I couldn’t resist using the homage to ‘Con Air’ again and with such awful and sad events we could probably all do with a bit of a chuckle. What a shocking film though – so bad it’s actually genius !!
As seems to be the ‘new normal’, I am starting this Blog much later than I ideally would like to be but as always I am easily distracted and sometimes I need gluing to my Computer and Keyboard. I will try to get through the ‘blurb’ bit on this fairly swiftly as I am eager to get onto the Charts to see just how much damage was inflicted last week and what the falls on Friday in particular are signalling. I have a small Long Position on the S&P500 which I placed a few days ago and it has been wiggling around but I suspect my Stoploss level has now been triggered – I will see what the Chart is saying and most likely I will not take any action until Monday Night as the Sunday Markets are very false and not all that reliable.
The Corona Virus is obviously a big story at the moment and the damage it is doing to the Chinese Economy is likely to be quite significant with so much of the Country in ‘Lock-down’ and with travel in and out of China severely hampered. I guess to an extent it depends on how long the Country is closed off which is related to whether or not the Authorities can get the Infection situation under control; if it is quick then the Economy could bounce back and limit the damage when viewed over a longer timeframe but it must impact even if not that much. With the global Economy not all that strong anyway, it is a pretty wobbly environment and I suspect the IMF etc. will be revising down global growth forecasts.
As always the situation is much more complicated than us just being able to say that the Virus will cause an Economic hit to China and by extension this will hit global growth and therefore Stocks won’t like it. In reality there are many more elements that play into the Economic backdrop and for instance, the Virus could trigger a slowdown in China which then hits Commodity Prices (we are already seeing this) but this could have other positive effects elsewhere in the World – for example, Western Economies quite like low Oil Prices as it in effect gives a Tax Cut to Consumers who then have more money to spend in the Shops. We also have lots of things happening in the US where the Economy up until now has been chugging along pretty well, although perhaps it is not at the rate it really should be at with all the Deregulation and Stimulus that the Trump Administration has done. So as much as the Virus could be a drag on Stocks, it is possible that with Trump due to give his ‘State of the Union’ Address on Tuesday and then with him most likely being “completely exonerated” (that’s a joke by the way !!) by The Senate in his Impeachment Trial, that Markets might find that all quite positive. In addition, on Friday afternoon (usually at 1.30pm UK time) we have the US Non-Farm Payrolls Numbers and this can cause some Market gyrations. I think the expected Number is about 200k Jobs being created but the Revisions from previous Months are important to listen out for. You can usually catch all this on CNBC TV. There have also been some noises about the EU upsetting Boris when it comes to a “Canada-style Free Trade Agreement” and there is potential for this to cause trouble because the EU appears to want the UK to stay under the remit of the European Court of Justice but that is clearly daft and if a compromise cannot be reached, then the UK could in effect ‘leave on No Deal’ which could put pressure on the Pound. And of course if the Pound drops it could help they FTSE100 – which after the beating it took last week is looking a bit Oversold maybe (I will look at the RSI on the FTSE100 later in this Blog). Tomorrow the Chinese Stockmarkets open for the first time since Cyrus raised its ugly head and it seems highly likely that they drop quite hard although earlier today the ‘Futures’ Markets didn’t look all that bad. Another impact could arise if the Virus creeps out into wider Asia and this could result in yet more ‘Safe Haven’ moves to the US Dollar which would be problematic for Asian and wider Emerging Markets Debt. Everything is just so intertwined in the modern Global Economy and it really is terribly difficult in Macro terms to figure out what effects will spill over to Stockmarkets. It is safe to say that Markets have been toppy for a while (I have been pointing this out for weeks in my Blogs) and to a large extent it is just Markets correcting this over-exuberance and of course the Virus is a handy narrative for the ‘Experts’ to blame it on. As per Part 1 of the ‘Bubble’ Blogs which I published a few days ago on WD1, I am pretty confident that if the Virus does impact several Economies, we will see the Central Banks injecting more Stimulus and already we are seeing this with the Chinese Bank saying it will be pumping in 1 Trillion Yuan of liquidity – I have no idea how much that really is but it sounds impressive !! The way things are run these days, the ‘Powers that be’ simply won’t allow Stockmarkets to drop more than a little bit – the ‘Plunge Protection Squad’ are a key feature of how Macroeconomics works these days. All in all, it probably isn’t wise to panic, but yet again it isn’t wise to go crazily buying everything. Be patient, let things play out. And invest in a Hazmat Suit….. Last Week Apart from having a divine day on Thursday when I ‘accidentally’ met up with the legendary Aston Girl @Reb40 and my old mates @InvestingMartin and @MarkOtten1, for my birthday and we had a cracking time in the White Hart and at my new fave Curry Establishment, The Spice Lounge in Warfield near Reading/Bracknell; the rest of last week is best forgotten !! My Portfolio was sort of limping along but then on Friday I took a right beating and I ended the Week down 3.1% which is pretty painful. I am just about positive for 2020 still but any more weakness and I will slip into negative which is rather disappointing. Anyway, it is all to play for and coming Weeks are no doubt going to be ‘interesting’. I haven’t spent time analysing this but I have a hunch that my Portfolio has morphed itself over time so that I am now dependent on a handful of relatively large Positions and then lots of much smaller ones. The upshot of this is that when those large Positions do well my Portfolio obviously does well and vice-versa. MPAC is a huge Position for me and it was weak last week and that probably did a lot of damage on its own; I still think it is crazy cheap so I will not be panicking. I can’t see myself doing much Trading in the coming weeks but I will be looking to place a Hedge if things do get really ugly. But of course Stoplosses are de-rigeur these days !!! TPI Podcast Reminder We released another Podcast recently but you may have listened to it already as the number of ‘Listens’ has been very high. Anyway, if you missed it the Number is 15.2 and I go on about a possible ‘Bubble’ in it. We have started putting Numbers in the File Name for the Podcasts and you can find it here on SoundCloud or if you use Apple or Audioboom, go to the ‘Conkers Corner’ Channel and you should find it there: https://soundcloud.com/user-479955511/conkers3-wheeliedealer-152-market-bubbles-high-pe-stocks-gaw-fevr-amzn-googl-mpac-1 If you ‘subscribe’ to the TPI Podcasts then every time a new one comes out the Podcast Platform should highlight it to you. Blog Slate As I mentioned above, Part 1 of the ‘Bubbles’ Blogs went out on the ‘Educational Blogs’ page on WD1 a few days ago and I am pretty well advanced on getting Part 2 written and my loose plan is to publish that one later in this coming week. After that I have lots of ideas for Blogs but most likely the top of the list is one about Hipgnosis Songs Fund SONG and I would assume Readers would like to see something on this. After that I have some ideas which are related to my Income Portfolio – both in terms of how I operate it and also with regards to potential new Stocks for it. With January out of the way now I also need to update the ‘Weekly Performance’ page and I will try to do this but if I don’t find time, then I will do a double one at the end of February. My mate @MarkOtten1 kindly gave me a couple of quality Investing Books that I really want to read so I suspect in coming months I will be working through those and making notes which I can then reproduce into a Blog. The books are the Sam Weinstein one and the Mark Minervini one so they really are excellent choices. Thanks Mark !! Mello Event and WheelieBash 2020 At this time of the year things are a bit tentative but just to let you know I have heard there could be another Mello Chiswick Event in May and I discussed with Aston Girl when to hold the WheelieBash and it will most likely be at the start of September as usual, but I will confirm the date we came up with before telling everyone. UK Investor Show **IT LOOKS LIKE I WILL NOT ATTEND THIS SHOW ALTHOUGH I HAVE YET TO CONFIRM THE ALTERNATIVE SOCIAL ENGAGEMENT I MIGHT HAVE. I WILL MOST LIKELY BE AT MASTER INVESTOR THOUGH AND ALSO AT THE SHARES/CENKOS TECH EVENT** I keep meaning to mention this Show but forgetting to include it. Anyway, there are 2 big Shows that I have been to in past years which of course are Master Investor in Islington and this one that is usually in Westminster. It takes place on Saturday 25th April 2020 but at the moment I am not thinking of going to it but I thought Readers might be tempted. Anyway, you can find out details here: https://www.ukinvestorshow.com/ If you do want to go, then do a search for ‘Discount Codes’ or shout on Twitter or something and usually a FREE ticket can be tracked down. Master Investor Show Islington This is taking place on Saturday 28th March 2020 and is held at the Business Design Centre (BDC) in Islington which is in that London. I have probably been to this for most years over the last couple of decades and it can be worthwhile both for the Speakers and the chance to meet up with other Investors, although the Companies tend to be dominated by Oil & Gas and Resources AIM stuff which is certainly not by Cup of Darjeeling. Having said that, there are usually a handful of proper Companies and at least the limited choice makes it easy deciding which Stands to visit !! The Admission Fees are pretty cheap but if you use Discount Code BFMI you can probably get a FREE ticket: https://investoraccess.masterinvestor.co.uk/events/master-investor-show-2020/ I haven’t totally decided if I am going yet but I probably will and no doubt I will be mostly hanging around the Canteen area on the top floor. There is a Restaurant of some sort next door and usually we pop in there. It used to be pizzas but I think it was some sort of burger joint last year. NOTE – it looks like the Share/Cenkos Growth & Innovation Forum which is on February 11th is now full up but if you contact Dan the Editor at Shares Mag maybe he can help you. If you are lucky enough to have a Ticket already, then I will see you there (make sure you grab me and shout “Hi Wheelie” in my lughole). From the Gallery…….. This is from September 2017 – another one I have even forgotten writing !! I am convinced somebody is writing Blogs and slipping them onto my Websites !! https://wheeliedealer.weebly.com/educational-blogs/analysing-the-analysts OK, Charts now then….. S&P500 As is always the way, the Images I show are ScreenShots taken from the excellent SharePad software that I subscribe to. If you click on the Images they should get bigger in your Browser although in recent weeks something strange is going on and when I click on them they actually get smaller. If you are struggling, use the ‘Ctrl’ and ‘+’ keys together and your Browser image should get bigger. First up this is my actual ‘working’ screen for managing my S&P500 Long Trade. The Blue Line (marked by my Blue Arrow) represents the Level at which I Opened the Long Position; and the sort of Pinky Line (pointed at by the sort of Pinky Arrow !!) marks my Stoploss Level. My Black Arrow is pointing to the Big Black Down Candle from Friday and note it has not yet ‘Triggered’ my Stoploss and on this basis I will let it run until Monday night and see how things lie at that point in time. I don’t use a fixed Stoploss with my Broker but I execute them manually if they get triggered – this runs the risk of slippage but it avoids unnecessarily being kicked out of a Trade only for it to reverse and go your way. The Text Box near the Pink Line under the Candles describes the Trade and you can find more details on the ‘Trades’ page on the WD1 website. That was quite a strong move down on Friday but note it did Close slightly up off the Low of the day and also it found Support on the 50 Day Moving Average Line, which is the Blue Wavy Line that it so nearly touched. It is quite often the case that ‘Monday Reverses Friday’ and we could get a similar reaction tomorrow.
The next Chart is rather concerning. This is the Monthly Chart for the S&P500 and there is a clear ‘Bearish Shooting Star’ Candlestick formed up for January and this suggests weaker months ahead.
Next the Weekly Candles for the S&P500 and these are pretty ugly looking as well. Last Week I pointed out a possible ‘Bearish Harami’ 2 Week Candles which is what my Blue Arrow is pointing to; and this Week that has been ‘confirmed’ with the Down Candle which is pointed at by my Red Arrow although that is a bit ‘ Inverted Hammery’ in its shape and may not be as bearish as you might think.
Next up it is the Daily Candles but I am not particularly interested in those here but I am looking at the interactions between the Black Wavy 13 Day Exponential Moving Average (EMA) Line and the Red Wavy 21 Day EMA Line. There is good news here because the ‘Bull Cross’ from back where my Blue Arrow is, is still ‘in force’. This is a really important Signal and worth watching in coming days as a ‘Bear Cross’ would suggest more trouble to come. This Signal makes me slightly more relaxed about the Small Long Trade I have running.
In the bottom window on the Image below we have the RSI (Relative Strength Index) for the S&P500 Daily. On a Reading of RSI 53 where my Black Arrow is, this is falling and not all that low (it is around the Neutral 50 Level). It has moved up from here in the past but if you look at the Chart you should see that it often needs to go lower before a proper bounce. All this Chart is really telling us is that the S&P500 on the Daily is neither Overbought nor Oversold.
Finally for the S&P500 here are the Daily Candles with the Pink Zone marking the Upper and Lower Bollinger Bands. My Black Arrow is pointing to the Big Down Candle from Friday and note how this is pretty much down at the bottom Band so it might move up from this or go sideways.
Where my Black Ellipse is there is a Zone of Support and there is a bit of Support down below so any Drops from here might not be all that large.
FTSE100
First up it’s the Monthlies and my Blue Arrow is pointing to a Big Down Candle for January and to me it looks like the FTSE100 is back into that tedious Range again which could be roughly 7000 at the lowest and up to about 7700 at the top. Worse case it might go to 6600 but otherwise quite good Support.
Next the Weekly Candles for the FTSE100. My Blue Arrow is pointing out exactly why last Week was so unpleasant !!
This next Chart is important. In the bottom window it is the RSI for the FTSE100 Daily and my Black Arrow is pointing to a Reading of RSI 38 which is quite low so a bounce could happen soon.
Finally the FTSE100 Daily with the Pink Zone showing the Bollinger Bands. My Blue Arrow is pointing to a Big Black Down Candle from Friday and note how it has been ‘hugging’ the Lower Band downwards – however, such hugs don’t tend to last all that long.
Regular Readers (that’s the All Bran !!) may remember my Range with the Green Line (Green Arrow) at the top and the Black Line (Black Arrow) at the bottom – we are back inside it. Also, my ‘Bull Flag’ theory failed to play out. It happens. OK, that’s it for tonight – good luck and keep your nerve, Cheers, WD.
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