Hambushed !!
This was T May at Salzberg on Thursday - what a fiasco. I’m not saying she’s a Pig (that is far too rude) although I have made the classic mistake of starting the text bits for this Blog on Saturday Night and because I will have tomorrow night to rewrite it all and finish it off, I felt that I could slip a sneaky Real Ale down my gullet. This is often a very bad idea. Having said that, maybe the Pig connection comes from all those Male Chauvinist Pigs she had to deal with…….(I’ll include Murky Merkel with them lot !!)
It’s not really clear how the Talks at Salzberg went so wrong - it seems to be that the ‘Intelligence’ on the UK’s side was very poor and T May’s Civil Servants and Ambassadors and suchlike totally failed to get accurate soundings from their EU Counterparts and Contacts and it was all a huge misunderstanding. The Tweet from Donnie Tusk on Thursday night with the Cake and no Cherries seemed to be mocking T May and this was clearly very inept (Tusky has clearly been following the example of Trump !!). The EU side seem to be blaming it all on an Op-ed that T May did in a major German Newspaper on Thursday Morning which they say upset them and had an uncompromising tone which she then repeated at the Talks - however this strikes me as the EU desperately rowing back after they had clearly received a lot of flak for discourteous and downright rude behaviour towards our Prime Minister.
It was very refreshing to see T May standing up for herself and for the Country for a change - although of course it would be good to see that translated into action as all she has done up until now is to roll-over on every demand the EU has. The other Classic bit was Napoleon Macron calling all ‘Leave’ Voters Liars etc. and it seems highly likely that his intransigence and rudeness (apart from living up to the usual French stereotype !!) was aimed at his domestic audience and with an Approval Rating of 19% he is even more unpopular than President Hollande (it’s hard to believe that is actually possible) so the idea that Macron is going to be the ‘New Face of Europe’ and such daft claims is clearly absurd because he probably won’t even be in office in a few Years. He is extremely unpopular. It’s really hard to know or predict where Brexit is going - there are some pretty certain things like a Second Referendum being an extremely unlikely event (not enough time, only Remainers want it, Labour Party better off calling for a General Election) and it is pretty likely that the Chequers Deal is “Dead as a Dodo”. And even if there was a Second Referendum (utter madness because it would just re-open all the nasty divisions), there would be huge disagreement over what the question would be and even that Nutjob Lenny McClusky says it should not contain the option to vote ‘Remain’. My Bet would be that we end up having a Canada Style Free Trade Agreement with perhaps the odd thing that is closer to the EU than the existing Deal with the Maple Leaf brigade. A Norway type Deal might happen but because of Freedom of Movement I just don’t think that will fly. What is extremely likely is that a lot of Fudge is created and the chances are some sort of ‘Withdrawal Agreement’ will be settled on with very vague outlines as to what the Trade Deal will turn out to be and the ‘Irish Backstop’ which in effect Annexes Northern Ireland to the EU simply will not happen (the DUP won’t allow this). The Irish Border is a totally manufactured and non-existent Political construct and it will get sorted. As I repeatedly say, what we don’t want from a Market perspective is a ‘Crash-out’ No-Deal Brexit - that would cause big problems I suspect although it would probably mean the Pound tanks and Smaller Stocks get hit but the FTSE100 might rise. If we have a No-Deal Brexit but it is mutually agreed with a Transition Period, then I expect little impact on Markets and I suspect this is largely priced in. Perversely perhaps the Markets might actually like it because it will remove uncertainty. In fact, the Price moves this Week have been very interesting because I have been watching the FTSE100 with very close attention to the tight Trading Range that had formed after the Plunge down in early September and in the last couple of Days the FTSE100 broke-out of the Range to the Upside and this was clearly a Bullish development. This suggests that a Floor is in for now (I will look into this in the Charts bit later in this Blog) and it looks like the Historically Bad Month of September might turn out sort of not too bad - we shall see. It is interesting that the FTSE100 had every excuse possible to go down and break the Range to the Downside but the fact that it has managed to Rally again (the rise on Friday was huge - but I always say that Fridays can produce weird moves) suggests the Bulls are still about. Last Week I took a few hits last Week with MOSB getting spanked on Friday (but fortunately it has always been a pretty small Position - I worked out the impact on my Portfolio of the 13% Fall was about 0.1% and a Fall of just 3.6% on IOM, which is a big Position for me, amounted to about 0.15% of my Portfolio - this shows clearly how Diversification and Position Sizing works) and earlier in the Week IGG got hit hard and did me some damage. In addition, my Overseas (mainly US) Unit Trusts were flat as the moves in the Pound affected the Value. The upshot of all that was a small Gain of 0.2% over everything (this does not include my Income Portfolio - go to the ‘Portfolios’ Page to see what I hold in the various Pots - if you can find it among all the reconstruction I am doing to the Website[s]) which is a bit disappointing considering the jump up on Friday for the FTSE100 but my Stocks were actually quite mixed. For 2018 so far I am just in the Money but it has been a struggle (although I have done enough to more than cover my Living Expenses) - my Strategy remains the same in that I am really not doing much and sitting on a High Cash level of perhaps as much as 10% and I am in no rush to put it into the Market. I think there is huge potential for screw-ups on Brexit (the misunderstandings between T May and the EU Heads of Governments demonstrated how they are all speaking different languages) and I see no need to take more Risk on the Long side and if Markets Rally then I am 90% invested so I will gain anyway. I am watching those Indexes very closely and I will be looking to Short in order to Hedge my Long Portfolio a bit if I see signs of trouble. At the moment the Markets look pretty good from a Technical viewpoint as I will get onto in due course. In terms of Trades I can’t see myself buying much if anything and my bias is towards Selling and Topslicing if I see the opportunity and/or need to. On IGG I am very happy to keep holding this because it is the Market Leader in Spreadbetting and such products and it is quite possible that they actually benefit from increased Regulation which deters Competitors and helps enhance a ‘Moat’ that IGG already has. That is the irony of Regulation - the Political Argument that more Regulation is a good thing is hugely flawed because it just entrenches monopoly power. The intelligent argument would be about appropriate Regulation and with an emphasis on as little as possible. With MOSB it is very frustrating but the Cash they hold and their Assets are now pretty much equal to the Market Cap and half of this is Cash. Most of MOSB’s issues are not something they can do much about and they seem to be navigating the challenges in a reasonable way and I have always been impressed by the CEO. They are doing interesting things with the Branding and enhancements to the Online Offer and the early moves Overseas seem to be going ok but of course it is just a toe in the water. With a chunky Divvy and the Cash to reduce a lot of the risk, I am happy to keep holding here and it is highly likely that once the Brexit Uncertainty is removed then even Retail will pick up. Next Week we have the US Federal Reserve holding a Meeting on Wednesday and this might cause some ripples in the Markets and as I mentioned in the ‘Weekly Performance’ for August (by the way this bit now has its own page somewhere on the Websites rather than cluttering up the Homepage with so much other stuff !!) I think there is a Risk that the US Central Bank could raise Rates too fast and choke off the extremely strong Growth they seem to be getting - this is something to watch for. On that subject, on Thursday we should get some US GDP numbers so it will be interesting to see if the 4% Growth Rate is continuing. And while I think of it - I am always saying “Hi” to New Followers on Twitter and all that but I am sure many Readers find me by different routes and all that. So if you have just found my Website then I am saying “Hello there !!” and I hope you enjoy the WD stuff and it is best to view it as a test of endurance and hopefully the pain you suffer will be character building !! Oh, and “Hi” all you ‘old’ Readers !! Website Destruction As I mentioned in previous Weekend Blogs, I am not putting out any ‘Educational’ Blogs at the moment and I will just be doing a Weekend Blog each Week because I am doing a pretty major hack-around on the Website and it will be much improved once I have done it all and things will be massively easier to find and there will be some new Pages. I have made good progress so far although I must admit I have been doing the ‘Low hanging Fruit’ because I wanted to make some good progress and see some change fast and I find my time is limited in the Evenings to do the changes so moving a Page from the Main Website over to the Sister Website, WD2, is something I can do quite quickly. Of course the catch with this is that I am getting to the point where moving some Pages will take a lot more work because I need to do more re-writing on them. At this stage I am concentrating on getting the stuff moved and the Pages set-out correctly across the Websites and with the Buttons at the top of the Homepage on the Main Site all set up and working. I can then rewrite the stuff as the next task although I am doing some as I go along. I think the changes so far are going well and in the coming Week I expect to get a lot more done so I am thinking that for the next 2 Weeks I will be working on the Websites but after this I might be able to issue an Educational Blog again during the Week - I have loads pretty much written so it should be easy enough to ensure something goes out although of course even a small bit of work on a Blog is a distraction from getting the Website Revamp finished. I want to get all this done because I am constantly thinking of Blogs I want to write and just this Week I have thought of 3 really good ideas for Short Blogs that I can add to the List of Blogs I have in mind !! While I remember, in future I will have 2 Blog Pages and you will find the Weekend Blogs I write (like this one) will sit on WD2 and the more ‘Educational’ Blogs will sit on the Main Website. I think this will separate things out in a more logical way and because the Educational ones are less time-related, when I put these on the ‘Blog Index List’ (which now has its own full page) I will use Links so that you can click on them to find them. I won’t do this on the Weekend Blogs simply for time reasons. Similarly for time reasons I won’t go back through the Archive and Link all the old WheelieBlogs but of course this would make them a lot easier to find. I could do it but it would take an immense amount of time and that is probably better spent writing new material. I am sure it will all make sense once it has been up and running like this for a while !! As always, please use the ‘Changes List’ on the Homepage as your first Port of Call when you visit the Website - this will tell you what has changed with regards to where things now are on the Websites. On the Podcast Project it is something I still have in mind and I am working on it in the background. The Website Revamp is my priority but hopefully in a few Weeks I will have more concrete news on what is going on with the Podcast. It is a potentially very exciting thing to do and I am sure Readers will love it. Tardis Time I get contacted all the time about Technical Analysis with many Readers and Twitter Followers etc. asking me how I learnt the Charting Stuff and wanting to learn the basics of TA. My usual response is to grab a copy of ‘Candlesticks for Dummies’ and/or ‘Technical Analysis for Dummies’ which you can find in ‘Wheelie’s Bookshop’ and I recommend that Readers hunt out my ‘Buy Rationale’ Blogs which I did on OPAY nearly 4 Years ago because I used those to explains loads of TA concepts. Anyway, back then I did not have the sense to link the Blogs together which form a Series, so to make it easy here are all the Links to the OPAY Blogs: http://wheeliedealer.weebly.com/educational-blogs/opay-technical-buy-signals-part-1-of-probably-lots http://wheeliedealer.weebly.com/educational-blogs/opay-technical-buy-signals-part-2-of-maybe-a-few-more http://wheeliedealer.weebly.com/educational-blogs/opay-technical-buy-signals-part-3-of-surely-near-end-of-series http://wheeliedealer.weebly.com/educational-blogs/opay-technical-buy-signals-part-4-of-probably-going-to-be-about-6-maybe http://wheeliedealer.weebly.com/educational-blogs/opay-technical-buy-signals-part-5-of-definitely-looking-like-6 http://wheeliedealer.weebly.com/educational-blogs/opay-technical-buy-signals-part-6-of-6 I am not sure if it comes across in these Blogs, but to me the key rule of Technical Analysis is to keep it simple and to re-use the same Indicators/Crosses etc. over and over again so that you get used to how they work and how predictive they are. My Favourites really are the Reversal Candlesticks like Hammers and Haramis and the 13/21 Day Exponential Moving Averages in terms of when they Cross-over are extremely reliable in their predictive power and of course good old Support and Resistance and ‘Breakouts’ are really helpful. If you read my Weekend Blogs I am sure that over time much of the Charting stuff I write about will rub off on you and most evenings I am tweeting out Technical observations regarding many Stocks and Indexes which Readers can use to look at their Charts and identify themselves. On the ‘Useful Links’ page there are some recommendations of Free Charting Websites to use. It is often a good idea to find some Charting Website/Package which you can draw lines and comments on etc. and just get practically mucking about with it. Blackthorn Focus Events My mate David O’Hara of Blackthorn Focus is putting on a couple of FREE to attend Events in London in coming Weeks. On Wednesday October 10th at 12.30pm there is an Event where the PRS REIT (TIDM: PRS) is presenting and you can find more details and register here: https://www.blackthornfocus.com/wheelie/20181010 On Monday 29th October at 4.30pm Mattioli Woods MTW, Sigma Capital SGM and Scientific Digital Imaging SDI are presenting and you can see more details and book this here: https://www.blackthornfocus.com/wheelie/20181029 Another one has Cohort CHRT, Wynnstay WYN and K3 Business Technology KBT presenting and is taking place at 4.30pm on Monday 12th November and you can find details and book here: https://www.blackthornfocus.com/wheelie/20181112 Right, better see what is going on with these Charts…… FTSE100 As always the Charts I show are ScreenGrabs from the superb ShareScope software that I subscribe to and if you click on them then they grow bigger and you should be able to see more detail. The Chart below is the Daily Candles for the FTSE100 and it is very similar to the Chart I have been showing for several Weeks now but of course we have moved on a bit. There is actually a lot of interesting stuff going on with this Chart and it gives us a good idea of what is happening and what to watch out for next. First off look at my Big Red Arrow which is pointing to the Big White Up Candlestick from Friday when the FTSE100 went a bit nuts and had a big rise. Note that the Candle hit Resistance up around the 200 Day Moving Average which I have pointed at with the Small Blue Arrow and this is at about 7500. Note how up above this Level and right through to the All Time High (ATH) there is a big Zone of Resistance and it could be hard work for the FTSE100 to wade through this. The 50 Day Moving Average which I have pointed at with the Green Arrow is another Line of Resistance up at about 7550 - so this could be difficult to get over. Note how the 50 Day MA is dropping down towards the 200 Day MA and it looks like we will get a ‘Death Cross’ which is not a good thing (derr, obviously !!) and such Crosses often imply Weakness in coming Weeks and Months. Now we don’t need to freak out and panic about this - it could simply be that we go Sideways for a long time with the Floor being down around 7220 where my Black Arrow is and note how we turned up off the Hammer Candle which was produced here. My Green Box on the Left was highlighting a big Zone of Support and clearly the FTSE100 managed to turn up from this Area. Down below this my Pink Circle is yet more Support - so if we do break-down through the 7220 Level then there is decent Support down below to help us avoid a terrible scenario. If you think about it all this lines up with the Fundamental Picture - which is always how I like things to be. Brexit and Autumn etc. are causing Markets to be very uncertain and this supports the idea that Markets will be Weak and/or Sideways but with Downside Potential for the next few Months - there’s nothing really surprising here. As usual last Week when we had all the Salzberg Drama the Pound dropped and the FTSE100 rose - it certainly looks like the Pound is taking the brunt of any Brexit problems and the FTSE100 gets helped by this. However, the FTSE250 and Smaller Indexes don’t seem to like it so much - this is presumably based on the idea that Importers will have higher Costs from a Lower Pound (although any weaker move in the smaller Indexes is pretty muted and they are actually rising together). Even if the Pound tanks it is hard for me to envisage the FTSE100 booming and getting over that All Time High up at 7903 until Brexit is resolved - although of course a rise in the Pound might knock the FTSE100 back. Perhaps later in the Year when we get to December and the usual Seasonal Rally we might have a chance at attacking 8000 if Brexit is resolved and Comrade Corbyn is nowhere near No.10 (could we put him on a Manned Mission to Mars? Tell him that it is a Soyuz Rocket - he’d like that) and Trump hasn’t pressed the Big Red Button. Keeping things simple, from a Charting point of view it is really about Support and Resistance with two big Zones of each both above and below the Current Price Level. Ah, before I move on, look back at where we had a 50/200 Day MA Death Cross back in Early March and how the Price did after that - so such Crosses are clearly not always a disaster and the FTSE100 recovered very quickly after this. The simple fact is that the 50/200 is not a great Indicator because it is actually quite ‘Slow’ and incorporates a lot of Historical Data which can soon be over-ruled. That is why Shorter Moving Averages and the Exponential ones which put more Weighting to more recent Days are more useful (I love the 13/21 Day EMA as I am sure I have mentioned on rare occasions before !!).
In the bottom window on the Screen below we have the RSI (Relative Strength Index - think of it as the ‘Speed’ or ‘Force’ of a move) for the Daily FTSE100 and on a Reading of RSI 51 it has plenty of room to go higher and clearly it has turned up.
These are the MAs I love - or more accurately the EMAs that I love - and my Red Arrow is pointing to where the ‘Faster’ Black 13 Day EMA is turning up towards the ‘Slower’ Green 21 Day EMA (Exponential Moving Average) but note we have not got a ‘Golden Cross’ yet which would be good - sadly at the moment the ‘Death Cross’ from where my Yellow Arrow is, is still driving things. If we get the Bullish Cross then expect gains for Weeks after that. I think this is a brilliant tool and I am sure a Trading System could be created using these Crosses.
Now we have the Weekly Candles for the FTSE100. My Green Arrow is showing a Big White Up Candle from Last Week and clearly something like this is Bullish - and more so because it pivoted up off the Hammer Candle where my Black Arrow is (OK, it is not a ‘Text book’ Hammer but in combination with the Candle from the Week before the 2 of them form a nice Bullish Harami anyway).
Now we have the Daily Candlesticks for the FTSE100 with the Blue Wobbly Bollinger Bands above and below. My Green Arrow is showing where the Top BB is around 7600 and this suggests we could have another 100 Points of upside until thing get a bit harder. However, BBs can be useful but quite often the Price Candles can ‘Hug’ the BB and go lower or higher rather than just hitting the BB and then changing direction. They are useful but only as part of a combination with other Indicators and stuff.
Now we have the Daily Heiken Ashi Candles for the FTSE100. Remember these are utterly different to the usual Candlesticks and each HA Candle forms up over 2 Days as an Average of various things like the Opens, Lows, Highs, Closes over the 2 Days. Anyway, they are very good although a bit ‘Slow’ and now my Black Arrow is showing how we got a Big White Up Candle and this is Bullish, suggesting more rises.
FTSE250
There are some similarities to the FTSE100 here although where my Yellow Circle is we got a Candle that looks like an ‘Inverted Hammer’ and in the short term this might signal a Pullback is coming but if that does happen, then it could just be for a few Days before turning up again anyway. Note how the High of Friday’s Candle at 20649 was around the 50 Day Moving Average which should act as Resistance really. My Blue Arrow is pointing to a nice Hammer Candle and note how this signalled the start of the Turn back up after some sharp falls. Up above now we seem to have Resistance at 20800 to about 20900 and then up at 21000. Down below we now have Support at around 20400 and 20200 and the Low of the Hammer where my Blue Arrow is was 20050 which should be Very Strong Support. While it is in my mind, I will just reiterate that Candlesticks are independent of the Time Period used - i.e. they are ‘Fractals’ and they work on 1 Minute, 3 Minutes, 15 Minutes, 1 Hour, 1 Day, 1 Week, 1 Month, 1 Year - I am sure you get the picture. Same for HA Candles - they work whatever the time period. I find the ones for 1 Century are not particularly useful though…..
In the bottom window below we have the RSI for the FTSE250 Daily - it is very similar to the FTSE100 and on a Reading of RSI 51 there is plenty or room to go up further.
Now we have the Weekly Candles for the FTSE250 - my Black Arrow is pointing at a Big White Up Candle and this is off a 2 Week Harami Pattern which is in my Green Box - that is a Bullish turn up. My Red Arrow is pointing to a Red Downtrend Resistance Line and we need the Price to Breakout over this.
The Daily Heiken Ashi Candles for the FTSE250 below are looking Bullish with my Yellow Circle capturing a nice Big White Up Candle.
Nasdaq Composite
This is the main US Tech Index and has been immensely Bullish for about the last 9 Years and as yet there is not much sign that the Bull Run is ending. Below we have the Daily Candles and my Black Arrow is pointing to where we had a Bearish Engulfing Candle on Friday and this is not good and suggests a drop back. However, there is very good Support at the 50 Day Moving Average around 7900 which my Blue Arrow is pointing at. If it does turn now, that would be something to keep an eye on because it would mean we get a ‘Lower High’ - in other words the Peak now would be lower than the Peak at the All Time High at 7933 and Uptrends are typified by ‘Higher Highs’ but even if we get a ‘Lower High’ it is not a disaster and the Uptrend in the Bigger Picture could take a lot more negative signs than this to get really problematic.
Now we have the Daily Candles for the Nasdaq Comp with a particular focus on the 13/21 Day EMAs. My Green Arrow is showing a Previous 13/21 Day EMA Death Cross and then this was eradicated by the 13/21 Day EMA Golden Cross where my Blue Arrow is - note this Bullish Golden Cross is still in force.
So, this means that if and when we get a 13/21 Day EMA Death Cross, that could be the first Sign that some weakness is creeping in.
Dow Jones Industrials Index (the DOW)
This is a ‘weird’ Index because it is only 30 Stocks and they are all huge Megacap jobbies. Below we have the Daily Candles and note how we Broke-out of the All Time High at 26617 and this is very Bullish. My Yellow Circle is capturing a Small Doji Candle from Friday and this could be a Reversal Signal from which the DOW turns down. If this happens, it would be a bit strange with an ATH Breakout usually being seen as very Bullish but it is possible that it simply ‘Overshot’ and it could turn down here. Obviously a move up over 26800 would be a good sign that we are still going up.
This next screen supports the idea that the move on Friday up above the ATH could be a false move and it has overshot. In the bottom window below we have the RSI for the DOW Daily and on a Reading of RSI 72 this is very high by normal standards (RSI 70 is usually where things get ‘overbought’ although it varies depending on what you are charting) but you can see how in the recent past the DOW has managed RSI Readings as high as RSI 86 or so - but that is very unusual.
The Chart below has the Daily Candles for the DOW with the Blue Bollinger Bands above and below. My Yellow Circle is showing that the Candle from Friday is way up above the Upper BB and this is a very unstable situation and it usually means that the DOW will need to at least go Sideways for a bit or perhaps drop back. More Gains from here are difficult without some sort of Consolidation to digest the strength of the move up.
Right, I am going to leave it there. Good luck for the Week ahead and remember to fully engage your Brain before any Trade and don’t do daft things because you are making a snap-decision and not properly weighing something up first. Cool Heads win at this game. 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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