Judging by the typically pants Bank Holiday weather it is hard to believe that we are now heading towards what many in the Financial World see as the Summer period (as opposed to Winter). Following on from this, the enduring Stockmarket adage “Sell in May and go away and don’t come back until St. Ledger day” (or “don’t come back until Halloween” if you are of a ghoulish nature), comes into play and it is something I have been considering as the Summer period is notoriously the weaker half of the Year.
I won’t go into the Stats in depth here for Summer but at a high level Chris Dillow in this Week’s Investors Chronicle on Page 18 covers it quite a bit and specifically points out that “Since 1966, the All-Share Index has on average lost 0.6% in real terms from May Day to Halloween, but gained an average of 8.5% from Halloween to May Day - these numbers include dividends”, so it is fair to conclude that Summer is by far the weaker half of the year on average.
Some months back I met up for lunch with Kerry Balenthiran (@17_6YrStockCyc on Tweets) because by a strange quirk he happens to work in Windsor where I live. Over Pie and Chips and Ale we got to discuss his book about a regular 17.6 year Cycle in Stocks which he has shown repeats itself over and over. Part of me has some scepticism with regards to this kind of VooDoo stuff (maybe it should be called the Balenthiran Black Magic Cycle) but over the years and having learnt more and more about stuff like Technical Analysis, Economics and Psychology, I am actually quite ready to explore such claims and see how it all stacks up.
I have been poised to read Kerry’s book for many months but with all the usual demands of life on me (like Sleeping in the morning, elongated Coffee Breaks, trips to the PUB, watching Countdown - you know the sort of hectic schedule a Retired Bloke has…..oh, and writing stuff for the WD Website…) I had not got around to reading it until just a few days ago and I have finally got on with it. When I first picked up the Book I thought “oooh, this is a bit slim” but as I have got into it I realise that it is not the Quantity of pages etc. that counts but the Quality and the messages held within this Book are potentially of very high value - as I will no doubt explain as we go along.
I ended up writing most of this on Saturday Night due to the ‘MotoGP of The Americas’ taking place in Texas and of course with the time difference it was broadcast fairly late (you can usually catch the Highlights at 7pm on Channel 5 on Monday Evening - it is not the best race ever but critical for the Championship with Marc Marquez never having been beaten in the US by anyone for 8 years - an incredible record).
Of course the big issue for the Markets now is the result of the First Round of the French Presidential Election where the Leader in the Polls, Macron, has taken the first place and Marine Le Pen has got through just behind him. It is conventional wisdom that Macron will win now in the Second Round and the Markets will probably like this because it removes a risk of Le Pen pushing for France to leave the Euro and for the Schengen Border Area to be replaced by National Borders.
Finally I have found some time to start on this Blog. I have had this in my mind for many months but not really had a ‘window’ of time where I can really free myself up from the hustle and bustle of life and enable an atmosphere that is peaceful and conducive to the Deep Thinking I suspect this Blog will demand. You could say I have “Cut out the Noise“……
Humans are nutty creatures. I distinctly remember doing a ‘Stock Buy Rationale’ Blog recently where I said something like “I’ve done loads of the Educational type Blogs recently and I want to scribble something about a Stock and do some in-depth research” - well now I am fed up with doing stuff on Stocks and I want to do an Educational tome !! (there is of course an implicit assumption in this paragraph that WheelieDealer actually is human - it is debatable. He is certainly part R2D2.…..)
Fizzling Fireworks and French Fancies - A look at Indexes, Oil, Gold and the Quid (and a few Stocks)
The heat has really been ramping up on the Macro Issues with North Korea doing a remake of David and Goliath and probably of more importance, the French Election process starts next Sunday 23rd April - and with the recent record of Polling organisations any predictions are pretty unreliable. Of course the big danger from the French Vote is that an anti-EU candidate like Marine Le Pen or that far Left chap become President - the danger here is pretty obvious as a collapsing EU would cause a big Economic Shock.
Markets seem to have been a bit soggy for a while, in a bit I’ll dig into the Charts on them but before that I want to look at a few Stocks that have done interesting things last week.
I have been meaning to crack on with this Blog for weeks but various distractions have conspired to stop me getting it done. It is a bit of a contentious subject as the Politics around it are beyond extreme but I just want to put into electrons how I see things playing out and how I will be managing around the Brexit Negotiation developments to ensure my Portfolio is protected. I have had a lot of painful discussions about this on Twitter but the upside for me is that they enable me to think through the Scenarios and to come up with a Roadmap of Options which will help me frame my approach.
In essence and at a High Level (there is no point in thinking lower than this - everything is unknown at the moment and most of the stuff anybody says or writes about this subject is useless speculation and 99% of the time it has a Political Agenda behind it on one side of the ‘debate‘ or the other) I think there are 4 possible Outcomes of the Article 50 Negotiation Process which we need to consider:
As always I am running late so I’ll go straight into the Charts……..
I am starting with a Daily Chart showing the FTSE100 over the last 3 months or so. The first thing I notice is how the Price Action now is around the 50 Day Moving Average which is the Blue Wiggly Line marked with my Black Arrow. Next thing that stands out is the Support at 7255 - note the Price has dipped down to this 3 times in recent Weeks and buyers have come in here.
Next we have the Red Line marked with my Red Arrow which is the Bottom Line of the Long Term Uptrend Channel from the 2009 Lows which I have shown many a time in the past. It is important that the FTSE100 stays nicely above this line and there is Support here around 7250. If all these Support Levels fail, then we have more Support at 7192, 7130 and 7093 - so there is a lot of Support which helps us a lot if the Markets do get wobbly.
The first draft of this Blog was called something like ‘Is it possible to be too cautious’ but I decided that this was a pee poor Title and I have gone for something more racy - after a lot of waffle at the start of this Blog, as we get further in it should all start to make sense.
Simplistically, I tend to write 2 basic types of Blogs - one is sort of more Research-based and takes a lot of time and effort but is probably in some ways easier to write in terms of WheelieBrain power, and then another type where I write from my own thinking and these tend to be quicker to produce but need focus and tend to require some planning and structure to make them work. Don’t get me wrong here though, in fact the Research-type ones need a clear Structure and once I have a Skeleton of Headings I can then start filling in the text - these tend to be ‘Buy Rationale’ Blogs. The other type tend to need me to turn off the TV and to have the Radio down low and I need to summon up full power from my ‘Slow Brain’ - and by a bemusing quirk I tend to flow better when lubed by Tea (and probably not Beer !!)
I was up in Westminster yesterday for the UK Investor Show and had a really enjoyable day meeting up with old friends and with loads of Peeps who are fairly new to Investing and had some really useful discussions. Funnily enough we didn’t seem to discuss individual Stocks so much, although a few came up, and the focus was probably more around Portfolio Management and particular subjects like Spreadbetting and Technical Analysis in particular. It was at the Queen Elizabeth 2 Conference Centre but I have no idea why they named it after a famous Cruise Liner………
Over the last few years since starting the whole WD fiasco I have met up with loads of people who I have met mostly via Twitter and it has massively improved my understanding and knowledge - in fact, at a time when I was feeling like my skills were plateauing to a large extent this ability to meet like-minded and experienced People was like a huge shot in the arm of enthusiasm and interest at a time when I was most definitely feeling a bit jaded with regards to my Investing.
Welcome to my Educational Blog Page - I have another 'Stocks & Markets' Blog Page which you can access via a Button on the top of the Homepage.
Please see the Full Range of Book Ideas in Wheelie's Bookshop.