I am pretty sure many of us are feeling a bit cautious about the Markets at the moment after such a strong run up, particularly in the US and now on the German DAX as well. With all the news about the Virus it seems rather surreal that the Indexes can keep on pushing to ever new All Time Highs when there is such a backdrop of concern. Of course, however, we do know the famous saying that “Markets climb a wall of worry” and this seems especially apt at the moment.
What has me most alert to the Virus situation is the likely impact on Global GDP and it seems almost impossible that the Global Economy can keep on steadily growing like it has been when we have huge chunks of China in effect shut-down and more and more Countries reporting cases of infection. The latest one is Italy where they have closed a couple of Towns and the fact it has got into Europe does give the impression the efforts by various Authorities to contain the spread of the Virus are not really working. I heard one ‘expert’ on a TV News Channel saying that the spread of the Virus was inevitable and that all the Authorities are really doing at the moment is slowing up the march of the contagion and in effect buying themselves more time to organise Health Systems and for getting to an effective vaccination.
The negative impacts on GDP are pretty numerous although of course pretty much impossible for us to estimate even to a rough degree without much more information. The other problem when it comes to the Markets is that we equally are unable to know of the quantitative aspects of any positive elements that might still be playing out within the Global Economy – for instance, there was a bit of a Slowdown at the back end of 2019 and we seem to have been pulling out of that and it is hard to know how much this effect is continuing and also how much it can make up for negatives impacts from the Virus. And the other unknown is that Central Banks and Governments are likely to keep Monetary and Fiscal Policy extremely loose and this could help cover negative Virus impacts also.
As ever, all I am going to concentrate on is what the Charts are telling me and at the moment, apart from a bit of a wobble on Friday, things are pretty Bullish. I will look at the Charts later in this Blog but I doubt I will find much of concern yet. Things could change early next week and I will be reading the Charts every night as usual and I will flag it on Twitter if I see anything alarming. I have a Small Long Position via a Spreadbet on the S&P500 and I am closely monitoring the situation so that I can act as needed to manage that Trade as best as I can. We discussed some of this Virus etc. stuff in a new TPI Podcast that was issued on Saturday, Number 17. The link below gets you to the Soundcloud recording and if you are using Apple or Audioboom then go to the ‘Conkers Corner’ Channel and you will find TPI 17 there: https://soundcloud.com/user-479955511/conkers3-wheeliedealer-17-the-coronavirus-50-bagger-stock-watr-ketl-ncyt-itm-rch-ixi Last Week For much of 2020 my Portfolio has been pretty sweet but last week I did get a sense that the ‘easy’ upwards trajectory was coming under a bit of pressure. Things were just about staying at dead level by Thursday Night but on Friday things were a bit ropey and my Portfolio ended the week down 0.9%. Obviously this is by no means a disaster and part of the merry ebb and flow that we always get on Stocks but I do get a sense that things might be a little bit more difficult for a while. As I mentioned above, the Indexes still look pretty good but we have had such a strong run for many months now and such sustained rises always come to an end. Usually the months of February and March are ok but April can be a bit dodgy and any weakness can start at the back-end of March. Perhaps that is the sort of pattern that we will follow again but I do have this niggling sense that the Virus is going to pull such a wobble forwards a bit. With the US Markets in particular having been so strong, we could actually have quite a drop to sort of ‘correct’ the over-exuberance and yet still be very much within the bigger Major Uptrend that has been in place for at least 10 years now. Such drops can still be a bit unpleasant though. If we do start to get a drop like this, then I will be looking to Short an Index and I am very alert to such a possibility. The big signal for me would be a Bear Cross on the 13/21 Day EMA Lines (Exponential Moving Averages) and I would be looking at what the Candlesticks and things like the RSI (Relative Strength Index) were saying as well. I will talk about all these things in the Charts section later I am sure. With a bit of a cautious feeling I am not in a rush to be buying any Stocks and I am happy to sit on the little bit of Cash I have parked in my Accounts. I would still like to buy more WATR at some point and I am keen on DUKE as I discussed in the Podcast. I also want something else for the Income Portfolio but I am in no great hurry to buy. ***THE TEXT ON THE SHOWS BELOW IS PRETTY MUCH THE SAME AS IT WAS LAST WEEK*** 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 my 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 have booked my ticket 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 later. Nearer the time I will tweet my plans and whereabouts out most likely. Mello Chiswick Anyway, the TWIT50 is not me but it is a cracker of a Discount Code that David Stredder @carmensfella has put out for just a few more days which gets you 50% off Tickets to the Mello Event in May at a Hotel in Chiswick and it could be well worth Readers taking advantage, as many have already. The more Stocks and Companies bit runs on Wednesday 20th May and Thursday 21st May and then there is a Funds day on the Tuesday 19th which you might fancy. I had been telling everyone that I will be there on the Friday, but that is going to be rather lonely for me !! We are due to run a ‘TPI Live’ session and we are yet to determine which day it will be – I will let you know as soon as I know, but it won’t be the Tuesday. You can find out more and book tickets using your TWIT50 Code here: https://melloevents.com/event/ These really are the truly premier Private Investor Events in the UK and the quality of the Companies presenting is of a considerably higher standard than all the Oil & Gas stuff you get at the lower priced London Shows. Not only do you get the chance to speak to loads of Companies and see a myriad of Presentations in the various rooms, you also get the opportunity to hang out in the bar with the top echelon of Private Investors in the Country and the collective wealth of the attendees must be immense. It is rare for David to give us a chance to get 50% off so make sure you go for it. If you find just one decent company that you invest in, it will more than pay for your tickets if it works out as you would like. I’ll see you there !! WheelieBash2020 When my good mate Aston Girl @Reb40 joined me and a couple of other buddies in the Pub for my birthday recently, we discussed a possible WheelieBash date for 2020 and I can now confirm after chatting to her earlier today, that the Bash will be on Saturday 5th September. So shove that date in your diary and I will give more details much nearer the time but as usual it will be FREE to attend and you just need to get your butt down to Windsor and it will most likely be at The White Hart in Winkfield which is where we normally hold it. Everyone is invited but I think we are limited to 60 spaces so first come first served and all that. If you go to the ‘Events’ page on the website you should find piccies of previous WheelieBashes. I have discovered ‘Open DMs’ on my Twitter Settings and have now turned that on so anybody can Direct Message me even if I am not following you – so feel free to get in touch and let me know you want to come to the Bash. You can email me also on [email protected] 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** 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. Blog Slate I think it was Friday night when I issued an ‘Educational’ blog which looked at how you could categorise the Stocks you hold into 1 of 3 simple types – Growth Stocks, Recovery Stocks and Income Stocks – and that how you could use this concept to help with Portfolio Management and for thinking about whether or not you should hold on to a particular Stock. I am really pressed for time lately (I am not sure why but I seem to have lots of agro with my health in terms of everything taking so long and eating into my time – it is probably a Winter thing as much as anything else) and as I type this on Sunday Night I have absolutely no idea what Blog I will be starting on next. I want to do a Stock one on SONG and also on DUKE and perhaps I will get stuck into one of those. I also have some easy quick ones I can write and I might go for something like that. We shall see no doubt and it depends very much on my mood when I actually get poised in front of the keyboard and ready to get seriously typing. Nostalgia ain’t what it used to be I’ve had a poke around in the cellars and this week I have turned up these ones for you to peruse. As always you can find a wide selection of Blogs I have written over the years on the page called ‘Blog Index List’ which sits on WD2. On the latest Podcast (Number 17) we talk a bit about the differences in Investing and Trading – these Blogs cover this a bit: https://wheeliedealer.weebly.com/educational-blogs/where-are-you-on-the-trader-investor-spectrum-part-1-of-2 https://wheeliedealer.weebly.com/educational-blogs/where-are-you-on-the-trader-investor-spectrum-part-2-of-2 I tripped over the infamous Bear Markets Blog as well and in light of some of what I have been writing earlier, it might be worth a revisit: https://wheeliedealer.weebly.com/educational-blogs/taming-the-bear-how-i-handle-nasty-markets Let’s look at what the Charts are saying…….. S&P500 As is always the case, the images I show are taken from the sublime SharePad Software I subscribe to and if you click on the images they should grow larger so you can see more detail. However, I have no idea why this is because I am doing exactly the same things as I have always done when I upload the images to the website, but for some strange reason the images are a bit fuzzy. You can probably still just about see what I am getting at and if you have a look at your own Charts on whatever Charting Tool you normally use, then you should be able to see what I am getting at more clearly. I have a Support Request in with Weebly at the moment regarding this and the problems with the Dropdown Menu not working on the Homepage when viewed using a Mobile Fone – all very annoying and hopefully I will hear back from Weebly Support very soon with some solutions. Starting off we have the Weekly Candlesticks for the S&P500 and my Blue Arrow is pointing to a Black Down ‘Inside’ Candle (it is ‘inside’ the Candle from the Week before) and this could be a Turning Point from which the S&P500 drops back. The key Resistance here is that 3400 Level and if it does drop there is good Support at 3200 and down to near 3050.
In the bottom window on the Screen below we have the RSI (Relative Strength Index) for the S&P500 Daily and where my Black Arrow is we have a Reading of RSI 60 which is not crazily high by any means but the direction is downwards.
This next Chart shows the Daily Candles for the S&P500 but what I am interested in here is the interaction between the Black 13 Day EMA (Exponential Moving Average) Line and the Red 21 Day EMA. Where my Green Arrow is the Lines are still in Bull Mode after there was a ‘Bull Cross’ back where my Blue Arrow is. We need to watch out for a ‘Bear Cross’ where the Black Line falls through the Red Line but we would need a fair bit of weakness in coming days to trigger this. However, such a Bear Cross would suggest some weeks of difficult markets ahead.
My next Chart has the Daily Candles for the S&P500 and the Pink Zone marks the Upper and Lower Bollinger Bands. My Blue Arrow is pointing at the Big Black Down Candle from Friday and note how this found Support at the bottom Bollinger Band. It could ‘hug’ the Band and go lower but it is probably more likely that it tries to bounce up a bit or goes sideways.
My Black Ellipse is showing where there is a Zone of Support not far below.
FTSE100
It has struck me for a while that the FTSE100 has been very much sideways whilst other Indexes like the US ones and the DAX have been charging ever upwards. The Chart below has the Weekly Candles and my Blue Arrow is pointing at a ‘Long Tails Doji’ from last week and this shows a lot of uncertainty really and no clear direction. Nearby Support is at about 7275 and then the Black Box I have drawn on the Chart is meant to be highlighting a Zone of Support from about 7200 down to 7000. This is good news because it suggests that even if we get some proper weakness on the FTSE100, the downside might be quite limited because that Support should kick in. To the upside, initial Resistance is about 7550 and then 7700 could be a challenge.
On my Chart below we have the Daily Candles for the FTSE100 and I am interested in the Black 13 Day EMA Line and the Red 21 Day EMA Line. My Red Arrow is pointing to a ‘Bear Cross’ between these lines and so far that has been playing out and this is very much in Bear Mode.
The next Chart has the Daily Candles for the FTSE100 with the Pink Zone marking the Upper and Lower Bollinger Bands. My Blue Arrow is pointing at a Black Down Candle from Friday but note how it has a bit of a ‘Tail’ downwards and that found Support on the Bottom Bollinger Band.
That’s it for tonight – good luck for the week ahead and keep alert to whatever the Markets wants to lob our way !! Cheers, WD.
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