I’m sure most of us have been feeling the heat this weekend but it is nice really and I particularly like the evenings when things have cooled down a bit but we still very much have the summer vibe. After the rather weird year we have had so far, I get a real sense that I want to enjoy what we have left of the better weather and it won’t be long until Autumn creeps up on us.
The downside with Autumn of course is that it often brings weakness in the Markets and that can start in August and historically September is the worst month on average. With the strength we have seen, particularly in the US and on the Nasdaq, it seems that we could easily be set-up for a bit of a drop not that far away and I am very mindful that this is quite possible (and in fact I would say it is highly likely). I am not expecting a massive sell-off like we had back in March though, this would just be some sort of Correction and to be frank it is very much needed because a lot of stuff has run up too far, too fast.
I had a decent week last week and looking on Twitter there were loads of people who had done extremely well and there was much happiness about. I have often noticed that when this happens and everyone is in a good mood, the Markets can take a bit of a pause or drop back – this is something to watch in the next week or so.
Mello Virtual TPI Video When we did the Mello Virtual session which was released as a Podcast numbered TPI 28, we also recorded a Video of what was on the screen (in essence it was just Peter C3 and myself !!) and Peter C3 put a lot of effort in the last few days to load this up to his YouTube Channel and you can catch it here: https://www.youtube.com/watch?v=2K7i3tiIs18 If you have not yet caught the Podcast version, you can find it on the ‘Twin Petes Investing Podcasts’ page on this Website or you can simply click the Link here to get you it on SoundCloud: https://soundcloud.com/user-479955511/conkers3-wheeliedealer-mellovirtual-live-no28-boo-amzn-nxt-rre-gaw-fdev-asc-ftse-100 Last Week Things went a treat last week and my Portfolio gained 3.9% which is truly massive really, and following this it is down 2.4% since January 1st and I am filled with hope that I can get back to Breakeven (like I was a few weeks ago) and then move nicely into Profit. After bobbing my head up above water a few weeks ago it was most unpleasant to take a ducking again but at least I can see the Surface not far away now as I desperately try to hold my breath and to avoid drowning !! Of course it will not be easy to take a gulp of air if we have an Autumn pullback and I am on alert to get more Shorts on to Hedge my Portfolio if I sense the need to. At the moment I am about 15% Hedged via a Short on the FTSE100 but the Indexes are quite strange because there is a disconnect between the UK and Europe and then with the US Indexes – it is unusual to have these mismatches and I am sure that soon things will revert to the normal pattern of all moving together. As usual I will look at the Index Charts later in this Blog. Out of curiosity I had a look at my Income Portfolio which sits in an iWeb Account and this is down 9.6% since January 1st. I am a bit disappointed by this but it holds HSBA, ESP and RDSB which have been really bad this year and of course with all the Dividend Cuts we have seen there has been little benefit from Dividend Cash – a key part of the logic behind my Income Portfolio is that a big chunk of the Return comes from Dividend Payments. Anyway, I am not going to obsess about it and there is still over 4 months of 2020 to go and I suspect there are some more Dividend Payments to come – let’s see how it looks on December 31st as that will give a truer picture. On some much better News, I also had to check the Valuation of my Prudential With Profits Bond (if you look at the ‘Portfolios’ page on WD1 there is more detail about this rather strange beastie), and from April 2019 to May 2020 it added 11.9% which is frankly astonishing. I think that is the best Return it has ever had and I really did not expect to see such a big performance. It is very much a ‘do nothing’ diversifier away from my Stockmarket stuff and it has proved to be an outstanding Investment over the something like 20+ years I have had it. I also noticed that since May 2020 it has even added a little bit more !! Anyway, my Strategy stays the same – I am not doing much in terms of Buying or Selling Shares and I am watching the Indexes closely for signs I need to Short more. The watchword is ‘Caution’ and I am being very careful and desperately trying not to do something really stupid. WheelieBash 2020 An extremely pleasant recent visit to the White Hart at Winkfield involved a chat with Phil the Landlord about what we could do for the WheelieBash this year, in light of all the Lockdown Rules etc. Fortunately, we will be able to do something but numbers have to be restricted to 30 in case the weather is unusually dodgy and we are all forced inside where of course ‘Social Distancing’ is harder to do. At the time of typing this more than half the places have already been taken so if you want to come then you must be rapid – the best way is to DM me on Twitter or to send me an email at [email protected]. Oh, I am sure it would help if you knew the date and we are going for Saturday 5th September. You can see more about the White Hart here: https://www.thewhitehartwinkfield.co.uk/ As usual attendance is FREE and you just need to rock up when you like (I will probably get there about 12 noon ish) and you can stay as long as you fancy. We tend to get a great crowd with a total mixture of ages and skill levels and Newbies in particular will feel right at home and no one judges anybody or anything like that - it is a superb atmosphere of like-minded people who are all trying to do their best to take on the Markets and extract some dosh out of them. It is very much a shared endeavour and an almost unique opportunity to meet up with many outstanding Investors and Traders who are more than willing to share their knowledge and experience. The White Hart is not far round the corner from Legoland and not far from the centre of Windsor and there are Hotels in many nearby locations even in good old Slough, and in previous years several people have travelled from far-flung places and made a weekend of it. There is a Car Park at the back of the Pub but it is pretty small really and has a horribly tight passageway to get to it. You might be able to park across the road in front of the Church and I am sure you can park further into Winkfield village. If you go to the ‘Events’ page which is somewhere on my websites (I think it is on WD2 so you should be able to find it from the Dropdown Menu up above this Blog you are reading) you can see pics from WheelieBashes of previous years and I am sure that even with the limitations that we must follow, it will still be a very worthwhile and fun event. Blog Slate A few days ago I published an ‘Educational’ Blog on WD1 which was about the difference between the perfect Long Term Buy & Hold Stock and things that are more Cyclical. Then last night (I am typing this bit on Saturday night) I found some time to crack on with a Blog idea I had in response to a discussion with a Reader about how I time my Buy Trades on individual Stocks. I made really good progress on this but I have a lot on this week so I doubt it will be published this week and it is more likely that I will issue it the week after. Back on Monday I updated the ‘Little Black Book’ which sits on WD2 and that has loads of Stock Ideas that require further in-depth Research. There were loads on it so it is well worth a look. I haven’t spoken with Peter C3 much this week apart from via TXT and I am not sure what the plans are for the next TPI Podcast – my expectation is that we will record it later in the coming Week and that would mean it will come out around the Weekend – so keep your eyes and ears pinned and I will update you when I know what is going on. In terms of Blogs I have plenty of ideas and several written partially in Draft form, so the flow should keep trickling out as we go forwards. Ah, I am aware that I have not updated the ‘Monthly Performance’ page on WD1 for July – I think I was down a couple of % that Month and I will try to do it one evening in the coming week. Memory Lane As usual I have been digging through the Archives of Blogs I have bashed out over the last 7 or so years and you can find the full list on the ‘Blog Index List’ page on WD2 and there are Links to all the Educational ones. Anyway, this week I have dug out the one below which I sort of remember writing although I have not much clue about what is actually in it !! Look at it as a bit of a lucky dip (or unlucky if it is a bit pants): https://wheeliedealer.weebly.com/educational-blogs/how-i-manage-so-many-stocks OK, better see what the Charts are telling us……… FTSE100 As is always the case, the Charts I show are taken from the superb SharePad software I use and if you click on the images they should grow bigger on your screen so you can see some detail. Usually I start with the US Indexes because they tend to drive other global indexes but because I am Short on the FTSE100 I will start with that tonight. On my Chart below of the Daily Candlesticks, the Black Arrow is marking a Bear Cross between the Black 13 Day EMA Line and the Red 21 Day EMA Line (Exponential Moving Average – more weighting to recent days), and this implies bearishness because it is still ‘in force’ and it is only when we get a Bull Cross (like where my Red Arrow is) that we can feel more bullish on the FTSE100. My Blue Arrow is pointing to a Candle from last week where the FTSE100 dropped down to 5857 and this is now very important Support and if that fails on an End of Day Close basis (EOD), then it would likely be a Signal for me to Short more (in truth I would probably need other confirmations). My Black Ellipse is an attempt to show a Zone of Support which runs from about 5900 down to around 5400.
My next Chart has the Weekly Candles for the FTSE100 and my Blue Arrow is pointing at a White Up Candle for last week and if you combine that with the Big Black Down Candle from the prior week, then the pair could be a Bullish Harami pattern. However, the context here is weak – ideally according to the Textbooks, a Bullish Harami would appear after a succession of Down Candles – not just a couple.
Really we can keep this all very simple; as long as 5857 holds as Support then we don’t have much to worry about. To the upside, a Breakout over 6512 would be hugely bullish. The other Resistance that is significant before that is at 6342.
In the bottom window on my Chart below we have the RSI for the Daily on the FTSE100 (Relative Strength Index – a good conceptual way to visualize this is to imagine it is the speed or force of a move). Where my Black Arrow is we are on an RSI of 44 which is not far below the Neutral 50 Level and this means whichever direction the FTSE100 wants to go, there is little impediment from the RSI for a sizeable move.
My next Chart has the Daily Candles for the FTSE100 and the Pink Zone marks the Upper and Lower Bollinger Bands. My Red Arrow is pointing to a Doji Candle from Friday where the FTSE100 just chopped about and note it dropped down in the morning to pretty much 6000 which acted as Support.
Then to the upside, on Friday the Price moved up to the Midpoint Line of the Bollinger Bands and that acted as Resistance (the Red wiggly line). Really the Doji shows indecision and if we are worried about downside, then 6000 is clearly an important step on the way to that really vital Support at 5857. Something has been causing me a slight worry for a while – look at the Black Line marked by my Black Arrow. Note how it is slanting downwards and if you imagine a parallel Line underneath the Candles, then perhaps we have a proper Downtrend Channel. I might be worrying about nothing but I am watching this closely. I won’t show it but for your information the Volume on Friday was very low – this is typical of both Fridays and Summer months.
Brent Oil Composite
I won’t show loads on this but I just want to sling one Chart in because the FTSE100 can be affected by the Oil Price a lot. My Chart below has the Daily Candles for Brent Oil Comp and my Black Arrow is pointing to a Doji Candle from Friday where basically it did pretty much nothing !! After pushing up a few days before to where my Blue Resistance Line is (Blue Arrow), at about $46.24, it has just eased back for a few days. If you look back at the Candle from 30th July 2020 then you should see a nice Hammer Candle and the Low of this was at $41.79 and that should be decent Support. To the upside, if it can Breakout of my Blue Line then I suspect we will see $50 (I have not pointed to the Hammer – you will have to count back and figure it out yourself !!) My Green Arrow is pointing to where Brent did a ‘Bull Cross’ on the Black 13 Day and Red 21Day EMAs and this is still ‘in force’.
S&P500
My Chart below has the Daily Candles for the S&P500 and first up my Red Arrow is pointing to where we had a Bull Cross between the Black 13 Day EMA and the Red 21 Day EMA Lines, and this is still ‘in force’. Next up please note that the All Time High is at 3393 which is just 42 Points from where we Closed on Friday (that’s just over 1% which gives a sense of how near we are). Something else to realise is that the ATH came from just before where my Black Arrow is which marked the Bear Cross between the 13 and 21 Day EMAs – look how quickly things can go smelly in a big way. If the S&P500 can Breakout over the ATH at 3393 then that would be a Bullish move. Next look at my Green Arrow. The point I want to make here is that the Candle from Friday in combo with the Candle from Thursday, could be a ‘Bearish Harami’ and mean a move down is coming, although it needn’t be a huge panic or anything. I won’t show it but on the Nasdaq there was a Long Tails Doji Candle on Friday and note that was an ‘Inside Day’ which means the Body of the Candle was within the Range of the Candle from the previous Day (Thursday obviously !!). If we get a Down Candle on Monday, then that would be a ‘3 Inside Down’ Bearish Pattern. The S&P500 is very much influenced by moves in the Nasdaq and I think those huge FAANG Stocks make up something like 20% or more of the S&P500.
Nasdaq Comp
I screwed up when writing most of the text below and thought I was looking at the Daily RSI for the S&P500 but actually it was the Nasdaq Comp !! Anyway, I have amended the text and put in a new heading !! My next Chart has the RSI for the Nasdaq Composite Daily in the bottom window and this is actually really interesting. I think I mentioned on a Tweet recently that I could see a ‘Bearish RSI Divergence’ on the Nasdaq and this is it. My Blue Line (marked by the Blue Arrow) shows the RSI is getting progressively lower and note how this ‘Diverges’ from the gains in the Price which is up above. This Divergence often predicts trouble ahead. My Black Arrow is pointing to where the RSI is now for the Nasdaq Comp Daily and at a Reading of RSI 68 it is not insanely high, but it is near Overbought Levels. Note the S&P500 is quite similar. If you think about the Fundamentals, the Nasdaq is looking extremely highly valued and we have Autumn just a few weeks away; when Technical Analysis lines up with the Fundamentals, that adds some more confirmation. OK, I will finish off there. Good luck for the coming Week and keep your wits about you and the occasional bath in Suntan Lotion and Asses Milk is probably a good idea !! Cheers, WD.
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Stocks & Markets WheelieBlogsThese tend to be more Markets and Stocks related and timely - the Blog Page on the Main WheelieDealer Website has the 'Educational' stuff (well that's the theory anyway !!). Archives
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