Of course the big story in the Private Investor world last week was about a Shorting Attack on a particular Stock but enough has been said about that by anyone and everyone and I don’t have the energy or the time to bother saying more today. Anyway, what I found more relevant for myself and how I do things was the news that for the last Quarter, the UK had recorded ‘Negative GDP Growth’ of 0.2% and with the Political shambles and bitter fighting that is likely in September and October, I cannot see anyway that the UK avoids dipping into Recession, which is defined as two successive Quarters of ‘Negative Growth’.
As per normal we will hear the usual statements that Macro doesn’t effect Stocks and that Individual Stocks do their own thing and that it doesn’t matter what the overall Market is doing. In my experience (20 years as an Investor but also probably another 15 or so years of learning about Economics and Politics etc.) this is very dubious ‘advice’ and when things get rough, all Stocks suffer and even if you have the odd one that does well, within a wider Portfolio this won’t make up for the damage meted out to your other Holdings. On top of this, I have never known Stockmarkets to rise or even stay level when there is an Economic Recession and when you look at the news coming out of Europe the picture there is pretty much the same as the UK and I expect a Recession there as well.
And this is merely around fears of a ‘No Deal’ Brexit and as a result of other factors like the troubles besetting the Auto Industry which are clearly impacting on Germany in a big way. If and when the UK leaves the EU on the 31st October on ‘No Deal’ terms, then it is highly likely that any Recession gets deeper – although it is unlikely to be as bad as all the extreme shrill cries of the ‘Remain’ camp are continually trotting out to scare the Public (it’s working though !!). Even if by some miracle a ‘Deal’ emerges, I doubt this will help the Economy much and the Political ramifications will be profound. So various Economies look troubled and this is unlikely to be good for Markets. There is this continual line that with a weak Pound then the FTSE100 will go up but I just don’t expect this to happen. The Inverse Correlation is very weak and we have seen periods where there is a strong Inverse Correlation and yet others where Stocks and the Quid fall together. Once the mood gets very ‘Risk off’ I expect we will see both falling in unison. I have written more around this kind of thing on my ‘Weekly Performance’ page from earlier last Week and with all this in mind my Strategy remains as it has been all year of doing very little and staying Hedged via Shorts on the FTSE100 and the S&P500 and with a view to Shorting a little bit more soon. If anything my bias is towards Selling Stocks but at the moment I don’t expect much of that but I am not keen to buy anything. I had a rush of blood to the WheelieBrain last Week and bought a small Position in Vodafone VOD from my Income Portfolio and if you go to the ‘Trades’ page you can read more about this. I am also in the process of producing a Blog about VOD and this should appear later in the Week but it is not a hugely detailed ‘Buy Rationale’ Blog like I often do but a far shorter effort which really has the Key Risks and the main Attractions. I can see the rest of 2019 being quite a relaxing time for me and I won’t be having to worry too much about Stocks to Research for potential Buys or anything. I can easily foresee that I will be doing very little on the Buying side of things until 2020 and it might be a few Months into that before I decide that things are calm enough to get buying. I expect to have some Cash kicking around by that time which I would like to use in my Income Portfolio but I will not be making any rash decisions. The WheelieBash There are still a few Spaces available for the Bash on Saturday 7th September and so far we have nearly the 60 Names I am allowed. It looks like this should be a hugely fun event and there are loads of well-known Twitter personalities due to turn up and I know many Readers relish the chance to speak in depth to such talented and capable Investors and Traders. It is FREE to attend and a completely open invite so don’t feel like you need me to invite you directly. If you think you will enjoy it then please DM me on Twitter if you can or Email me at [email protected] For more details go to the ‘Events’ page which is on WD2 I think and that will give you more insights into what the Bash is about and where it is (Windsor, near Legoland). There are lots of new Investors and Traders coming along and if you are new to the game yourself, you will probably meet up with many decent people who are in the same rocky boat as yourself !! Latest TPI Podcast We issued a new Podcast on SoundCloud a couple of Weeks ago I think and the number of Listens has slowly been creeping up but I worry that many people have not realised this is out and about. It is an unusual one in that it was recorded with a ‘Live’ Audience at the Mello Event which was held in Chiswick a few Months ago and when I listened to the playback I was really pleased with how good it is. You can find it here and it covers lots of useful Investing concepts and ideas and there are probably a few funny bits as well !! https://soundcloud.com/user-479955511/conkers3-wheeliedealer-recorded-live-at-mello2019-talking-investing-strategy-sch-futr-more Last Week I feel like I ‘got away with it’ last Week as my Portfolio was down 0.4% which in light of a hit from On The Beach OTB on Friday and quite a general Sell-off that day, this wasn’t too painful on the Week. The OTB situation is a pain but the reasons I bought it stand firm and I am very happy to hold it for the Long Haul. The Profit Warning on Friday was due to the weak Pound in the words of the Directors and really this is sort of plausible. It is worth noting that they said the Results would miss the Board’s Expectations but they did not say “significantly” or “materially” so perhaps the damage won’t be all that bad. Of course it does put a cloud over the Stock now and it seems very likely that it will slowly drift down in coming Weeks and this will especially be the case if Stocks in general take a hit. It is a pain but not hugely surprising and I am happy to ride it out as I suspect this is a temporary issue and at some point OTB will get back on track – it could be a while though. The fact my overall Portfolio held up quite well on the Week despite the Warning from OTB shows that my Diversification helps a lot and of course the Hedges helped me as well. Blog Slate Mainly due to the Hip problems I have had of late, I managed to get a lot of material for the Website written and the pile of Blogs in ‘Draft’ form is very pleasing to see. This makes my life a lot easier and takes away any pressure I sometimes feel to have something ready to publish and I now have several weeks of backlog lined up. Lovely. In the week just gone I published the first of the Blogs on ‘You can’t time the Markets’ and this one was a bit of a scene-setter with some diversions in it and I had intended to publish the much more meaty Part 2 this coming Week but actually I am going to amend that timetable because the one I have bashed out on VOD has superseded it. The VOD one is pretty good I think (there was naff all on the Box last night so I thought I would bash out some thoughts on why I bought VOD !!) but it needs a proof read and I want to bung in a Valuation Part and something on the Chart. That is easy peasy so I expect to issue that Thursday Night or something like that. In addition there is a small chance of a ‘Guest Blog’ appearing which I think Readers might find useful – I can’t say a lot at this stage but keep your eyes open for this one. I have also written a ‘Stock Buy Checklist’ for those High Risk Speculative Dodgy AIM Companies and that is in pretty good shape and I would like to get it out soon as I know many Readers swim (and drown !!) in these Murky Waters and I am sure it would help many people avoid losing Money. There are then loads of ideas for Blogs I have so it looks like the next 20 years will have regular pieces appearing on the Websites !! From the Archives This is one of the first Blogs I ever published and I recall this was perhaps the one where my scribblings were starting to get noticed by a much wider audience and by many experienced Investors (that bit surprised me because I really started the Website to help Beginners but over time I found that many more people actually liked reading my dulcet tones). Of course you can find the full list of all the grot I have written in the last 5 years of so if you go to the ‘Blog Index List’ which sits on WD2: http://wheeliedealer.weebly.com/educational-blogs/information-overload Starting this Blog I wrote a lot about the weak Economy and I have been seeing signs of this impacting upon the Charts as well – let’s see what the Technicals are predicting now. S&P500 As always the Charts are from the sublime SharePad Software I subscribe to and if you click on the images they should get bigger for you to see them better. For various reasons I am only going to look at the S&P500 and the FTSE100 this Week but note the Nasdaq Composite tends to track the S&P500 anyway. I am Short on both the S&P500 and the FTSE100 so that is obviously where my interest lies !! Pretty much every Night around 10pm onwards I look through the Index Charts and Tweet out about them – you might find this stuff useful. First off the ‘Big Picture’. In simple terms, as long as the S&P500 stays above the Blue Uptrend Support Line since the 2009 Lows, then there is not much to panic about. If that Line fails decisively, then that could mean huge problems ahead. Numerically I would be worried on a Close below 2300 especially.
This next Chart is interesting. This is the Weekly Candles for the S&P500 and where my Red Arrow is I am pointing at a Hammer Candle which shows a really nice Reversal up off the Low of Last Week. After the Big Drop of the Week before, this suggests the S&P500 can move up so not everything looks bad !!
This next chart is more concerning though. My Black Arrow is pointing to a Bear Cross on the 13/21 Day Exponential Moving Averages (EMAs) and this is highly predictive of falls ahead. Note this is not inconsistent with a brief Rally for a few Days or so then the Rally fizzles out and we go lower again. For things to look brighter, we need a Bullish Cross on these EMAs like where my Green Arrow is.
In the bottom window on the Screen below we have the RSI for the S&P500 Daily. On a Reading of RSI 46 where my Black Arrow is this is rising and has room to go higher. Again, this would be consistent with a bit more of a move up and then the Rally to fizzle out.
Next we have the Daily Candles. My Red Arrow is pointing to 2 Candles – the Big White Up Candle from Thursday and then the Narrow Black Candle with the Long Tail down from Friday. This could be part of a 3 Day Candle formation and we need the third Candle to complete the Pattern. If we get a Down Candle on Monday (tomorrow) then this would suggest more falls ahead and if we get an Up Candle, then that would be good for Bulls. Note also how the Price is struggling at Resistance where the 50 Day Moving Average is which is the Blue Wavy Line near the Point of my Red Arrow.
To the Downside, the Level we need to worry about is 2822. If this fails as Support soon, then expect more falls.
It would be a good idea to go back to the Charts I showed Last Week in the Sunday Blog (actually I think it came out on Saturday for a change) and look at my comments about the Monthly Candlesticks.
FTSE100 Please ignore the noise on this next Chart. Again I am looking at the ‘Big Picture’ and this time it is the Red Support Line that I am interested in (marked by the Red Arrow). As long as this holds we shouldn’t worry too much. If however the 6500 Level fails as Support, then that would be extremely worrying !!
Oh dear, this isn’t anywhere near as pretty as the US Indexes (note it is unusual for the European and UK Indexes to diverge a lot from the US Indexes). This is the FTSE100 Weekly Candles and my Red Arrow is pointing to a Big Down Candle from Last Week which follows the Down Candle (Shooting Star) from the Week before – none of this is good for Bulls. Note last Week the FTSE100 did Close up off its Low for the Week but that is a small consolation and really this doesn’t look good.
Next up my Black Arrow is pointing to where a Bearish Cross is ‘in force’ on the 13/21 Day EMAs. Really not good.
In the bottom window on the ScreenShot below we have the RSI for the FTSE100 Daily. On a Reading of RSI 39 where my Arrow is that is a very low level and perhaps some hope for Bulls but it could mean a bit of a rise up which then soon fizzles out to respect the other Bearish Signs like the 13/21 Day EMA Bear Cross. Usually you would expect a move up from such a low RSI Reading but it also does show weakness.
I find the 13/21 Day EMA Crosses some of the most reliable and predictive Signals I know – I would take more heed of this than most other Indications which tend to be of a shorter time period. Remember, longer time periods dominate over shorter periods.
Next we have the Daily Candles for the FTSE100. My huge Red Arrow is pointing to the 2 Candles from Thursday and Friday and on a quick ‘analysis’ I would say this looked a bit Bearish and like a 2 Day Bearish Harami Pattern or a ‘Dark Cloud Cover’ or something like that. However, note the context is not ‘textbook’ for such Patterns to work well – these are Bearish Reversal Patterns and I would expect them to be far more predictive after a strong Run Up beforehand. Here we have just had 2 Up Days before.
There is often a ‘Monday reverses Friday’ phenomenon that plays out and we could see this again. My Blue Arrow is pointing to the Light Blue Wavy Line which is the 200 Day Moving Average Line and this looks like important Support. We can simplify this by Support and Resistance. If the FTSE100 can Close above 7300 then that would suggest more upside and if it Closes below 7150 then that would be worrying. OK, that’s it this week, take care out there !! 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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