Thinking about Downside Risk
It is often the case with my blogs that they sit around in my head for perhaps several weeks before they actually make their way to even an early Draft form. This one is certainly of that ilk and I am quite pleased to be actually getting on with writing it and unloading my WheelieBrain from having to think about it anymore !!
Sadly parts or all of this blog might seem repetitive when considered next to other things I have written in blogs or on the Website over the many months that WheelieDealer has been going. However, my thinking is that this is such an important subject that it won’t hurt one bit to reiterate the themes and by giving the subject its own dedicated blog, perhaps it will really get the focus and attention that I would say is appropriate and justified.
After the momentous Events of last week and with continuing Political Chaos over this Weekend, I think we are likely to see more Downside in the coming Week - I wanted to run through the Charts and see what clues they throw up - particularly with regard to Support Levels.
I scribbled a ‘Weekly Performance’ update last night at the top of my Homepage which covers my thoughts about what has transpired and what I think is likely to hit us in coming Weeks/Months - I also gave my current thinking on my Strategy. I recommend you read this.
A good case could be made to say that this Blog will be a total waste of time and we cannot know anything before the Vote on Thursday 23rd June 2016, or, perhaps even more accurately, once we know the actual Result. I read something that said the Polling Results will start to come in overnight from various Regions and it looks like the Result should be known by the Open of the Markets on Friday 24th - I would guess that not all the Results will be in but the vast majority will be and the Market will react to this.
I was out in my garden this afternoon trying to dodge the Showers (that never actually came but that’s another yarn for another day) and I was rolling Brexit thoughts around the WheelieBrain and thinking about how I need to handle things in the next couple of Weeks (or less). As I shoved my Sweetcorn Plants into the freshly Horse Pooed soil, the thought kept hitting me that Brexit looks a real possibility - and what does this mean for my Stocks and Strategy?
I don’t want this Blog to be a Political Rant or anything - quite frankly there is far too much of that around at the moment and I am sure Reader’s know my view (and how I Voted) and it is up to each and every one of us to make our own decisions about how we Vote. I will just tell you how I see things and it is up to you to do whatever you want - as of course you should always do - this is just my Personal Diary of my Trading - I am not making any Recommendations or anything.
With the Brexit Vote now under 2 weeks away and the Markets taking a turn downwards at the end of last week, it seems very likely that the ‘Buyers Strike’ I have talked about for many months is finally upon us. It certainly seems like the tone has gone decidedly negative as the Polls have narrowed and the likelihood of the ‘Leave’ Campaign winning has increased - the momentum is clearly with the gallant & sexy Brexiteers.
However, this might be how things ‘feel’, but what are the Charts actually telling us? Remember, a big part of this game is to “Trade what you see, not what you feel” and the Charts are how we can identify if the Markets are actually behaving in the way we might think they are.
THIS IS NOT A TIP OR RECOMMENDATION. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITE. IF YOU COPY MY TRADES, YOU WILL PROBABLY LOSE MONEY. SHORTING INDIVIDUAL STOCKS IS VERY HIGH RISK.
You may have spotted that I Shorted Tesla TSLA via a Spreadbet yesterday at 22537 ($225.37) - please see my ‘Trades’ page for specific Trade details. This won’t be a long blog, I just wanted to outline the main reasons for my Short and a few other points worth noting.
A few weeks back I wrote a ‘Week Ahead’ update on a Sunday night and I included a fair chunk of text on how Negative Interest Rate Policy (NIRP) was perhaps not one of the brightest ideas from the Central Banks. I am not sure why but I omitted a pretty key piece of information about the implications of NIRP for Cash and so I thought I would just knock this text up to address this serious deficiency !!
The previous Blog including my bit on NIRP can be found here - it might be worth reading this first, or refreshing if you have not read it for a while (it was written as one of the usual Weekly Charts Blogs but contains the NIRP stuff near the beginning):
Such a lovely and welcome change to have some decent weather today - maybe ‘Flaming June’ is finally upon us and I won’t be turning on the heating this week……..
Obviously the Brexit Vote is getting close now and is just under 3 weeks away - as I mentioned in my last Blog, I think some sort of drop in the FTSE100 is most likely prior to the Vote (it may not happen, but that is what I think is most probable) and there are some signs that the recent moves up are weakening, and this is also the case in the US. This is even more noticeable with the Gold Chart which looks to be turning up - I think this will act inverse to the Indexes and we will see Gold rise if the Indexes fall and vice versa.
Regular Readers / Tweet Followers, will probably know I have some Huge FTSE100 Short Positions running which I put on earlier in the Year when Markets went quite ugly and caught everyone by surprise. Sadly my timing here was atrocious and Sods Law meant that the Markets rallied strongly since that malaise and this has been a real pain for me - it really was the worst possible scenario that could have played out.
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