That was quite a week. I remember Monday Morning when the FTSE100 opened below 6000 and things were looking a little bit wobbly but by the end of the day there had been a decent recovery; and by the time we closed on Friday night it had turned out a pretty good week. There are some short-term negative signs from the US but we need to be careful with price action on a Friday because it is often skewed by low volumes and choppiness. In the bigger picture things still seem bullish and that is certainly the stance I am playing to.
I got a bit carried away and actually bought a new Stock last week (see my ‘Trades’ page on WD1 for all details on my Trades) which was Bango BGO and if you tune in to the latest TPI Podcast, which we released a couple of days ago, then you can hear more about it. I am in the process of writing a ‘Buy Rationale’ Blog about BGO and that will probably appear in the next few weeks. I see BGO as having a lot of potential upside if I am patient and it is in the sweet theme of Mobile Payments which means I am tacking with a strong tailwind.
You can hear the Podcast at the link below on Soundcloud and you want TPI 25 (if you use Apple, Audioboom, Spotify, Overcast etc. then you can find it under the ‘Conkers Corner’ channel):
https://soundcloud.com/user-479955511/conkers3-wheeliedealer-mobilepayments-bgo-boku-bids-botb-boo-inl-ncyt-itm-clin-mbh We also discuss loads of Stocks on that one so I am sure you will find it well worth listening to. Last Week A week ago I was quite disappointed to have got my Portfolio back to breakeven only to find it drop back again (that’s funny – I say that like I have been working really hard but in truth I haven’t really done a lot apart from leaving it alone !!), but thankfully last week it gained 3.8% and is now down just 0.7% since January 1st. I am obviously very pleased about this and if the luck goes my way then I expect to be able to build on this and get nicely into profit. It is quite crazy really when you remember just how beat up Stocks were just a few months ago and how it was ‘The End of the World’. My Strategy is the same as always – mostly don’t do a lot. I intend to add a Long Spreadbet on a Stock I hold as Normal Shares but do not have a ‘mirror’ Spreadbet on, but I am stalking it and trying to get the timing quite nice. On Fundamentals it looks really good but I just want to see the Share Price turn up a bit before I pounce (I never see the sense in buying something that is falling and the Candlesticks really help me see what is going on). That might happen in this coming week. The weakness in the US on Friday makes me a bit hesitant so I need to see how things play out on Monday and probably Tuesday, but if things look decent enough, then I will most likely add to my FTSE100 Long Spreadbet position or I might do a Long on the S&P500 or something. I am currently about 120% Long with my Portfolio and I would like to take that up a little as I think Oil has a long way to recover and with all the Monetary stimulus going around, it seems most likely to me that Markets will keep going higher. Anyway, if they don’t, I can quickly change my tack and go Short to hedge my Portfolio. Blog Slate As I mentioned above, I started on a Buy Rationale Blog for BGO which is probably a few weeks from completion and I might end up releasing it in 2 parts. I have a Blog lined up to publish in the coming week which is the one that captures all those Tweets I sent out about my Approach and I am sure Readers will find it very useful to be able to refer easily to the text I put in those Tweets. I will also add more comments to it to flesh out some of the stuff I wrote originally. Once that one is out it should complete the ‘Set’ on blogs about my Approach going forwards with full details on my ‘System, Execution and Optimisation’. I have a few other things in draft form and plenty of ideas for blogs so you can expect a good flow. Oh, and potentially a couple of Guest blogs to come as well. Of course we will also be aiming to do a new Podcast every 2 weeks and we are steadily tweaking the format to get it in the ideal shape for serious Investors and Learners. Digging in the Basement As always, if you go to the ‘Blog Index List’ page on WD2 then you can find the full list of all the Blogs I have written over the last 6+ years and there is a true treasure chest of Educational material stuck in here. This week I have plucked out one from May 2017 and this one is vitally important to help us keep our psychology in check and to avoid useless distractions. This is Part 3 but there are links to the earlier bits at the bottom: https://wheeliedealer.weebly.com/educational-blogs/enjoy-the-silence-cut-out-the-noise-part-3-of-3 Let’s see what these Charts are saying after Friday then…… S&P500 As is always the case, the Charts are screengrabs taken from the superb SharePad software that I use and if you click on the images they should get a bit larger on your screen so you can see more detail. If you click in the top right-hand corner you can usually get the larger image to close so you are back to the blog. I am starting with the S&P500 because I want to see what the state of it is after the drop away on Friday by the Close. My first Chart is of the Weekly Candlesticks and this is really intriguing because my Blue Ellipse is capturing the Big Black Down Candle from the week before and then the fairly big White Up Candle from last week. Now I am pretty stumped about this – although I will explain in a bit how this doesn’t really matter and we just need to be patient. The difficulty is because it is unclear to me if these 2 Candles in combination constitute a ‘Bullish Piercing Lines’ pattern or a ‘Bearish Thrusting Lines’ pattern – if you have the superb ‘Candlestick Charting for Dumbos’ book then you can read all about these different patterns and how to interpret them and what they mean. The fact that the White Candle from last week has not managed to Close up above the halfway point of the Black Candle from the prior week, makes me think this is a ‘Bearish Thrusting Lines’. However, such a Bearish pattern should occur during a Downtrend and in truth this could be interpreted as the start of a Downtrend but really the Major Trends are all up. Thing is though, we don’t need to decide one way or the other at this point in time. What matters is the Price Action over the next few days – if we see more weakness, then that would signal that this is most likely a Bearish 2 Candle pattern and if we start moving up again then it is probably the Bullish interpretation. We can simplify this even more. If the Price breaks up above my Black Line at 3233 (Black Arrow) then we can assume the pattern was Bullish and if the Price falls below my Red Line at 2965 (Red Arrow) then it was Bearish. The point is, whichever wins out, you can expect the Price to keep going in that direction. The other interesting thing on my Chart is where my Blue Arrow is and I am pointing at a Gap on the Chart – usually the Price wants to ‘fill the Gap’ so we might see this attacked soon.
On the Chart below we have the Daily Candles but I am not interested in those at this point in time. My focus now is purely on the Black 13 Day EMA Line (Exponential Moving Average) and the Red 21 Day EMA and if you look where the Red Arrow is, we had a Bull Cross and if you follow the Lines up you should see that the Black 13 Day EMA is still above the Red 21 Day EMA and this is very much Bullish.
The time to worry is when we get a Bear Cross like we had where my Black Arrow is. With the gap between the Lines quite wide at the moment, this means we can withstand a few weak Days yet still be Bullish in the bigger picture.
In the bottom window on the Screen below we have the RSI (Relative Strength Indicator or Index) for the S&P500 Daily. On a Reading of RSI 59 where my Black Arrow is this is not at all Overbought or Oversold and it’s really not far away from the Neutral 50 Level.
The bottom window on the next Screen is also an RSI but this time it’s the Weekly. On a Reading of RSI 53 where my Black Arrow is this is also around Neutral.
Of course it doesn’t mean the S&P500 cannot drop or rise, but it does give the lie to claims by ‘Experts’ who make out that the S&P500 is “overbought” or “oversold”.
Last up 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 the Down Candle from Friday and this is obviously a sign of weakness. However, when you look at the Price Action from last week it was mostly sideways for 4 days so it could just be a simple Consolidation move to take out any excitement.
Note however that the Volume was very high on Friday although I did see that it was ‘Triple Witching’ Option Expiry day and this might have been part of the moves. To the downside we have nearby Support at 3076 and then at 2965 which is the Low from last Monday and it is also near the Bottom Bollinger Band which should be a natural area of Support.
Nasdaq Composite
I wasn’t going to show this but on a quick run through I noted on the Weekly Candles that where my Red Arrow is we got a juicy Bullish Engulfing Candle – that is very Bullish (especially after the suggested Bearishness of the week before which has now been nullified). I won’t show it but the 13/21 Day EMA Lines are very Bullish on the Nasdaq Comp.
Dow Jones Industrials Index
On the DOW we have a conflict with the Nasdaq and on the Weekly Candles where my Blue Ellipse is below, we have what looks like a pretty clean ‘Bearish Thrusting Lines’ pattern. This is interesting because I often say that the S&P500 is sort of a blend between what happens on the DOW and what happens on the Nasdaq. I suspect the DOW is influenced a lot by Oil and of course the Nasdaq has the benefit of loads of exciting Tech Stocks. I wonder which one will win?
Brent Oil Composite
First we have the Weekly Candles and my Blue Arrow is pointing to a pretty good Up Candle from last week and this wipes out the Bearish Candle from the week before. It’s not difficult to see that the Brent Oil Price has been mostly going sideways in the last couple of weeks.
My next Chart has the Daily Candles for Brent Oil Comp and what I am most interested in here is the Bullish state of the Black 13 Day EMA and the Red 21 Day EMA Lines. We had a Bull Cross back where my Green Arrow is and the Lines are nicely apart which means we can have a Pullback but still not dent the Bullish bigger picture.
My Black Arrow is pointing to where Resistance was established at $43.4 and we need a Breakout above this for Bulls to really run. To the downside there is Support at $37.3 in particular. On Friday we had a Star Doji which suggests we might ease back but it doesn’t look all that concerning.
In the bottom window on the Screen below we have the RSI for the Brent Oil Comp Daily. On a Reading of RSI 64 where my Black Arrow is, this is perhaps a bit high but nothing alarming. A small Pullback would soon take any ‘heat’ out and enable the Brent Oil Price to keep rising.
In the bottom window below we have the RSI for the Weekly for Brent Oil Comp. Where my Black Arrow is we are on RSI 45 and this is certainly not anywhere near Overbought despite the recent rises.
FTSE100
I have a Long Spreadbet Position on the FTSE100 so I am eager to see how it looks. First we have the Weekly Candles and my Blue Ellipse is capturing the Candle from last week in combination with the one from the prior week. This looks like a Bullish Harami 2-Candle pattern to me although the context is not perfect because ideally you would expect more down Candles before the Harami. Anyway, the key here is Support at about 5952 from last Monday and up above where my Red Line is (Red Arrow) there is Resistance at 6856.
Now we have the focus on the 13 and 21 Day EMAs. Where my Red Arrow is we had a Bull Cross and this is still in force.
In the bottom window below we have the RSI for the FTSE100 Daily. On a Reading of RSI 55 where my Black Arrow is, this is only just above Neutral.
I won’t show the Weekly RSI, but on a Reading of RSI 47 it is also just around Neutral.
Last of all we have the Daily Candles for the FTSE100 with the Pink Zone marking the Bollinger Bands. My Red Arrow is pointing to a small Up Candle from Friday and this is mildly Bullish but for many days last week the action was sideways.
Note my Green Parallel Lines which are suggesting a nice Uptrend Channel. OK, I will leave it there. Good luck for the coming travails and I hope you like the Podcast. Cheers, WD.
2 Comments
Brian Blivion
6/23/2020 01:20:03 am
Useful stock tip site here,, thanks. multi year rally just started imho. just gone full in. Buffet was an idiot to sell in march. anyone who sold in march must be feeling sick as a parrot.
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WheelieDealer
6/25/2020 02:43:02 pm
Hi Brian,
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