As per normal we have the ongoing Brexit saga and the key element regarding this is the length of any Extension to Article 50 that the EU will allow and we should get some clarity on that in coming days. It seems to be a battle between a short Extension of perhaps a couple of weeks which is favoured by President Macron or a longer Extension to the end of January 2020 as per the Benn Act. Or of course a combination of the two.
And from this any decisions about a General Election and/or any progress on the ‘Deal’ that Boris extracted from the EU will be very much dependent. Having said that, a General Election is clearly on the way at some point in coming months and that is yet more uncertainty and risk for Markets to fret about.
Of course there are always plenty of Economic and Politics worries in the world and the general consensus tends to be that we should ignore them as Stock Investors but I am really not convinced by this. Anyway, despite that it certainly strikes me that we have a ‘Perfect Storm’ of problems and I can honestly never think of a time in my Investing experience of 20 years+ when there have been so many troubles stacked up.
Anyway, with that as the backdrop, it strikes me that one risk that is getting very little attention is that of the possible ‘Impeachment’ of Donald Trump – the theory seems to be that the Democrats in Congress will Impeach him but that the Senate, which is stuffed with Republicans, will sort of over-rule it. I don’t understand all the ins and outs but I think this is yet another issue we need to be aware of because if Trump is Impeached then it is highly likely that the Markets will not like this because he has been seen as favouring policies to ‘juice’ the US Economy and the Markets with such things as more Government Spending, low Interest Rates and efforts towards Deregulation. Of course, on the flipside to this his Policies regarding China and more Protectionism to favour the US with Tariffs and stuff are seen as negatives for the US Economy and, by extension, the Global Economy. If Trump is booted out or perhaps unable to stand to be President for another 4 years, then that might be taken badly by Markets and this might be exacerbated by a Democrat such as Elizabeth Warren (“Pochohontas”) becoming President as her quite far left politics is likely to be seen as less stimulative for the US Economy and it is highly likely her approach to China etc. won’t differ all that much from Trump’s approach. Ah well, what will be will be so there is not much point worrying too much about all this stuff but as I suggested, it is certainly something worth keeping a wary eye on as it has potential to cause yet more drama in the Markets and with the recent challenges we have all faced, I am sure most of us would rather avoid it. Last Week Yet another week where my Stocks were chopping around with little common direction to them and I feel very fortunate to have ‘got away with’ only a drop of 0.3%. I think some of the damage was done by the relatively small Short Positions I still have on the FTSE100 and the S&P500 but the situation was much more ugly until Friday when a bit of a surprise outcome meant that things recovered quite a lot. I suspect a big move up in Tristel TSTL helped me as that is quite a large Position. On that note, it is worth appreciating just how much the relative Position sizes of the various Stocks you hold affect the overall Performance of a Portfolio – I often find that I can have lots of Stocks that are battered yet when I work out my Numbers, the overall result isn’t too bad. And of course this can work the other way unfortunately. So I suppose in simple terms what I am trying to say is that when it comes to the varying Position Sizes within a Portfolio, you really want to have the Big Positions in the Stocks that you think are going to do well and to have relatively much less in the Stocks that you think will do badly. To some degree this takes care of itself as your ‘problem’ Stocks will diminish in size and your Winning Stocks will grow in size and then momentum effects will work in your favour. If you can also add to your best Stocks and perhaps even reduce exposure to your not so good Stocks, then that might increase the positive effects for the whole Portfolio of these dynamics. I remember I wrote a Blog called ‘The Diminishing Problem’ a while back and I will dig this out for later in this Blog. Despite what I have just written, I also think it is wise to size your Positions to the perceived Risk of the Stock concerned – i.e. it would make sense to have perhaps 8% of your Porfolio in something ‘safe and boring’ like Unilever ULVR but it would perhaps not be so bright to have 8% in the latest hot AIM Cryptocurrency play !! In terms of Trades I don’t remember doing anything last week and I can see this being the situation going forwards with me having little enthusiasm to be buying much and if anything my bias is the same as it has been all year of tending to try to reduce my Exposure and do more selling. With the Hedges I have in place I feel less need to be selling in a big way and I am very happy to keep a watching brief. I issued Part 1 of a 2-Parter ‘Stock Idea’ blog on Gately Holdings GTLY a few days ago and I might buy some of those quite soon but probably just a small ‘Starter Position’ rather than a full-on heavy weighting. I have also realised that following the discussions I had with Peter @Conkers3 on the latest Podcast we recorded, I actually fancy some more GlaxoSmithkline GSK for my Income Portfolio and I will put more focus into that and perhaps make a move in coming weeks. My intention has been to buy more Stocks in my Income Portfolio and to go from 12 up to a maximum of 15 but it strikes me that GSK is worth having more of as per the reasons I outlined in the Podcast (there are links coming in a mo !!). I don’t have much Cash spare in my Income Portfolio at the moment but it is nearly enough to justify a buy I think. The beauty is that all the time there are drips of Dividends appearing in that Account and this means that with a bit of patience I will soon have enough Cash to justify buying something. New TPI Podcast As I just mentioned, I had an extremely productive discussion with Peter @Conkers3 on Friday night and we managed to record 2 Podcasts and the first of these has already been released on all 3 formats – Apple, Soundcloud, and Audioboom. We are both really pleased with what we created and the quality of what we are doing is clearly improving both with regards to the content and the sound which sets things up for this to achieve the kind of regular new ‘episodes’ that we always have intended. You can find Part 1 which covers loads of Healthcare Stocks at the Links below and fairly soon we will release Part 2 which again covers loads of Stocks and is done very much in a free-format, unstructured, style: Soundcloud: https://soundcloud.com/user-479955511/conkers3-wheeliedealer-the-winning-ai-tech-stock-that-up-195-ytd-azn-gsk-ixi-hotc-clin-tstl Apple: https://podcasts.apple.com/gb/podcast/59-twin-petes-investing-winning-ai-tech-stock-that/id1384481834?i=1000455024342 Audioboom: https://audioboom.com/posts/7406875-twin-petes-investing-the-winning-ai-tech-stock-that-is-up-195-ytd-and-only-just-getting-started NOTE: On both Apple and Audioboom the TPI Podcasts sit on the ‘Conkers Corner’ channel. 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. If you find the Code doesn’t work, then email me on [email protected] or Tweet me or something and I will see if I can get a Code for you: 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 As I mentioned earlier in this spiel, I published Part 1 of the Blogs on Gateley Holdings GTLY a few days ago and you should be able to find it immediately below this Blog on the WD2 ‘Weekend Markets Blog’ page. I realise that the name of this Blog page is a bit stupid now and I need to correct that and my current thinking is that I will simply rename it as ‘Stocks and Markets Blog’ or something like that. I will try and do this in coming days although I have a lot on socially this week and I might not get much opportunity. I also want to think about it a bit more and try to come up with an appropriate name. Due to all these demands on my time I will struggle to produce Part 2 of the GTLY Blogs this week so I think that one is really a couple of weeks away. Once I get a chance to get really stuck into it I am sure I can get it done quite easily but I just won’t have the time this week. Anyway, some time ago I did a Phone Interview with Michael Taylor of Investors Chronicle and Shifting Shares fame and although I pointed WD Readers to the Transcript that Michael had created on his website, I decided that I wanted it as a Blog on my website as well. Anyway, what I am saying is that in coming days I will re-issue this as a Blog on the ‘Educational Blogs’ page on WD1. A couple of days ago I updated the ‘Little Black Book’ on WD2 (the website you are reading this on) and this has several Stock Ideas which I think have some potential but you need to do thorough research on them. I also have lots of Non-Finance Books that I want to put on the Bookshop page but I am not treating those as a priority although I have many Blogs half-written for them. I am hoping that as we get more into Winter and I go into full ‘Tortoise in the Shed’ hibernation mode, I can get more of this stuff lobbed out onto the Websites. The ‘Diminishing Problem’ Blog I was on about Here it is: http://wheeliedealer.weebly.com/educational-blogs/the-diminishing-problem-part-2-of-2 As usual, this is Part 2 and there is a Link to the first Part at the start of the Blog. Right, better see what the Charts are up to. Although I do need to troff my Fish Pie first !! S&P500 As ever the Charts I show are simply screen grabs from the superb SharePad software that I subscribe to and if you click the images they should grow larger so you can see more detail. As is best practice, I am starting with the ‘big picture’ stuff and here is the Chart of the Weekly Candlesticks for the S&P500. My Blue Arrow is pointing to a small Up Candle from last week and this is clearly Bullish and note that during the last week it actually touched the All Time High up at 3027 and it looks highly likely it will break above this ATH in coming days. However, on the Fundamentals side of things we have a US Federal Reserve Interest Rates decision coming up and on Friday we will have the US Non-Farm Payrolls – if either of these disappoint then perhaps the S&P500 could drop back. I understand that the expectations are for the Fed to cut Interest Rates a little bit again, but this is most likely already priced-in so any impact might be muted. It is also worth remembering that with the UK Clocks changing the US Markets will be Opening and Closing an hour earlier – so the Open will be at 1.30pm UK time etc.
Next up the Daily Candles for the S&P500 but my focus is on the Black 13 Day Exponential Moving Average Line and the Red 21 Day EMA Line. My Blue Arrow is pointing to a ‘Bull Cross’ where the 13 Day EMA crossed the 21 Day EMA from underneath and this is Bullish until we get the opposite which is a ‘Bear Cross’ like you can see where the Black Arrow is.
This next Screen is interesting. If you look in the Bottom Window you should be able to see my Black Arrow which is pointing to the RSI (Relative Strength Index) for the S&P500 Daily and on a Reading of RSI 59 there is plenty of room for the S&P500 to go higher.
However, look at the Red Line which is marked by my Red Arrow and note how this is sloping downwards. Then look in the top Window at the Price Line and my Blue Line (marked by the Blue Arrow) which is sloping upwards. This could be showing us a ‘Bearish Divergence’ and is a warning of trouble ahead. However, note my Red Line in the bottom window has an element of ‘line fitting’ to it and if we see some strength in the RSI in coming days and it rises a fair bit, then this would suggest there is nothing to worry about.
Finally for the S&P500 here is a Chart of the Daily Candles with the Pink Zone marking the Upper and Lower Bollinger Bands. My Black Arrow is pointing at a Big White Up Candle from Friday and this suggests more gains but note it is up at the Top Band so it might struggle. We are up near the ATH though and as I mentioned earlier, a Breakout here would be very Bullish.
Keep an eye on that 3027 ATH Level.
FTSE100
First up we have the Weekly Candlesticks for the FTSE100 and my Black Arrow is pointing to a Big White Up Candle from last week. That is pretty bullish looking. Of course a lot of the action on the FTSE100 will depend on what the Pound does and that could swing about as news around any Brexit Extension and/or General Election or whatever seeps out. The Red Arc is the one that I drew last weekend (Red Arrow) and I was pointing out here that there seems to be a possible ‘Rolling Top’ formation which will only be negated if we get some decent upside strength soon.
My next Chart is all about the 13 and 21 Day EMA Lines again. Where my Green Arrow is we are just executing a ‘Bull Cross’ now and this suggests upside for a few weeks ahead. The key thing next is the Resistance at 7440 and if that gets broken above, then expect more gains.
And my last chart is the Daily Candles for the FTSE100 with the Pink Zone showing the Upper and Lower Bollinger Bands. Where my Blue Arrow is we have what looks like a ‘Hanging Man’ Candlestick from Friday and this could be Bearish. Note also that the Price is right up at the Top Bollinger Band which might be a challenge for the FTSE100 to get over.
As I am sure I mentioned last weekend, the big picture thing here is the Sideways Range between the Black Line at the bottom where my Black Arrow is at about 7020 (call it 7000 !!) and my Green Line (Green Arrow) up at about 7440 (call it 7450). Note also that if the FTSE100 can get above the Green Line then it faces a big Zone of Resistance where my Black Ellipse is. OK, that’s it for this week as I am pushed for time – needless to say I was watching MotoGP from Australia last night and even with the Clock change that was extremely late, so I am Kerry Packered today. The races are pretty excellent though and the last lap on MotoGP is a cracker. I noticed you can see it at 6pm on the Quest Channel on Monday night if you don’t have BT Sport. Good luck for the coming week and I hope you enjoy the Podcasts. Cheers, WD.
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