As always I am typing this on Sunday Night and it’s pretty obvious we are on the verge of what could be an extremely dramatic and probably chaotic Week in terms of the Politics around Brexit and the ‘Meaningful Vote’. The Vote is due on Tuesday Night at 7pm and it seems highly likely that the Government will be defeated and this means that Jezza Corbyn is probably going to call for a ‘No Confidence’ Vote in the Government which I guess would take place on Wednesday or at least quite soon afterwards - and although it would be a surprise if Corbyn was to win because the Parliamentary maths are against him as long as the DUP vote with the Tory Party, there is a chance Parliament will be dissolved and we could face a General Election. I think T May is likely to do a Speech to Parliament just after her Deal gets defeated and it will be interesting to see if she has anything new and relevant to say.
If a No Confidence Vote is not called (I struggle to see how this can happen as Corbyn would lose a lot of credibility - assuming he has some !! - and his Party and Activists would be pretty bemused if he did fail to act), then due to the recent Dominic Grieve Amendment, Theresa May would have to come back to Parliament on the following Monday to present the way forwards after the failure of her Brexit Deal. It is possible she can return with the Deal a few times but I suspect that is unlikely unless something significant is changed although she might be able to get away with it once.
Something that does strike me is that a ‘Crash out’ No Deal Brexit is getting increasingly unlikely. The Government is posturing that it is preparing for a No Deal Exit but in reality the steps they are taking look amateurish and last minute and it does not strike me that they are at all serious about leaving without a Deal and it is merely a threat to frighten both the EU and MPs to get them to support the T May Deal. In addition, with The Speaker John Bercow now quashing Parliamentary Convention it looks like ‘No Deal’ just simply won’t happen and however you cut it, the most likely near term event is that Article 50 and our Leaving Date gets extended - the EU are pretending they won’t extend except for particular circumstances (such as Second Referendum, General Election etc.) but it is in the interest of big trading Partners to the UK like Belgium, Ireland, Denmark, Holland etc. to also avoid a ‘No Deal’ which would be painful and probably cause a Recession. Let me be clear on this though, there is a distinction I think between a shock, crash-out, No Deal and a No Deal which is planned and properly organised - if you like a 2 Year Transition to No Deal or similar - that would be fine and in the long term could be very good for the UK. The only Legislated position is for the UK to leave the EU on the 29th March 2019 but to change this the usual Parliamentary Process is that only the Government could propose a Motion to alter this Legislation - however, with Bercow now slinging aside decades or more of Convention, Back-Bench MPs might be able to raise such a Motion. Needless to say Remain MPs think they are clever but this has huge implications for future Governments and it could turn out a big mistake that many future Governments will be hamstrung by. Anyway, it is pretty clear that next Week could be very messy and this means that my Portfolio stance of not doing much and having Shorts on both the FTSE100 and the S&P500 to the tune of about 25% of my Longs is about right - I will monitor closely how things are playing out but the potential for Downside trouble is immense and I think this is a time for extreme caution. In particular, if Corbyn wins a No Confidence Vote (this is unlikely but possible as the Majority the Government has is very slim and it wouldn’t take many abstentions to defeat them - and some of those ‘Remain’ Tory MPs are pretty unpredictable) and we head to a General Election I think this could really spook the Markets because the fear of Corbyn is probably even more than Brexit in The City (it should be !!) although I am not convinced that Corbyn would win and if the Tories had a half-decent Leader they would get a Landslide I suspect. In the last Election Corbyn had a huge bounce and everyone decided he was the ‘Messiah’ but in reality I suspect he got a huge boost from ‘Remain’ Voters who expected Labour to go for a ‘softer’ form of Brexit - that will not be the case this time because People now realise that Corbyn is highly Eurosceptic. Having said that, the Tories really must get a new Leader because T May is utterly hopeless. Last Week Quite a strange feeling for me after 2018 was so miserable but my Portfolio gained 4.1% Last Week which is a pretty massive move - and that is even with my Short Positions dragging a bit so my Stocks actually worked unusually hard for me. Of course the Markets in general have been in the midst of a bit of a Rally since Xmas and my Stocks have risen nicely with this but I suspect it is merely a Retracement in the bigger Downtrend and I will get onto the Charts in a bit and see how things are looking. I note that on Friday in the UK we had a very clear ‘Inverted Hammer’ Candle and this suggests to me that the push up might be about to turn down again - with all the uncertainty around Parliament for the coming Weeks it can be no surprise that Investors are reluctant to Buy. Upcoming Conferences Every Spring we tend to get the London Shows such as Master Investor and the UK Investor Show and I have been meaning to look up when these are and highlight in my Weekend Blog that they are coming up. So I am going to open up my Browser and see if I can find some more details - they are usually something you can attend for Free (look out for Discount Codes etc.) or for a pretty small Charge and they can be good although there are usually far too many dodgy AIM Mining Businesses and suchlike and not enough at the Quality end - but I like attending them for the social side as they are a great opportunity to meet up with lots of People I know and for Readers and Twitter Followers to come and say ‘Hi’. I have not yet decided which ones I will attend but I guess it will be at least one of them. UK Investor Show This one is taking place on Saturday 30th March and is at the Queen Elizabeth 2 Conference Centre just by Parliament. I notice that Sanderson SND will be there so at least there is one Quality Company !! https://www.ukinvestorshow.com/ Master Investor Show This takes place in Islington at the Business Design Centre and is on Saturday 6th April - the Week after UK Investor. I am a bit disappointed that they are consecutive like this as I would prefer a few Weeks between them really. Maybe I will only attend one but I have yet to decide !! https://events.masterinvestor.co.uk/master-investor-show/about-the-show/ Mello Funds Event As yet I don’t think this one has been officially published as I can’t find any information on the MelloEvents website but David Stredder (@carmensfella on the Tweets) mentioned that they would be holding a Funds Event on Wednesday 15th May and on the next Day there would be another ‘normal’ Mello Event - but I might have read that wrong on the Tweet !! Keep the dates free anyway if you are interested - I am unsure what the location is but I suspect it might be London again. Blog Slate Last Week I published the full breakdown of my woeful Performance in 2018 in the ‘Scores on the Doors 2018’ Blog and I am praying I don’t have to scribble another SOD Blog like that for many Years !! Having said that, it was interesting to see how my various Portfolios performed with the Income Portfolio actually turning out a respectable and positive Result which is amazing when you consider that I did almost nothing to it all Year. Another surprise was that I spent pretty much the same on my Living Expenses as I have done for the last 9 Years or so - that is really unexpected and does perhaps show how we all have our own individual Inflation Rates and that the Government CPI and RPI Indexes can differ quite a lot from what we each experience. Something that always hits me along these lines is that I am sure I used to pay £20 for a pair of Jeans when I was a kid (not Levis !!) and I can probably buy them for £3 in Primani now !! Last Night I made good progress on getting that Final Blog on the ‘Moving into Cash’ Blog Series done and in fact I wrote so much that I have decided to split the Blog into 2 more Parts - so this Week I should publish Part 5 which will cover some Probability Modelling (don’t panic, it is very simple and an extremely useful technique) and Hedging and then Part 6 will be the next bit and really it is just a meaty Conclusion piece. I then have those Blogs on Macroeconomics which I need to complete but they are well advanced and I should be able to get them nailed in coming Weeks. I have also produced 2 Book Reviews but they are on Non-Finance things although Readers might find them interesting - I might be able to get one of those out this Week. I am still intending to do a ‘Stock Blog’ because I like doing those but at the moment I seem to have plenty of other Fish in the Frying Pan. Oh, and thanks for the Comments on the SOD Blog - I am still unable to comment myself which is really annoying and I suspect that will be the case until I finally get around to buying a new Laptop but after a preliminary visit to Currys last Week to see what was available I have come away very unenthusiastic about the whole thing as it just strikes me as a pile of grief and I have enough hassle in my life already !! Back to the Future This Week I am going back to some Blogs from 2015 which I wrote in response to lots of questions from Readers about how much Capital they would need to retire etc. They covers lots of things to consider and might help you with your own planning for the future: http://wheeliedealer.weebly.com/educational-blogs/when-can-i-retire-and-how-much-capital-do-i-need-part-1-of-2 http://wheeliedealer.weebly.com/educational-blogs/when-can-i-retire-and-how-much-capital-do-i-need-part-2-of-2 Better do some Charts then…… FTSE100 I’m starting with this one because I want to look at the implications of that inverted Hammer which we got on Friday and see how likely a turn down now is. I have a Short Position on this one so I need to be well on top of things but of course with all the Political muck that Short might come in very handy. As ever the Charts are ScreenGrabs from the superb SharePad Software that I subscribe to and you can see more details by clicking on the Charts. First off I am zooming in on the FTSE100 Daily Chart and this is my ‘Working’ Screen so it is a bit messy - sorry !! Anyway, I want to point out that Inverted Hammer and if you look where the Black Ellipse is, that is capturing the offending article and note how during the Day it rose to 7000 where it then turned down again - clearly 7000 is a strong psychological Resistance Level. Note also that the Price Action on Friday was all inside the Red Horizontal Lines which were the Sideways Range that was in play recently (the Black Arrows are pointing to the Top and Bottom of this Range and it runs from about 6850 to 7200 and if Bulls are to win out, then we need to see the Price up above 7200) and also that the Price is just above the Darker Blue Wiggly Line which is the 50 Day Moving Average - it would be a believable place for the FTSE100 to turn down from after the recent Rally. On the subject of the 50 Day MA, it is worth considering how the Price has ‘hugged’ the 50 Day MA recently. It is clearly in a Downtrend and if the Price continues to follow this Line then we are heading down. To the downside now we need to watch that 6536 Support Level - if that fails, then you can expect the FTSE100 to fall further. Note also that with the recent Price Action we have built some Support just below at around 6900 to 6700 so there is hope here even if things do head downwards. However, with the bigger picture of the Nonsense going on in the UK Parliament we could see any Support or Resistance Levels smashed very quickly depending on various outcomes. The Blue Arrow on this Chart is pointing to the Blue Horizontal Lines where my Shorts were Opened and the Pink Line up above is my Stoploss Level - if the Price gets up above 7200 then things look better for the Bulls and this would be why I would trigger my Stoploss and take the Shorts off - this is because at that point my Short stance would be ‘wrong’. The Red Arrow is pointing to a ‘Death Cross’ between the 50 and 200 Day Moving Averages (the Lighter Blue Wiggler is the 200 Day MA) and this is obviously Bearish although it is worth appreciating that this is not a hugely reliable Indication.
In the bottom window on the Screen below we have the Relative Strength Index (RSI) for the FTSE100 Daily - on a reading of RSI 55 it is not high at all and can rise a lot more but if you look back over the recent history it is a very volatile beastie and it has often turned down from such a level.
Next one of my favourite Signals and this is the 13/21 Day Exponential Moving Averages (EMAs) and my Black Arrow is trying to show were we have the start of a Bullish Crossover which if it holds could be very positive for the FTSE100 Daily. However, if you look where we had the Bearish Cross where my Red Arrow is, you might notice that shortly before we had a Bullish Cross which soon failed and turned down - so we need to be careful. No Signal is perfect.
The Screen below has the Weekly Candles for the FTSE100 - my Black Arrow is pointing to the Candle from Last Week and we got a gain but note how it has long ‘Tails’ both up and down so it was quite unsure. Note also that it hit Resistance at the Green Line which marks the Top Line of my Downtrend Channel between the 2 Green Lines - that suggests it might turn down.
Next we have the Daily Candles again and the Pink Zone is marking out the Top and Bottom Bollinger Bands. My Black Arrow is pointing to where the Inverted Hammer Candle from Friday hit the Upper BB and then turned down - that is pretty disciplined behaviour in terms of Technical Analysis ‘Rules’.
S&P500
I don’t have a huge amount of time tonight so I will only look at the S&P500 for the US - however, the DOW and Nasdaq tend to move with it to a large extent anyway and I have a Short on the S&P500 so I am most interested in this one. With the Government Shutdown and the never ending Trump Fiasco, the US is in almost as much mess as the UK is so I am sure anything could happen over the Pond as well. We live in ‘interesting’ times……. First off we have the Big Picture and the Chart below goes back to the 2009 Lows and my Blue Uptrend Support Line is crucial here (marked by the Blue Arrow) as the Price has stayed above this so far and as long as it does so Bulls should be pretty pleased. If that Line fails, then big trouble could be on the way.
Next I have zoomed in on the Chart above to just show much more recent Price Action and the thing to note here is my Green Arrow which is pointing to the Bottom Line of a Channel which ran between the Green Lines and which recently was broken down through (which was negative). Note now that the Price has rallied recently but we are now approaching the Bottom Green Line and this is likely to be Resistance from which the S&P500 could turn down.
My Black Arrow is pointing to a ‘Death Cross’ between the 50 and 200 Day Moving Averages.
This next Chart is very busy so please ignore most of it and just look at my Red Ellipse which is pointing out the recent Doji Candles from Last Week - there are no particular Reversal Signs here but such small Candles do suggest a lack of oooomph in either direction. Note also that the Price Action is all happening just below the Blue 50 Day MA Line - this could be limiting upside.
This next Chart is similar to one I showed Last Week (I hope regular Readers will have noticed that I do use similar Charts most Weeks so you should be able to see the progression in how things are playing out) and my Green Arrow is pointing to where we are near a Bullish Cross on the 13/21 Day EMA Lines - if it happens it could be a good sign but note the Big Box I have put on the Chart to the Left which is highlighting a wide Zone of Resistance.
Now we have the Weekly Candles. My Black Arrow is pointing at a Nice White Up Candle and this is no doubt a Bullish Sign.
Finally we have the Daily Candles with the Bollinger Bands marked by the Pink Zone around the Candles. My Black Arrow is pointing out that we are near the Upper BB but not quite there.
OK, that’s it for this Week - Good Luck for the coming Week and I hope your Portfolios weather any Political storms in a resilient manner !! Cheers, WD
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