Last week the Markets got a tad nervous and we had quite a sell-off which is not unusual this time of year and if anything it is quite amazing that we got away so lightly in September. October has a history of throwing up some crazy moves although overall it tends to be a positive month but there can be some wild swings before it gets there. And of course some of the biggest ever falls in Stockmarket history have occurred in October but fingers crossed we won’t be seeing anything like that.
I’ve been saying for ages that the strength in Stockmarkets didn’t really seem consistent with all the negative Global Macroeconomic news coming out and of course the UK’s meltdown over Brexit just adds to an overall messy situation. Gold has been rallying hard for a while now and Bonds have been shooting up (remember Bond Yields move inverse to Bond Prices so the Yields have been falling and many are now negative) which screams “Safe havens” and this is yet more inconsistency with Stocks being so strong. Anyway, the Charts might give us some clues and I will look at them in due course.
TPI Podcast Part 2
We put out the second part of the recent Podcast and the response to both has been outstanding – this has been by are our most successful Podcast and there is a fair case to say it is also our best one in terms of content and sound quality. The intention is to keep up such standards and I’m sure this will be welcome by Readers/Listeners. You can find the second bit here and I have put the link to the first part below as well: https://soundcloud.com/user-479955511/conkers3-wheeliedealer-how-to-get-very-rich-slowly-part-2-vod-igg-mgr-ctr-bur-prsm-wpct https://soundcloud.com/user-479955511/conkers3-wheeliedealer-how-to-get-very-rich-slowly-boo-igg-azn-mtro-sxx (I have put part 1 underneath just to confuse you !!!). If you have any problems with only hearing one of the ‘Twin Petes’ then it could be that we record them in stereo with a Left and Right channel – so if you tweak your Balance settings then you will probably get the questionable benefit of both Petes !! Last Week After a drip, drip, drip, run of down weeks I finally managed a small gain of 0.15% for the week on my Portfolio which merely shows that the Index Shorts that I have to hedge my Long Portfolio of Stocks are still biased to the downside. I am not moaning and it is an extremely welcome change and I feel quite well placed for whatever the Markets chuck at me in the coming weeks. After Closing a large part of my FTSE100 Short Position some weeks ago and taking a painful actual Loss, it is typical that after quite a strong move up when I was very happy to have smaller Shorts, we then get a turnaround and Markets drop hard and I am wishing I had kept the Shorts as they were !! There is no point in thinking like that though and it is simply impossible to get away from the fact that my error was early on when I should have obeyed my Stoploss and going forwards that is exactly what I will do. I Opened another Short Position in the S&P500 (I am wary of the FTSE100 at the moment because it is being so affected by the Pound and by the Oil Price) and I will be looking to Short more if I see good reason to (if you go to my ‘Trades’ page which is on WD1 then you can see more details about this). The outstanding thing to me is how the 13/21 Day EMAs have given ‘Bear Crosses’ across the board and this is certainly shouting that we could see more downside – I will show this on the Charts in a tad. Having said what I have said so far in this blog, it would be rather silly if I was obsessively buying things and of course that is not what I will be doing. I have a few things I want to buy in terms of increasing the weight I have in Stocks that are already in my Portfolio but I am in no rush to make any moves. There seem to be a lot of ‘Falling Knives’ around at the moment and there are so many Profit Warnings and ‘cheap’ stuff has this hurtful and anti-social habit of getting a lot ‘cheaper’. So I am sitting and waiting but with an eye to Short more. Perhaps once the Government has sorted Brexit it can focus on giving Profit Warnings an ASBO…….. 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 I issued Part 1 of 2 blogs about ‘Over-thinking’ last week and I intend to issue Part 2 later in this coming week and that shouldn’t be a problem because it is pretty much finished and I just need to give it a thorough Proof Read and usually when I do this I add some little bits as well. It has also occurred to me that I need to update the ‘Weekly Performance’ page for September and I will try to get that done soon but I am quite busy socially this week so my time is a bit limited. I have quite a few blogs in Draft form so there should be no problems keeping the flow going. More importantly as I know Readers like to see these, I made a start on a blog about a Stock last night and perhaps I can get Part 1 of that out in the next couple of weeks. It is a Stock I really like and if I am happy after doing all my Research and writing the blog then I could well buy some. It depends on the Markets to some extent as well because I am reluctant to go deploying Cash if we are going to suffer yet more turmoil in coming Weeks/Months which is extremely possible. It would help if the Entertainment One ETO bid situation was to move forwards (in other words, I want to see a Bidding War !!) as being able to sell my ETO would boost my Cash a lot and make it ‘easier’ for me to spend a bit of Cash on buying a Starter Position in Hotel Chocolate HOTC which I still fancy and this new Stock if it checks out nicely. Results of an Archeological Dig I’ve dug right to the bottom of the Blog Archive and I bring you this one which is perhaps a bit appropriate as we come into the final quarter of 2019 and soon thoughts will be turning to 2020. This Blog is about Trading Rules and it can be a good discipline to draw up a set of Rules for the coming year and/or to revisit your existing Rules and to tweak if required: http://wheeliedealer.weebly.com/educational-blogs/yearly-trading-rules-parameters-template Let’s see how messy these Index Charts look…….. S&P500 As per usual, the Charts I show are ScreenGrabs from the brilliant SharePad Software thing that I subscribe to and if you click on them then they should grow larger so you can pick out the details. You can of course view them on a Smartfone but it might be wise to use a Tablet or large PC Screen as it will probably be a lot clearer !! (I do appreciate that it is hard to lug a 28” Desktop Screen around on a train though…..) I’m starting with those EMAs because they are perhaps the most relevant development from last week. The Chart below has the Daily Candlesticks for the S&P500 and my Red Arrow is pointing to the ‘Bear Cross’ we got between the Black 13 Day EMA (Exponential Moving Average) Line and the Red 21 Day EMA. If you look over to the left you should be able to see a Black Arrow which points to a similar Bear Cross and note that on that particular occasion the S&P500 had done most of its falling and really went Sideways after the Bear Cross but of course there are no guarantees that it will do that this time. If you look further to the left then you should see a Blue Arrow which points at another Bear Cross and on that occasion the S&P500 fell a lot more afterwards. In general a 13/21 Day EMA Bear Cross implies weeks of market weakness ahead. For things to improve, we need the opposite which is a ‘Bull Cross’ and you can see an example where the Green Arrow is.
Next we have the Weekly Candles for the S&P500. My Blue Arrow is pointing to a Down Candle for last week but note it has a really long ‘Tail’ or ‘Wick’ and this shows a very nice Reversal off the Low of the week which was down at 2855. This level is now nearby Support and if that level fails, then the next important Support is at 2822 which is marked on the Chart.
That is quite am impressive Reversal on the week and it is quite possible that the S&P500 tries to move up from this in the coming week. There could be a bit of a Sideways Range going on here between 2822 at the bottom and then 3028 which is the All Time High (ATH). Note how the S&P500 was moving up but then dropped back at the Higher of the Green Parallel Lines (marked by Green Arrows) and this does seem to be a valid Resistance Line. It is hard to get away from the negative signs that the 13/21 Day EMAs are flagging though.
I don’t always show this because I don’t find them the best Indicator there is. However, below we have the Heiken Ashi Candlesticks for the S&P500 Daily and my Blue Arrow is pointing to a Big White Up HA Candle which suggests more upside. However, this is a ‘slow’ type of indication because the HA Candles form over 2 days so that needs to be considered.
Finally for the S&P500 we have the Daily Candles with the Pink Zone marking the Upper and Lower Bollinger Bands. My Black Arrow is pointing to a nice Up Candle from Friday but note how this hit Resistance and Closed right at the Red Line which marks the mid-point of the Bollinger Bands (I have pointed at this Red Line with my Red Arrow). I am no expert on such things but there is a school of thought about how Prices often struggle at that mid-point.
Note also how the Price of the S&P500 on Friday built off the Reversal Candle from Thursday – that is quite ‘textbook’ behaviour. Clearly there is a Zone of Resistance up above the Price now. Last week I pointed out the 2 Shooting Star Candles that are captured in my 2 Black Ellipses – these are still looking like a Bearish ‘Double Top’ and it will be interesting to see how predictive they turn out to be.
Brent Oil Spot
Before looking at the FTSE100 I wanted to see what Oil was up to because it has quite an influence on the FTSE100. My Chart below has the Daily Candles and the key thing is a ‘Bear Cross’ on the 13/21 Day EMAs (marked by my Red Arrow) and this is pretty much the same as we saw on the S&P500. My Black Ellipse is highlighting a Reversal Candle from Thursday and an Up Candle from Friday which is again similar to the S&P500. However, note that whereas the S&P500 has been up near its All Time High, this Chart shows that Brent Oil Spot has been a lot weaker for some time and the key Support now is at about $56 and if this fails then I suspect we will be seeing $50 soon enough.
The Chart below has the Weekly Candles for Brent Oil Spot. First off please note my Black Ellipse which is capturing 3 Black Down Candles and this could be a Bearish ‘3 Black Crows’ pattern. My Blue Arrow down near the bottom of the Chart by the middle marks a Reversal Candle from late December 2018 and note this found Support off $50.
My Black Arrow is pointing to a ‘Shooting Star’ Candle from back in April 2019 and this now has a clear Resistance Level of around $75. My Red Arrow is pointing to a Downtrend Resistance Line and clearly if Oil is to rise properly then it must break through this Red Line. We might get the odd attempt to rally in the short term but overall this looks quite a weak Chart to me.
FTSE100
I’m starting with the 13/21 Day EMAs again and on my Chart below where the Blue Arrow is you should see a ‘Bear Cross’ which suggests we could see more weakness. Again this is very similar to the S&P500 which shouldn’t be too much of a surprise because on the whole it tends to be that all Major Global Indexes are quite closely correlated and move together. My Black Ellipse is marking a Reversal Candle from Thursday which found Support at 7004 and then on Friday we got a nice Up Candle. However, we need to see the FTSE100 keep building on this now and if it runs out of puff in the next few days then that would not be a good sign for Bulls.
Next it is the Weekly Candles for the FTSE100. My Black Arrow is pointing to a Big Black Down Candle from last week which isn’t great but there is perhaps a bit of consolation in that it managed to Reverse off the Low at near 7000 but this looks weak really.
My next Chart has the Daily Heiken Ashi Candles for the FTSE100 and this is interesting because it differs from the S&P500. My Red Arrow is pointing to a Big Black Down HA Candle from Friday and this is clearly still bearish (remember, the S&P500 ones were hinting at a turn up).
In the bottom window on the screen below we have the Relative Strength Index (RSI) for the FTSE100 Daily. Where my Black Arrow is, on a Reading of RSI 39, this is quite a low level and perhaps we can see the FTSE100 try to move up from here.
FTSE250
I’m gonna finish off with the FTSE250 because we are bang on the verge of a 13/21 Day EMA Bear Cross where my Red Arrow is on the Chart below. In the very short term we might see a bit of a move up but that Bear Cross will weigh heavy I suspect. OK, that’s it for this Weekend – good luck with your coming escapades against the Markets, Cheers, WD.
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