As ever, I made this Topslicing decision out of Market Hours last night while looking at my Stock Charts on the ShareScope software I use. My thinking is that since the recent nasty sell off in Markets Overall, we have seen a very strong and fast bounce over the last week and I cannot see that this can go much further in the short term. I will be issuing another Blog either tonight or tomorrow that investigates this further.
My original Share Buy in AZN was back in Early August 2014 when I felt that the sell off over collapse of a possible Pfizer Takeover had gone far enough - and the dividend yield of nearly 4% was attractive enough for my Income Portfolio - where I hold things long term and where they have a big yield. I also feel there is a chance of a Takeover which could be as high as 6000p.
I then added to this position by buying a Spreadbet in AZN in mid August 2014 - you can see this on the chart below where I have marked my buying level and time using the Blue Horizontal Line - as you can see it only extends to today (3rd Nov) because I cut it off now the position is sold. My convention is to do Normal ISA share holdings in Green, Spreadbets in Blue and Income Portfolio stuff in that Purple/Mauvey kind of colour.
The sort of mauvey/purple Horizontal Line around 4380 ish represents my Income Portfolio Shares position - I am keeping these so I have let the line extend long into the future going to the Right on the chart.
The CEO of Pfizer said last week that he thought so called ‘Tax Inversion’ deals were still viable despite the change in US law. This comment sparked the spike up in AZN shares on Friday.
However, this meant that the share price had moved up to strong resistance at around 4600 which I have marked with a Thick Red Line. You can see back in September where this level at 4600 was tested several times and the price fell back - therefore Strong Resistance here and it will be difficult for the price to break up and above this for a while most likely.
I have put a Black Circle around the ‘Doji’ Candle from Friday. These sort of candles after a good run up usually indicate that the trend could be exhausting and will change direction soon - in this case it means the price might fall - in fact, that is highly probable and more likely than the price continuing to rise up through 4600.
The Doji I have circled has a very thin ‘body’ and long tails up and down (some people call them wicks).
It is also notable that the 4600 Level of Resistance was previously Support. Look back to May and you will see that the 4600 level acted as Support for several days before it broke down and the price jumped down to 4300 ish. This also created an interesting and rare ‘Island Top Reversal’ which is a sort of cluster of Candles - I have marked this with a Blue Circle.
I banked about 300 points of profit so happy enough. The other great thing about Closing Spreadbet positions is that it frees up Capital that was held as Deposit (or Margin if you prefer that term). So my Free Cash in my igIndex account has gone up a bit and given me more ‘buffer’.
It is entirely likely that I have ‘screwed up’ and a Takeover gets announced in next few days or so. However, by just top slicing my position in AZN I am still in the game - so I have won if there is no bid and I will win a bit if there is a bid. This whole share dealing game is about Probabilities - you have to think about what is most likely and what is possible - and make your decisions coolly, calmly and rationally and try to position yourself to maximise your likely gains. You will never get it right - but just try and be as close as possible to being right.