I’ve found this Weekend quite frustrating because I really want to crack on with my Garden and planting Seeds and stuff but the weather has been either peeing down or like today just flippin’ nippy and with Superbike Racing on the Telly it wasn’t really much of a contest. I feel sorry for all those People who have gone away for the Weekend with Kids only to find their planned Break a bit of a washout. Welcome to Britain……
I guess Last Week was a typically soggy one for the Markets with the Bank Holiday and the whole tone of 2018 so far being pretty painful for Bulls. Thankfully my Portfolio ‘only’ lost 0.5% for the Week but it is frustrating how difficult it is proving to make headway and with another Bank Holiday in the coming Week, I don’t have high hopes for much of a change. I think there are US Non-Farm Payroll Numbers on Friday 6th April and that might cause some excitement to finish off the Week. I have a small Long Spreadbet on the S&P500 still running but I will be looking at this closely on Thursday Night with a view to closing it before those Jobs Numbers.
With the current Markets in such a turgid state I am in no rush to be buying Stocks and increasing my Exposure in my Portfolio. I have plenty of Stocks so I see no need to add more when things are so unclear and to a large extent I am just monitoring the situation and ‘maintaining’ my Portfolio while I wait for something to change and suggest things could get more Bullish. I don’t expect this to happen fast and it would not surprise me if we go through more pain in the Summer and it is only once we get to the start of Winter that things might be better - of course this is impossible to know this far in advance but Summer is rarely a good time for Bulls and despite the ridiculous weather we are scarily near the Summer already with a Quarter of 2018 already gone.
With me not doing a lot on my Portfolio (I might be looking to Sell stuff if anything but I would be looking for a Rally to sell into and that might only be the odd bit of TopChopping and of course dumping the small number of Stocks that I don’t particularly want to hold much longer - of course I mean FCCN in this category !!), I expect to be dabbling with Index Trades as per my Blog Series of which Part 1 was issued this Week - the theory is that I might be able to make some Gains doing a few Index Spreadbets (both Long and Short) and this will help my overall Performance for 2018. On that subject, Part 2 is pretty much written and needs a few tweaks but should appear in the Week and that will be all the words completed and Part 3 will just contain some Charts which give Examples of the kinds of Trades I am looking to do and how I place Entries and Stoplosses etc. I am still figuring out how to do this but I think I have a sort of plan - that will be a task for me this Week to make some progress there.
There has clearly been an uptick in the Global Economy and the key thing is how the US has been picking up and there has been a synchronised improvement across the Main Regions of US, Europe, Asia all at the same time. However, there are some small signs that Growth might be slowing a bit - although it will still be strong. I have noticed a few comments about PMI (Purchasing Managers’ Index) Numbers appearing to slow a bit (but note they are still growing) and some of the Business Confidence and Consumer Confidence Numbers out of Europe appear to suggest things might slow - however, these Numbers are not particularly reliable from what I understand.
Anyway, the Big Picture is that the Global Economy is doing well and Interest Rates are still extremely low and all I am mentioning here are a few conflicting signals that things might be easing a little - I see no need to panic and it is just something to keep an eye on. Remember, ‘Experts’ are continually trying to predict Recessions and they are useless at it - so until it is bleedin’ obvious we are in trouble the default stance should be to assume the Macro Backdrop is supportive of Stocks and I am happy to keep Investing in that way - I just don’t want to take any Risks when the Technical Picture is not so clever - we will look at the Charts in due course.
First off a couple of Stock Charts.
National Grid NG.
Normally I am pretty well behaved when writing my Blogs but tonight (must be an Easter thing !!) I really fancied some Cider (I work on the principle that Cider is a non-alcoholic fruit juice drink) and have gone for a bottle of Magners - it is decidedly watery and weak so hopefully it will only hone my Blog Writing ability and not cause things to go off the rails too much !!
I don’t want to dwell on this Chart because we have plenty to get through and I have plenty of Cider to get through as well and I might fancy a second bottle (really living on the edge now !!!). The Chart below shows the Daily Candlesticks for NG. going back about a year (as always, the Charts are from the excellent ShareScope Software which I use and if you click on the Charts they should grow larger so you have a chance of seeing a bit more detail) and the first thing to notice is the Black Downtrend Line (marked by my Black Arrow) and note how this has dominated the Price Action for the last Year but look where my Yellow Circle is and you should see we got a Breakout and this suggests things are on the mend here and we should see the falling stop. However, at this point in time we cannot be certain that the Price will rise now but we can be pretty confident that the falling has stopped - it is very possible that it just goes Sideways in a Range for a while but note where my Green Line and Green Arrow are that we might have the start of a Shallow Uptrend - we shall see. That Green Line should act as good Support and note there is also Horizontal Support at the recent Low at about 730p ish.
Look where my Blue Arrow is how the ‘Death Cross’ where the Darker Blue 50 Day Moving Average Line crossed the Lighter Blue 200 Day Moving Average Line from above and this predicted the subsequent falls - this is why I always look for Death Crosses or their opposite, the ‘Golden Cross’ as they have strong predictive power.
Note how the 50 Day MA is still a long way below the 200 Day MA at the moment - it will take a few weeks of positivity to get that 50 Day MA to cross the 200 Day MA from underneath and if we get that it will suggest good gains to come (it would be a Golden Cross obviously).
NG. is forecast to provide a Dividend Yield of 5.8% next year and with Jeremy Corbyn rapidly looking rather unelectable to any kind of moderate Leftie, the big Risk of a Labour Government and Nationalisation is clearly reducing. I hold Shares and a Long Spreadbet on NG.
I noticed that DVO has been slowly climbing recently whilst the Market has been generally unimpressive - I guess Sausage Skins are quite a defensive kind of thing. My Chart below is Long Term and goes back about 11 years and if you look to the Left there is a Big Yellow Box which is supposed to show how DVO was in an Uptrend until about early 2013 and since that it has been in a Downtrend as bounded by my Red Lines marked by the Red Arrows.
What I really want to show though is how we have a Triangle between the Green Downtrend Line (marked by my Green Arrow) and the Blue Uptrend Line (marked by my Blue Arrow) - depending on how this Triangle ‘resolves’, this should predict the Direction to come. I hold Shares and a Long Spreadbet on DVO.
Blimey this one has a lot of Arrows !! More Arrows than Geronimo and Robin Hood put together……
This again has the Daily Candles for DVO and I have zoomed in to about the last 2 and a bit Years. The Red Downtrend Lines and the Green Downtrend Line and the Blue Uptrend Line are all the same as the ones on the previous Chart. My Black Arrow is pointing to where there was a 50/200 Day MA ‘Golden Cross’ and note how the Price then trended Upwards but look where the Pink Arrow is how there was a 50/200 Day MA ‘Death Cross’ and the Price has been in the Downtrend within my Yellow Box since that and some time before (it must be appreciated that these 50/200 Day MA Crosses are very ‘slow‘ Indicators and are not much use for Short Term Trading - for Long Term Investing they are very helpful though).
The Triangle between the Green Line and the Blue Line looks very elongated on this Chart but the principle is sound - if the Price ‘Breaks out’ above the Green Downtrend Line then expect more gains and if the Price ‘Breaks down’ below the Blue Uptrend Line, then expect more falls (look at it on the earlier Chart if you find that easier).
I won’t dwell on the DVO Fundamentals (there is a Blog buried away somewhere if you look under the ‘Stock Buy Rationale’ category) but at the moment it is on a Forward P/E of 12.2 and a Forward Dividend Yield of 4.7% which look pretty attractive numbers.
This Cider really is extremely average but I guess the Vitamin C will do me good………
I am especially interested in this one because I have a small Long Spreadbet running on it. I generally don’t like keeping such Index Trades going over a Long Weekend but in this case it is quite small and I decided to take a chance on it. Not only that though, with Markets in general being so wobbly the US Indexes are extremely important because they tend to lead where other Country Indexes follow - there is usually a pretty close Correlation and at the moment that seems to have become more of a Divergence which is not normal.
First off here is a Big Picture view going back to the Credit Scrunch. My Black Line with the Black Arrow is the Long Term Support Line but note we are a fair way above it at the moment and even though a Pullback to this Line would mean that the Uptrend is still intact, in a shorter Time Period it would mean a fairly hefty drop and would feel pretty painful I suspect. This Black Line suggests there is Support at around 2200 which is nearly 17% below where we are now - that would definitely feel unpleasant !!
My Yellow Circle is trying to point out where we look like we might have a ‘Double Top’ which is a Bearish Chart Pattern and might hint at a drop (it has certainly turned out that way so far) but if we move to a Shorter Timeframe it might not look so ugly.
On the Chart below I have zoomed in to about the last 2 years or so, first off note at the Top Right where my Blue Arrows are that I am pointing to how we have not had a ‘Double Top’ like I thought we might have had when looking at the previous Long Term Chart, but as I will show in a bit, it is not particularly great anyway. Now look at the Black Uptrend Line down the Bottom where my Black Arrow is - as I suggested before the last Chart, a drop down to this Support Level at about 2200 would be a pretty painful fall - and if it does happen, that Support Line is crucial - if it fails, then we really are deep in the mire (I would guess that would need a Recession for things to get that bad).
My Pink Arrows are pointing out how over the last Couple of Years the Light blue 200 Day Moving Average Line has acted as Support for the Price and note how we just touched it very recently - it is important this holds as Support or we will get more trouble in coming Weeks/Months.
My Green Arrow is pointing to where there was a 50/200 Day MA ‘Golden Cross’ and of course anyone who bought back then and kept holding made a mint !! (that is unusual though and it is more normal for a Golden Cross to predict gains for perhaps 6 months or something). Note how the Darker Blue 50 Day MA Line is dipping down now but still a long way from the 200 Day MA Line - it would not be a shock if they started to move closer together to take out a lot of the ‘heat’ where People have simply got way too excited.
The Screen below is my actual ‘Working’ Screen from ShareScope where I am monitoring my Long Spreadbet Trade - my Blue Arrow is pointing to a Blue Line which marks the Level where I Opened the Trade. My Pink Line marked by the Pink Arrow is marking where I have placed my Stoploss (if you look in the Text Box above the Green Arrow then you can see more Details on the Trade) and note how I put the Stoploss just below where I think the ‘Turning Point’ is (if you have read Part 1 of my ‘Index Trading System’ Blogs from last week then this might make some sense to you) and note how this means I can have a pretty tight Stoploss so if the Trade goes against me, then I am out for a limited amount of Loss.
My Black Arrow is pointing to where the Price fell down and found Support at the Light Blue 200 Day MA Line and note also how on Wednesday 28th March we got a ‘Narrow Body Doji’ which is highlighted in my Yellow Circle and then on Thursday 29th March the Price moved up although note it did not manage to hold the Intraday High which was up near where I Opened my Long Trade. It looks like there is good Short Term Support at that 200 Day MA Line.
My Green Line marked by the Green Arrow up above is showing where there is a Downtrend Line which comes off the ‘Peak’ from late January - it is vital that the Market ‘Breaks out’ through this Green Line if progress is going to be made in coming Months - I have my doubts about this. Note above where we are now that there is a lot of Resistance between about 2650 to 2800 - I guess at some point if my Long Trade does well I will end up closing it in this Resistance Zone.
Another Month has gone by so it makes sense to have a look at what the Monthly Candlesticks are indicating. The Chart below has the Monthly Candles for the S&P500 and my Yellow Circle is highlighting where we had a White Up Candle for January but then the Candle for February was ‘Inside’ the Candle from January - this needed a third Candle to complete the Pattern and we got a bit of a Down Candle which completes a ‘3 Inside Down’ Candlestick Pattern - that is negative and suggests we could have a Turning Point which means more falls ahead.
There might be a small glimmer of hope for the Bulls here - my Black Arrow is pointing to the Candle for March and note how it has very long ‘Tails’ or ‘Wicks’ - the context here is not great as it would be better to have had a long run of Down Candles before getting such a ‘Long Tails Doji’ but it might hint that we can reverse up here - the key factor is that Blue 200 Day Moving Average Line - if it fails, then there is big trouble.
I won’t show the Big Picture on this one because 99% of Readers should know US Tech has been in a Bullish Uptrend for years and high valuations and the Social Media ‘Data Use’ Political fuss has been blamed for causing the recent Sell-off and this has hit the S&P500 as well.
Anyway, my Chart below shows the recent moves and my Yellow Circle is highlighting where we got a nice ‘Long Tails Doji’ and it does look like this could be a Turning Point as the Market managed to gain off it on Thursday 30th March. We will know more in coming Days but if this is a Turning Point, then we could see Tech regain its poise pretty quick and all the talk of it being the end of the Bull Run could be utterly wrong. We shall see and all that……..
The DOW is very similar to the S&P500 so I won’t waste time showing that one.
I am starting off with some Big Picture stuff and the Chart below has the Monthly Candles for the FTSE100 and first off please look at the Black Support Line marked by my Black Arrow and it is important that this Line holds. Next look at my Yellow Circle which is highlighting the Candle from March which shapes up as a fairly positive Hammer type of thing - although it must be said that the context is not great because we have not had many Down Months before it. There is some hope for Bulls here though.
The Screen below has the Daily Candles for the FTSE100 and first off note the Yellow Circle which is marking a 50/200 Day MA ‘Death Cross’ and of course this is very bad news. We need the Darker Blue 50 Day MA to level out and start moving up if we are going to reverse this Death Cross but that will take time and we need to see some Bullish Action now on the Price - I am not so sure we will.
My Green Circle is highlighting an ‘Inverted Hammer’ Candle from Thursday 29th March and that is not good - it suggests the Price will drop back now. It is crucial that the Support below, particularly at 6866 holds but if that fails then we might go as low as 6600 or 6500 soon. I will be watching this closely as I might have to get some Shorts on !!! A good Signal to Short would be failure of that Support at 6866.
My Green Line marked by the Green Arrow is suggesting a Downtrend Line which might cap any gains.
Looking through the different Charts I have found something a bit more positive - the Chart below has the Weekly Candles for the FTSE100 - please ignore most of it but the key thing to look at is where my Yellow Box is because that looks like a 2-Week Bullish Harami Candle Pattern to me - after many falls, this might be suggesting a turn up.
The Chart below has the Heiken Ashi Candles for the FTSE100 - remember, these are ‘slower’ than the normal Candles but my Yellow Circle is highlighting how the HA Candles look Bullish at the moment with Big White Candles.
I need to finish off soon so I will just chuck this in. In many ways the FTSE250 is similar to the FTSE100 but in the very Short Term there might be a slightly more Bullish picture. My Chart below has the Daily Candles and if we do the Bad News first, where my Yellow Circle is there is a 50/200 Day MA ‘Death Cross’ and then if you look at my Black Arrow that is pointing to the Candle from Friday 23rd March which is a pretty tasty example of a ‘Hammer’ - I suspect this could be a Turning Point (in other words it is the point from which the Market turns up after the drops before).
My Green Arrow is pointing to a White Up Candle from Thursday 29th March when we had the less pretty ‘Inverted Hammer’ on the FTSE100 - in this case we did not get such a clear Pullback from the Intraday High and there is some hope in this. As I mentioned above, the key is that Hammer Candle and the Low at 19091 which must hold as Support - if this Level is broken, then expect more trouble.
OK, that’s it for now, good luck in the coming short Week !!
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