I’m really tight for time tonight as the MotoGP from Circuit of the Americas in Texas is running as I type, so I am not sure how much I can cover but there is a pile of Admin type stuff I need to run through first and then I need to flag some concerns I have about the prospects for the US Markets and I also need to carry on the Forensic Analysis of a difficult FTSE100 Short Trade I had running last Week (see my ‘Trades’ page for full details on this and some initial thoughts about what I did not do particularly well and how I can improve things).
I attended the UK Investor Show in Westminster yesterday and met up with so many people who I have met previously or who are people I regularly chat to on Twitter and of course many Readers of this Website etc. I really enjoyed the Event although I didn’t get the chance to see many of the Stands and stuff but I did listen to Mark Slater’s Speech but in many ways it was pretty much old news to me and sadly this time he did not really come up with any new interesting Stocks to look at - in fact he was a bit of a tease because he said his Funds had been buying into 2 Stocks lately but I don’t think he told us which ones they were (although of course it makes sense for him to keep quiet about this if he is still building his Stake).
I have been scribbling this WheelieDealer stuff and bashing out Tweets for probably about 3 and a Half Years now and I have been attending the UK Investor Show and Master Investor over most of that period but I have to say this is the first Show where it really struck me that what I am doing with the whole WD ‘thing’ is getting some serious traction and clearly People are finding me on Twitter and heading towards the Website etc. I am obviously extremely pleased about this because I reckon the stuff I produce should be pretty useful and it is nice if plenty of People are actually able to take advantage of it.
This is particularly welcome when New Investors latch onto my stuff as they are the ones who without doubt can benefit the most - but it has also been an extremely pleasant surprise to find that Experienced Investors/Traders also find my output of use. In fact, one of the highlights for me yesterday was finally meeting up with Paul Scott who really is a Legend in the Private Investor sphere for the first time yesterday and he was so complimentary of the stuff I write which I am really flattered by - although to be fair he was a bit squiffy !! Cheers Paul !!
Obviously this is all very inspiring and a big motivation for me to try to make the stuff I put out as good as possible in the limited time available - and my intentions are to make this something I do until I am unable to type anymore so hopefully there will be many more WheelieBlogs to come !!
Later this Week on Thursday and Friday I will be very quiet on Twitter and stuff because I will be attending the Mello Event in Derby and that looks like being the highlight for Private Investors this Year. They always say that Warren Buffett’s Omaha Nebraska Berkshire Hathaway AGMs are “Woodstock for Share Investors” but I reckon this Mello Event is the equivalent in the UK and a must for anyone who can make it. I guess they have tickets left and it takes place on Thursday and Friday - you can find out more and get Tickets here and there are Ticket Discounts for Full ShareSoc Members (assuming they have some !!):
For Medicinal reasons I can’t attend the Show for both days and it is a long drive for me due to the limitations of Hand Controls on my Car which make my hands/fingers extremely achy if I drive for anything near 2 hours or more. In light of this I will be driving up on the Thursday but I won’t be able to leave Windsor until mid afternoon so I will take my time and get up to Derby where I have a Travelodge Booked just off the Motorway for Thursday Night. I should get to the Show around 11am ish on Friday and I will head straight to the ‘Twitterati / Bloggers Sofa’ thing they have going on and I expect to be hanging around there for most of the Day as there are loads of Twitter Mates I want to meet up with. If you are about then come and say “hi”.
I am not sure how things will pan out on Friday Evening but I am staying in the Travelodge again on that Night and I will be driving back slowly on Saturday.
If you are unable to make Mello Derby then there is also an ‘Event’ going on at Duxford Aerodrome Museum thing just off the M11 near Cambridge on Monday 25th June - there are details about this on my Homepage - already loads of people are telling me they will come so feel free to join us - all are welcome.
Later in the year I expect to sort out a ‘WheelieBash’ which will probably be at The White Hart, Winkfield, near Windsor but I need to sort the Date and Venue out precisely but there is no rush yet !!
Clearly I am a bit busy at the moment but I do intend to issue some sort of Blog during the coming Week but it could well be something I have written a very good draft of already and I have no idea which one I will put out. I have one that sort of follows on from the ‘Index Trading System’ Blogs but it might not be finished in time. Whatever…….
I tried to trick everyone (I promise it wasn’t deliberate) with Part 4 of the Index Trading Systems Blogs and it appears out of the usual Blog Order due to an IT glitch (in other words the person loading up the Blogs to the website is a muppet) - if you have not see it you can find it here:
Last Week in the Blog I included a rather bizarre Video which was from many many Years ago when I appeared on Top Gear with Clarkson and all that. Anyway, if you have not seen it if you look back to the Charts Blog I did last Weekend then you should be able to find a link to it. As a result of that many People have asked me about how the Filming and the Studio appearance went and actually it is quite a funny story so I will write a ‘non-Finance’ blog about it and put it out at some point - it should be fairly easy for me to write because I have been dining out on the Stories for years !!
Other than that I have a Stock specific Blog I want to get created and that will probably get my focus once the dust settles and I am back from Mello Derby - and then there is a list as long as my Arms with ideas for stuff to write !!!
Blast From the Past
These are some of the earliest Blogs I ever wrote - but it is such an important topic and I think the ideas contained in here of ‘Sizing to Volatility’ are extremely important and have saved my backside many a time - so this week you get 2 Blogs in effect !!
Right, finally we are on to some Stock stuff and I have got all the Admin out of the way !! Last Week was pretty good for me and my Portfolio gained 1.5% on the Week which is a strong Result. In recent Weeks my Portfolio went negative for 2018 so far but with the last 3 Weeks being up I have got things back into the Black and it is a really nice feeling to be making progress again. It was a common theme yesterday at the UK Investor Show that many of the People I chatted with are having a tough Year and it is really unclear to me how things are going to play out from here. My hunch is it won’t get much easier as we are now coming into Summer and that always tends to be pretty turgid - remember the expression “Sell in May and go away and don’t come back until St Ledger Day” - and it is amazing how often this would have been a very wise move.
I will come on to this in a bit but despite there being positive signs lately in the UK Indexes, the European and US ones in particular don’t look so promising - in fact the US ones have got me a bit worried and I want to dig into this in a bit. On the Macro front Global Growth still seems pretty good although I am seeing more mentions of signs of a possible Slowdown appearing - but not anything to panic about yet by any means and in the UK (as I predicted note !!) Sterling has recovered a lot and as a result Inflation is softening which is helping relieve the pressure on Consumers and of course the Brexit Fears are all totally overdone and the UK Economy is doing better than most people think or expected.
With all this in mind I am sticking to my Strategy of late to do nothing much and just to perhaps do the occasional Index Trade if good opportunities arise. My emphasis here really will be on the Short side of things if I see the need to Hedge my Portfolio but I expect a fairly inactive Summer ahead - which is cool because after a very miserable and nasty Winter I want to get out and enjoy the Sun.
I have a bit of Cash in my Income Portfolio and depending on how things play out I might move on a New Stock fairly soon - other than that I am in no great rush to do any Buying or Selling of my Stocks - unless the situation changes quite a bit. As I keep saying, I wouldn’t mind lowering my Spreadbet Long Leverage a little bit but I am in no desperate panic to do this.
Let’s look at those US Charts and see if my worries have any foundation…….
The Chart below (as usual, all ScreenShots are from the brilliant ShareScope software that I use and if you click on them they should get bigger and easier to see on your Screen), is a fairly Long Term picture of the DOW and this is what has got me a bit worried because I have been looking at this kind of image on a small-scale on my Mobile Fone Screen in recent Days.
My concern arises because we seem to have a bit of a ‘Downwards Pointing Triangle’ between my Red Line (Red Arrow) which is Resistance and my Black Line (Black Arrow) which is Support. The problem is that as the Price follows the Red Line downwards, it is ‘squeezing’ up to the Black Line and this could end up with the Price breaking down below the Support of the Black Line which would suggest much trouble to come.
An important Line here is the 200 Day Moving Average which I have pointed at with my Blue Arrow - this is good Support down near that Black Line but if the 200 Day MA fails then that is more trouble ahead signalled.
Of course if the US Markets get in trouble there is no rule that UK Markets etc. need to track them downwards but in reality it is hard to ever think of a time when the UK Markets rose for a sustained period whilst the US Markets fell - “When the US sneezes, the Rest of the World catches a cold”………
On the ScreenShot below I am trying to zoom in on what I showed above and to try to show some detail of what we need to be aware of. First off note the Green Downtrend Line (marked by the Green Arrow) and look at how the Price broke-out of this Line to the Upside but then it quickly ran out of steam and has started heading down again. The Price looks like it pivoted down from where my Pink Arrow is and if this does turn out to be a proper Turning Point, then my Red Line (Red Arrow) will be valid as a Downtrend Line and the break-out from the Green Line might actually be a bit false.
My Yellow Circle is highlighting a Big Red Down Candlestick from Friday and this hints at more Falls to come but it could turn up again very quickly and this is exactly what we need to avoid that Red Line becoming too powerful as a Resistance Line. The Black Line (Black Arrow) is the one from the previous Chart and 23344 is a very important Support Level.
My Blue Arrow is pointing to the 50 Day Moving Average Line and not how it is still heading down towards the 200 Day Moving Average (the other light Blue Wavy Line) and if they Cross then that would be a concern because we would have a Bearish ‘Death Cross’. Note the 50 Day MA has tried to turn up again and if the Price can turn up very soon then maybe the Death Cross can be avoided.
On the Chart below we have the DOW Daily Price Candles with the Blue Wavy Bollinger Bands above and below. My Green Circle is trying to highlight how in the last 3 Days the Price has dropped off the Upper Bollinger Band and it could easily head down towards the Bottom Band now.
Blimey, the bad news continues !! This is the Weekly Chart and although the context is not great as you would really want a sustained run up first for the validity to be more confident - but anyway where my Black Arrow is we have an inverted Hammer - in fact, it is almost a ‘Gravestone Doji’. Clearly not much signs of life there then !!
Here we have the Heiken Ashi Candles - these are totally different to the Normal Candlesticks I have shown - in this case where my Green Circle is we have a Big Red Down Candle which is looking quite negative after the Narrow Red Candle from Thursday. These HA Candles are brilliant because they give very clear and ‘slow’ Signals but are pretty accurate I find.
This one is clearly worse than the DOW and I think it is still being led by Technology and the Nasdaq coming off the boil - I will have a quick look at the Nasdaq Composite Index in a bit.
As on the DOW we have a Triangle going on with a Downtrend Line where my Red Arrow is and a Black Line at the bottom giving Support where my Black Arrow is. The Key Support is down at 2532 and if this fails then there is big trouble to come. My Blue Arrow is pointing at Support from the 200 Day Moving Average and this will kick in now at about 2600. My Yellow Circle is showing a Big Red Down Candle from Friday similar to the DOW - the Price really must turn up soon and get through that Red Downtrend Line.
All the other things like RSI, MACD, Bollinger Bands, Weekly Candles, Heiken Ashi etc. look the same as the DOW.
We have a fairly similar picture here as well with a Triangle hemming in the Price and depending on how that Breaks we will then get a steer on what is most likely to happen in the Weeks ahead. My Yellow Circle is showing a Big Red Down Candle from Friday and we need this to turn up straightaway and Breakout of that Red Downtrend Line if we are to avoid trouble. I will not be surprised if the Price stays within the Triangle for a while though. There is a lot of Support below and of course the Key Level is 6630 and a failure here has the potential to be extremely serious.
The Chart below has the 13 and 21 Day EMA Lines (Exponential Moving Average) and where my Black Arrow is the ‘Faster’ Red 13 Day EMA was crossing the Green 21 Day EMA from underneath and this is a Bullish Golden Cross - however, it needs to cement this and it is possible that if we have weakness in coming Days then this could immediately turn down again which would not be good.
Other Indicators are similar to those on the DOW and S&P500.
FTSE100 Short Trade
As I mentioned earlier, Last Week I placed a Short on the FTSE100 which didn’t go my way and cost me a bit as the Stoploss was triggered and if you go to my ‘Trades’ Page you can read all about it. However, I have thought about it a lot since then and it was clear to me that my Error was in having too loose a Stoploss and in future I need to be sharper in this regard as I will explain in a tad. There is no problem with having a Losing Trade but having a Losing Trade that costs me a big hit is unforgivable (let’s all calm down a bit though, the Trade only cost me 0.35% of my Portfolio Value so it was not really too much of a disaster and in truth it is probably a good lesson learnt).
If you look at the Chart below, just like in the ‘Index Trading System’ blogs I wrote (in Part 3 really), please ignore the Candlesticks within the Black Box so it is pretty much the situation that faced me when I decided to Open my Short Trade on Monday Night. The first thing I would like you to get your head around is the larger Sideways Range that seemed to be dominating between about 7062 at the Bottom and 7326 at the Top.
My Black Arrow is pointing to a Big Red Down Candle which seemed to mark that the FTSE100 was Turning Down off of a Pivot where my Blue Arrow is. Therefore when I put my Short on the logic was that the Price was Turning Down and therefore should keep falling. On this basis, my Stoploss should have been placed just above the Turning Point which would mean at about 7280 where the Green Line is. In essence, if the Price had then risen up through 7280 then the whole premise of my ‘Turning Point’ theory would be wrong - and of course that is what happened and I should have been out of the Short Trade very quickly and with a very small Loss.
However, because of the larger Range, I decided when I Opened the Trade to place my Stoploss up above the Top of the Range at about 7330 where the other Green Line is. If you look back at my Trades Page Entry for when I opened the Short I even said there were a choice of Stoploss Levels but I think it is clear from this experience that a Tighter Stoploss is always what I should go for. In effect the Stoploss should kick in at the point where the Rationale for my Trade has been proven Wrong.
Anyway, in the event the Price broke-out above the Top of the Range and this suggests more Gains to come - that is quite an interesting situation because it is clearly very different to the US. The value of the Pound seems to be influencing things along with the Oil and Mining Stocks in the FTSE100 and its heavy Weighting to just a few Mega-Cap Stocks - as I often say this is a very poor Index to use for my Trades !!!
I am tight for time so I will not show them here but the other Chart things on the FTSE100 look pretty good and so do the smaller UK Indexes - so we might get more rises ahead despite the US situation. This disparity is unusual.
As always I will Tweet out the Indexes as I see them in coming Nights and it will be interesting to see how they develop. Of course Thursday and Friday I will be very quiet as I will be away for all intents and purposes but I am sure you will all cope !!
Good luck in the coming Week,
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