It never ceases to amaze me how quickly things can change and from a period of continual and rapid falls in the Markets, we had a strong rebound last Week as we picked our battered bodies up off the canvas.
This was a very welcome relief cos I really was getting fed up of being punched hard in the face and the whole tone of the Market just seemed to almost instantly do an about-turn and things bounced back very strongly. From a situation in the Week before where my Portfolio had got well and truly spanked and gone deep into Negative Territory for 2018, last Week I recovered 4% which is a really big Gain and this got me back into Profit for the Year - I am extremely relieved about this but of course things can change fast as we all know although my sense is that the Major Bull Run is still very much intact - both for the Fundamental Reasons which I outlined in some depth in my Blog from last Weekend and for the Technical Reasons which we will go onto in a bit when I have finished waffling on.
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Last weekend I started my Charts Blog with: “Finally the Bears have come out for their Honey………” my goodness, they certainly came out and I didn’t realise they would be so greedy and scoff so much !!!
My Portfolio took a right kicking last week and it ended up dropping 4.3% in the 5 days and this means that for 2018 overall I am now in a Loss situation with damage to the tune of 3.3%. It has been such a funny start to the year because I had a super strong first week but then did nothing much through the rest of January and then got whacked last week - not the sort of start I wanted !! As usual I will look at some Index Charts later to try to get a feel for where we are likely to go next but before that I just want to re-iterate what I think I said last week about how I just don’t see this as being the start of a full-on proper Bear Market like many ‘talking heads’ on Bloomberg and the like are saying. Financial TV loves sensationalism (like all Media because it captures people’s attention and that means Subscription and Advertising Revenues) and wheeling out the Ultra-Bear and Ultra Bull at various Market Troughs and Peaks totally pumps up Viewers’/Readers’ emotions and feeds the Fear and Greed.
Finally the Bears have come out for their Honey………
I have been saying for a long time that the Markets were very overstretched to the upside, especially in the US and this was of course best shown by the RSI Readings which were quite frankly insane. The crack in the Bull Run had to come and finally it is upon us. I don’t see this as ‘The End of the World’ and it is far more likely to be just a healthy Pullback within a Major Uptrend - in my experience, Markets always tend to do ok when the Global Economy is decent, and that is clearly the case with more strong Economic Data expected next week. There is a lot of talk/worry/Noise about higher Inflation and higher Interest Rates but I think such concerns are utterly overblown - firstly because it is highly unlikely that Central Banks will raise Rate quickly and secondly because Chris Dillow in the Investors Chronicle has pointed out a few times that the historical evidence of how Markets perform in a Rising Rate environment is that Stocks can rise while Rates move up to about 5% or 6% - and we are a long way off such levels. The simple fact is that the Faster Economic Growth that goes along with Rising Rates ‘Trumps’ (sorry !!) the drag of higher Borrowing Costs (of course it is not a uniform thing across sectors - for example Banks can make a lot more Profit in a Higher Rate scenario because their Net Interest Margin [the ‘gap’ between their Funding Rate and their Lending Rate] gets larger).
I’ll look at the Charts more in a bit but from a quick look the astonishing run on the US Markets keeps going and yet more freshly minted All Time Highs were created at the Close on Friday 26th Jan. The UK and European Markets look a lot tamer, and it seems most likely that the strength in the US is a lot to do with Dollar Weakness - I haven’t (and probably won’t !!) looked closely for such an Inverse Correlation but it would certainly seem that way. I find this unnerving. It is not normal.
The worry of course is that as the US Markets get more and more stretched and more ‘Toppy’ the chances of a hefty drop must increase - I would strongly welcome some kind of ‘Consolidation’ move (either a bit of a small drop or simply going Sideways for a couple of weeks perhaps) just to remove some ‘Heat’ and get everyone to calm down a bit and think about what they are doing. Especially on Tech, Valuations must be getting quite a lot above their ‘Normal’ levels. We need a Healthy Consolidation.
“The Trump Shutdown” is how Nancy Pelosi of the Democrats is labelling the latest fiasco with the US Government and clearly this is a direct attempt (which will most likely succeed) to blame Trump for the Shutdown.
As always this is really about Politics and the Democrats see a great opportunity to engineer the Shutdown and pin it on the President - and with Public support overwhelmingly on the side of an Amnesty for the DACA ‘Dreamers’, and with Trump’s Approval Ratings an all time low for a President after 1 year of Office, their timing is probably spot on. This also managed to disrupt Trump’s one year Anniversary celebrations and of course will set the Dems up nicely for the upcoming Mid-term Elections.
The astonishing Bull Run continues - I just updated my ShareScope Software prior to doing the Charts for this Blog and I noticed that the S&P500 had another strong move up on Friday and it has now pretty much had a continuous run of about 9 Days - all of 2018 so far in fact. It is Martin Luther King Day on Monday 15th January so the US Markets are closed.
Despite the overall strength I actually had a lucky escape and managed to eke out a Gain of 0.75% on my Portfolio Exposure (slightly higher if you look at Capital used obviously because of my Leverage on Spreadbets) - which is a pleasing outcome after getting hit with a Profit Warning from Moss Bros MOSB earlier in the Week and with Superdry SDRY (just changed name from Supergroup SGP) and Boohoo BOO both putting out decent Results but getting spanked anyway. The latter 2 are very big positions for me.
It’s hard to believe we have only had 4 Trading Days of the New Year and yet my Portfolio was up 2.5% by the end of it - in the context of a Target of 10% for the Year this is clearly a blistering start and it is probably the best opening to a Year I can ever remember. I always ‘Zero’ my Numbers at the End of each Year and start a fresh Year with my ‘Profit’ at Zero in effect. The usual pattern is that my Profit goes negative for a few Days in early January and gradually it moves back into positive as the Month progresses - it can be quite unnerving so it is nice to already have a bit of a ‘cushion’ of Profit built up. I always like being ‘Ahead of the Game’…….
Webinar Monday 8th January I was invited by Dale Pinkert to appear on his regular Webinar tomorrow at 1pm UK time - I am under the impression that it does get recorded and is available on YouTube later - I will look into this after the Show and put a Link on the Homepage somewhere for people who are unable to listen ‘Live’.
I am starting on this one well early today because I want to watch that Guy Martin making a WW1 Tank and driving it to France thing on Channel 4 tonight - and it’s a 2-hour epic so my hope is that I can get the bulk of this Blog bashed out well before then (it is around 4.30pm now so I should have loads of time) and I can come back to it after Guy for a proof-read and upload to the Website - be nice if my plans don’t get stuck in the Mud of the Somme……
STOP PRESS - I watched the Guy programme and it was very good - well worth digging out the 4OD thing or whatever it is to watch online. Real soggy week for me last week - my Portfolio overall was down 1.6% although I don’t recall any particular culprits (there were a few Ex-Divs which will have exaggerated the falls a bit) but it just has the feel of a Market that lacks direction. ‘Soggy’ is such a great word for such a Market because it really has no oomph either way - it seems to have no great inclination to go higher, but equally it doesn’t seem over keen to Tank - it is just ‘Soggy’. In many ways these kind of Sideways, Grinding Markets are the worst to endure from a psychological viewpoint (and they certainly lack entertainment and/or fun) - at least when a Market properly tanks we know that won’t be forever and it is an opportunity to buy more - and of course when Markets shoot up we are naturally happy anyway.
Last Week turned out to be a bit of a pain for me - from Monday to Wednesday nothing much seemed to happen and then things tailed off at the end of the Week so my Portfolio took a hit of 1.2% over everything (excluding my Income Portfolio which I rarely look at). This continues my angst at failing to see my Portfolio Breakout of its All Time High which was put in back in May and I feel like much of the Year has achieved very little !!
However, as always we need to stay calm about such situations and focus on the positives and what has really been achieved - even if the Numbers are not reflecting it yet. There was an excellent TED Talk (Rory Sutherland - ’Perspective is everything’) which my mate Tom Tomsky @calvoreon sent me on Twitter which was about Psychological Framing and Perspective - the basic essence being that how we experience things that happen in our Lives etc. and how we let them affect our Emotions/Decisions, is largely down to how we set the context of whatever has happened. I am not explaining this very well, so rather than me jibbering on, check out the Talk yourself here - it is 18 minutes long and actually quite funny: https://www.youtube.com/watch?v=iueVZJVEmEs First off I am having a very good year despite the flat recent Months - this is something that obviously I should celebrate and not get too down about. In addition, I have a nice collection of Stocks and I expect to see nice upside from the majority (or at least decent Dividends) in the Months ahead - and as we will see below, several of my Stocks are in very interesting Technical Situations where they are on the verge of All Time High Breakouts (don’t switch off already, I am going to do a proper explanation of this !!).
On November 5th a Title for my Blog is not too difficult to dream up and Miss Perry has come to my aid as well - and with Stocks shooting upwards like a Rocket it is also appropriate. No doubt there will be some Roman Candles somewhere in the Blog…..
Markets continue with their strength especially in the US and even the FTSE100 is up near its All Time High again - if it can breakout over 7600 then 8000 must be very much in sight perhaps even by Year End. After a couple of grotty weeks my Portfolio managed a nice gain of 1.4% overall last week and I am just a smidge off the All Time Highs I hit back in May - this inability over the Summer to breakout has been driving me to drink and I really hope it will happen soon - but of course anything can happen. |
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