podcasts, but we managed to get Part 1 out and you can listen to it at the link below. We expect to release Part 2 soon.
https://soundcloud.com/user-479955511/conkers3-wheeliedealer-how-to-get-very-rich-slowly-boo-igg-azn-mtro-sxx Last Week The grinding ‘Death by a gazillion cuts’ Market keeps nibbling away at my Portfolio and last Week I took a hit of 1.3%. I would put that mostly down to strength in the FTSE100 because I still have a Short Position running there although it is significantly smaller than it was – and a flippin’ good job too or I would have really taken some pain. I also have a small Short on the S&P500 and that looks like it would have gained slightly last Week but clearly that was not enough to help me much. The general story seems to be that the MegaCaps in the FTSE100 are holding up pretty well (I hold many of these in my Income Portfolio which I do not report on in my Weekly Numbers so that is some consolation although it won’t offset the damage to my larger ‘Normal’ Portfolio – the WD40) but stuff in the FTSE250 and in AIM and the FTSE Small Caps is just drifting down without much buying interest. Without doubt there are countless challenges in the Big Macro Picture at the moment and the Brexit Battles are having a big impact by weakening the Pound and dissuading Investors and Traders from buying Smaller Company Stocks that are seen as high risk. The FTSE100 has been benefiting from the weak Pound but this is not a perfect Inverse Correlation and when the Markets get very moody, both the Pound and the FTSE100 can fall together. I am particularly interested in what the US Markets are doing and it is the Nasdaq which took quite a whack last week and perhaps the reality of the insane valuations is starting to hit home. I will look at the Chart of the S&P500 in a bit and I expect this to be similar to the Nasdaq because it normally is. However, if there are significant differences that are important I will show them on the Nasdaq as well. Last week the DOW did better but that only has 30 utterly massive Stocks and is not all that representative with regards to what is really going on. We have pretty much got through September with just one Trading Day left and it has turned out to be unusually good as it has the repute of being the worst month on average. However, before we start jumping for joy it could simply have been the case that August was rough and September had an element of ‘bounce back’ and this could lead to October being ropey. On the whole October has a good record in terms of the actual Return for the Month but it has often turned out immensely choppy and even with a positive Return for the whole Month, it can often have achieved that after some huge drops and recoveries. With the Brexit Balls-up ongoing there is no doubt almost anything could happen and it would not be a huge shock if we are seeing Corbyn in Number 10 very soon – it could be later this week !! There is talk of a ‘No Confidence’ Vote being called by Corbyn within days and this could lead to a ‘Caretaker Government’ which would ask for an Extension to Article 50 as its sole role and then there would be a General Election – but we would not leave the EU without a Deal. No doubt a General Election could cause lots more turmoil in the Country and by extension in the Markets and when you look at the polling then Boris has a massive lead although how the Brexit Party reacts and how cleverly the ‘Remain’ Parties can work together to win Seats, is not really clear. But we can be sure Markets will be wobbly and in particular the Pound is likely to suffer, although an Extension might actually push the Pound up which could hurt the FTSE100. I picked up a sense that some of the Macroeconomic News coming out around the Globe was a little better a couple of weeks ago but the latest Economic Page in this Week’s ‘Investors Chronicle’ just seems a litany of negative Macro Numbers and clearly Germany is as weak as anything and we know the UK is having a tough time. With Germany in trouble from its Manufacturing sector slowing bigly, it is hard to see how the rest of the Eurozone can do well and we then have China gradually slowing and this has a big knock-on for all other Countries. I noticed also that the Riots in Hong Kong were much worse this weekend and that doesn’t look very good at all – I hold some HSBC HSBA Shares and Standard Chartered STAN and they both have significant operations out there. It is impossible to know how Hong Kong will get resolved but my bet would be that it won’t end well for the Protesters – China is not a ‘sensible’ Country by Western standards and the Authorities have a strong dislike of unrest. Needless to say my Strategy isn’t changing. I am extremely cautious and although I have my eye on more Live Company Group LVCG and more Clinigen CLIN and I would like to buy some Hotel Chocolat HOTC, I am biding my time and letting things play out. I bought more igIndex IGG recently and you can see this on the ‘Trades’ page which sits on the WD1 Website and I am keeping a close eye on the Indexes for signs that I can Short more if I get the chance (with a strict Stoploss !!!!). Mello Chiswick – November 12/13 The next Mello Event is due to take place on Tuesday 12th November and Wednesday the 13th in Chiswick. I intend to be there on the Tuesday afternoon and into the evening and there is a Discount Code going around where you can get Tickets for half price if you are quick – the Code is ML1950 and you can book at the link below: https://melloevents.com/event/ These are without doubt the best Investor Events around and well worth attending. There are usually loads of decent Companies with stands and presenting and it is a superb opportunity to meet up with other Private Investors who are serious about Stocks. Blog Slate At last I got around to publishing the ‘Stock Buy Checklist’ for AIM Blue-Sky Story Stocks and you can find this on WD1 on the ‘Educational Blogs’ page. This coming Week I will most likely release Part 1 of a two-parter about not ‘over-thinking’ things and that of course has a big psychology aspect to it but I continually see evidence that keeping things simple is the best way to go and I am putting more emphasis on this myself. I have many Draft Blogs in various states of disrepair but I am confident I have plenty to keep the weekly stream of Educational type Blogs coming out. I have been contemplating doing a Blog about a Stock that I want to buy and I will be perhaps starting on something soon. I have several Stocks I am attracted to and I need to whittle through these and pick one to do more in-depth research on which is when I create the Blog. And the big thing I want to start on are a series of Blogs about errors that Beginners make and the first Blog of these is likely to come out in a few weeks. That first one will be a long list of the kinds of mistakes that are made and then the follow up Blogs will come out over many weeks and probably months and will address the items on the List in more detail. That should keep me busy over the Winter and mean you Readers have plenty to see every time you visit the Websites. From Prehistoric Times As always, every Week I include a Link to an old Blog from the Archives and had forgotten about writing this one – you might find it worth a read through: http://wheeliedealer.weebly.com/educational-blogs/affirmative-action-timidity-vs-assertiveness Right, let’s see what those Charts are saying and in particular the US ones. S&P500 As always, my Charts are ScreenGrabs from the excellent SharePad software that I subscribe to and if you click on the images they should grow larger so the detail is more clear. I have looked at some of my Blogs on my Fone and I have no doubt it is easier to see the details on a big PC screen or perhaps on the 10 inch tablet. First up we have the Monthly Candlesticks for the S&P500. Now, I am cheating here a bit and we need to see what happens tomorrow which is the last day of September but based on what we have so far, this doesn’t look all that great. My Black Ellipse is capturing the Candle for September as it stands and although it is a White Up Candle, note that is has quite a long ‘Wick’ up above it which shows that it has been unable to hold the High for the Month. My Blue Arrow is pointing to a ‘Shooting Star’ sort of Candle from July and this looks like a Turning Point to me from which the S&P500 is dropping back. We shall see.
Next we have the Weekly Candles for the S&P500. My Blue Arrow is pointing to a very choppy Black Down Candle from last Week and this has long ‘Tails’ or ‘Wicks’ which shows it was chopping about a lot. Note it fell on the Week though and it looks to be turning down from the ‘Shooting Star’ Candle from the Week before.
Next up we have the Daily Candlesticks but my focus here is on the 13 and 21 Day Exponential Moving Average Lines and at the moment they are still in ‘Bull Mode’. The Black Wavy Line is the 13 Day EMA and the Red Wavy Line is the 21 Day EMA and note where my Red Arrow is they did a ‘Bull Cross’. However, we need to watch these Lines now and if the Black Line crosses down through the Red Line, then we have a ‘Bear Cross’ and that would suggest weeks of falls ahead. I might Short more on a Bear Cross.
Underneath we have the Daily Candles with the Pink Zone marking the Upper and Lower Bollinger Bands. My Black Arrow is pointing at a Big Down Candle from Friday but note how it managed to Close up off the Low of the Day at 2945 and it Closed right on the Bottom Bollinger Band. It is possible that it tries to move up now but generally there seem to be quite a few Bearish signs here as my previous Charts suggested.
Note how the Price on Friday dropped back to the Blue Horizontal Line (marked by my Blue Arrow) and this was former Resistance of a Sideways Range that has now become Support as it should do. Therefore, this Blue Line at about 2945 is immensely important and if the S&P500 drops below this then it could be getting more concerning. My 2 Black Ellipses are marking ‘Shooting Star’ Candles which certainly look like a bearish ‘Double Top’.
Nasdaq Composite
This is US Tech Stocks as I am sure most Readers know. Something that I have noticed for a while is a possible Bearish Head & Shoulders Shampoo pattern – my Chart below intends to show it. On my Chart, the Black Ellipses are marking the ‘Shoulders’ and the Red Ellipse is highlighting the ‘Head’. It’s a very ‘shallow’ Head & Shoulders pattern though so that might mean it doesn’t play out as I suspect. However, if it is a proper Bearish Head & Shoulders then a drop below 7662 would set up an attack on 7292 and if that level fails then we are in big trouble.
Next up we have the Monthly Candles. I am showing this because I expected the S&P500 to be similar but in fact the Nasdaq Comp looks much worse. My Blue Arrow is pointing at a Shooting Star type Candle for September although we must remember that September has one more day to go. Like the S&P500 this looks to be Turning Down off the Doji Candle where my Black Arrow is from July.
Next I am looking at the 13 and 21 Day EMA Lines. My Black Arrow is pointing to where the Lines are on the verge of a ‘Bear Cross’ – it looks like this could happen tomorrow. Such a Bear Cross would imply more falls and if you look where the Red Arrow is, we had such a phenomenon play out recently.
FTSE100
Again we need to bear in mind that there is one more day to go in September, but first off we have the Monthly Candles for the FTSE100 and my Red Arrow is marking a Big White Up Candle for September and this looks bullish although it is not a great context when combined with the Candle for August – the two Candles taken together look like a ‘Bullish Harami’ but for the context to be good, we would need a proper fall for a few months beforehand. My Blue Arrow is pointing at the Candle from July and the long Wick on this Candle still has the look of a Turning Point and a critical Resistance Level at about 7730.
Next it’s the Weekly Candles for the FTSE100. My Black Arrow is pointing to a White Up Candle which looks bullish but interesting that it has a long Tail down and this shows how choppy things are and how the Pound moving is impacting this Index. It is behaving more like a Forex Cross than a Stock Index !!
Having said that, if we see weakness in other Global Indexes it might be hard for the FTSE100 to go up even if the Pound drops more.
The Chart below has the Daily Candles with my focus here on the 13 and 21 Day EMA Lines. My Red Arrow is pointing to a Bull Cross on these EMA Lines and this suggests more gains. This was the main reason I reduced my Short Position recently.
On the Chart below, my Blue Arrow is pointing to a Big White Up Candle from Friday on the FTSE100 Daily and note how this ‘Broke-out’ above my Green Line which is a Bullish move. It topped out at 7440 and this is clearly Resistance now that needs to be broken through. My Black Ellipse is marking a Zone of Resistance from around 7460 (note this is very near Friday’s High at 7440 which suggests this is strong Resistance) up to the All Time High at 7727.
On Friday the FTSE100 Closed up above the Top Bollinger Band which is unstable and this means it could drop back now or go sideways most likely.
Babcock BAB
I’m going to finish off with a Chart that is something I am finding difficult to interpret because it has been quite choppy and moving in a wide Range. It has struck me that BAB is not another Carillion CLLN or Mitie MTO or something of that ilk and despite its recent troubles, I suspect it might actually turn out well for Buyers soon. I don’t hold BAB but it is interesting and of course it holds a special strategic place with regards to the UK Defence Industry. From SharePad, I notice the Forward P/E is 7.9 and the Forward Dividend Yield is 4.8% - not expensive but of course it could be cheap for a reason. Anyway, I looked at the BAB Daily Candles Chart and tried to draw some sensible Trendlines but it was not easy. Therefore I cheated and used the ‘Draw Trendlines’ function in SharePad and it automatically produced the attached Chart below. The shaded Blue Area marks a Downtrend Channel and this suggests to me that although a Bottom could be in now, I would like to see the Price get over 700p to be really confident it can recover and is not just moving around inside that Bigger Downtrend. Note also that the Dark Blue Wavy Line has just got near the point of Crossing the Lighter Blue Wavy Line and this would be a 50/200 Day Moving Average ‘Bull Cross’ which would be a good sign and looks like it will happen. OK, that’s it for this Blog, Good Luck for the coming Week and all the encounters to come your way by dint of the Markets. Cheers, WD.
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