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.
Looking at my slightly outdated copy of the UK Stockmarket Almanac, it implies that a typical November for the FTSE100 does have this kind of Up and Down and no obvious direction but it specifically says that the last 7 Trading Days of the Month tend to be very strong - my goodness I would welcome some of that soon !! As things stand my Strategy remains the same - I am pretty much Fully Invested and I am just letting things plod along - I would like to lower my Spreadbet Long Exposure a little but I am relaxed to not rush this. I am keeping my eyes on the Index Charts for any clear Signals to Short but probably the only thing that would really motivate me to do this would be if the US Indexes do 13/21 Day EMA (Exponential Moving Average) Death Crosses - and at the moment there is no sign of this (if anything the US Indexes look hugely bullish still).
A Big Event for the UK Market next week is the Budget on Wednesday but in reality I don’t think these affect the Markets all that much - perhaps when they were more unexpected back in the 1980s with Lawson’s Tax give-aways they had a bolstering effect but there is obviously no chance of this now with UK Public Finances still in a complete mess (Debt is at the Highest Levels it has ever been and still we are borrowing huge amounts just to keep things ticking over - hardly the sign of a Strong and Dynamic Economy). Throw in Brexit on top and it is clearly no time for heroics and although we will probably see a slight easing of the Government Spending Taps it will be pretty small I suspect and purely for Political reasons - i.e. to buy the Nurses off with a small bribe.
At a Sector level there might be some action but the obvious one is Housebuilding and it could involve some Sticks to beat the Housebuilders for sitting on Landbanks (although in reality there is little concrete evidence that they are doing this) and some Carrots to encourage them to build more. However, we cut it, the UK desperately needs more Houses and there is a political imperative to address this and such a background has to be good for the Housebuilding Stocks - nearly every one I look at comes with chunky Dividends and looks on the cheap side - I hold Galliford Try GFRD which looks super cheap and McCarthy & Stone MCS which is a bit more specialist as a Retirement Homes play but the Chart looks very nice on it as it seems to be escaping a Long Term Downtrend Line. Crest Nicholson CRST and Bovis BVS also look tasty.
There was some Press Coverage about Plastic Containers to be taxed but from what I have heard it looks like that is merely a ‘Consultation’ (hefty kick into the Long Grass is probably nearer the truth) so I doubt Packaging Companies will get much impact as yet - although it could be something to consider for the future if you are holding such Stocks.
Income Portfolio Blogs
This Series really has been an epic but I have had some great feedback on the ones I have put out so far and I think it is proving a worthwhile exercise. As I mentioned in the latest one to be released, the Series has got stretched to 7 Parts in total and the last 2 are looking at each of the FTSE350 Sectors and I am giving a view on their suitability for an Income Portfolio and suggesting some Stocks in each where appropriate. So far I have probably done about 28 out of something like 35 Sectors so it is in pretty good shape and I plan to issue the First Half later this week - I need to tweak it and proof-read and stuff.
Looks like this Blog Series has been extremely well timed (pure luck and I take no credit) because the kinds of Stocks which would suit such a Portfolio well are really getting hit recently (it mystifies me as to why this is the case and I see it as an Opportunity to take advantage of some very attractive Entry Points). In fact, I suspect this fall in Prices has hurt my Trading Portfolio as well because I have Long Spreadbets on several of these which have suffered. On the flipside though, some like Royal Dutch Shell RDSB and Telecom Plus TEP have been very strong lately (ah, Diversification doing it what it should do !!).
One theory behind the fall is that Utilities are being hit because of fears of a future Labour Government (can you hear my Teeth Clattering?) and I heard that loon McDonnel was on about Nationalising them again this morning (great idea John, and exactly how will you pay for this pointless piece of ideological foolishness?). I don’t see such fears as a reason to Sell Utilities in particular - if a Labour Government is coming then we will need to Sell every Stock we hold and move entirely into Cash (and that will probably lose Spending Power very fast also !!). It is pretty obvious that the real reason they are so keen on Nationalisation is to increase Union Power and build a stronger base for the Labour Party of the extreme Left.
There have been some very interesting Polls around this in recent Weeks - bizarrely some even have Theresa May ahead which is pretty astonishing when you think this is probably the worst Government we have had since the Labour Governments of the 60s and early 70s - amazing. Even that smoothie Tony Bliar says that with the Government in such a mess, Corbyn should be 15% or more ahead in the Polls - and he is barely 6 or 7% ahead in even the most flattering Polls for him (I think the latest average gives Corbyn a 2% Lead which is wiped out by the Margin of Error). As much as Corbyn had a good Election, he simply did not win and came Second and was a long way behind - for him to win the Next Election (and this is likely to be many many years away) he needs a swing of 40 Seats or more - and it is highly unlikely he can do that.
There is a view that the General Election was a bit like a By-Election protest vote - it is very normal for the Electorate to ‘send a message’ to the Government of the time that they are unhappy and this could have happened in the General Election. No-one thought Corbyn would win and it was anticipated that T May would have a huge Majority, so perhaps many Voters decided to act in this way. If so, then Corbyn will struggle to even match his previous performance at the next Election (and it is highly likely the Tories will have a new Leader by then and they cannot be less attractive to the Electorate than the T May Cyborg).
It seems to be that Corbyn was very good at motivating the young and the disillusioned and usually non-voting People to come out and Vote but he needs to convert Conservative Voters over to his way of thinking - clearly that is a huge ask (and of course the LibDems might steal a few Votes from Strictly Come Dancing fans). Time and again the key factor that is helping the Tories is on Economic Competence - the Public at large still struggle with the idea that you cannot solve a Debt Problem buy borrowing more - and they are right (ok, I will concede that there are ways of doing this but it needs combination with Deregulation and this is not something Marxists like McDonnel would understand). There is clearly a case to be made for how Government Spending is allocated between Departments (and cutting out Waste and unnecessary Spending) but this is very different from more reckless borrowing.
I watched McDonnel on the Andrew Marr Show re-run tonight and his ‘policies’ are just incoherent - he says he will not borrow more but then goes on to say he will issue Government Bonds to buy back the Utility Companies (Bonds are the tool by which a Government borrows) and then he goes on about growing the Economy faster but in the next breath says he will raise Taxes - which of course would have the opposite effect. Barking.
A half-decent Conservative Government could demolish these idiotic ideas but of course the current motley crew have no idea about how to get their message across and T May has no Leadership ability whatsoever.
To show this dire situation with an anecdote, I just heard on the replay of the Andrew Marr Show that when Dennis Healey had to go to the IMF because the UK was broke back in the 70s, the UK’s Debt to GDP Level was around 50% - now it is running at 88%……….
This week I have loads of Stock Charts to run through, but I will probably look at the Quid because it is looking interesting again.
Oh, while I think of it, I did a review of a superb book I recently read by Victoria Hyslop called ‘Cartes Postales from Greece’ - if you skip over to the ‘Non-Finance Books’ page then you can see it there and obviously with Xmas coming you could find a few Gift Ideas on that page I am sure !!
Equinix Inc. US:EQIX
This is one I know pretty much nothing about apart from the fact that it seems to be a rare DataCentre play and this is something I am very keen on and I get my exposure via Iomart IOM and to some extent via KCOM. I tripped over this one recently and what stood out to me was the Chart - look at that beauty !!
The Chart below goes back to about mid 2008 but apart from the odd Dip it has been really One-way Terrific (see what I did there?) - I would not suggest such a brazen thing to those of a Fundamentals bent, but for a Chart Trader type of person to go Long on this with a Stoploss could be very Profitable with a well-timed Entry.
I haven’t gone into the Fundamentals at all but from a quick look on the ShareScope ‘Details’ Screen it looks like Revenue has been growing nicely but so has Debt - but of course with these US Tech Stocks they don’t seem to care about Fundamentals too much !! Obviously the logic of DataCentres is that ever-increasing demands for Data (and remember the Internet of Things IoT will massively increase such flows) will need more and more Computing Space and there has been loads of Consolidation in the Sector so that very few are left now for Private Shareholders to get involved with. My expectation for IOM is still that it will get taken-over at some point.
The Screen below is the ‘Details’ screen from ShareScope - sadly there are no forecast figures in here but it gives you a view of how the numbers have developed in recent Years - if you click on the Picture it should grow bigger so you might have a chance of actually being able to read it !!
Learning Technologies Group LTG
This one came up recently and I thought it would be interesting to look at the Chart. They do eLearning type stuff (providing Education over the Internet in simple terms) and it is obvious that this should be a pretty Big Theme in coming years - in fact, I am surprised it hasn’t achieved more traction than it has. I suspect this is down to resistance within the Profession which is fairly resistant to changes which obviously threaten Jobs.
It is certainly not cheap on a Forward P/E of about 26 but perhaps the growth rate of such a Sector would justify paying up - the Market Cap is £322m so it is hardly a tiny Company but equally it could grow fast from such a size. With the way Tech Companies are being adored at the moment I would guess that this will go higher - and the Chart certainly supports such a view as we will see in a tad.
The Chart below is all the history available for LTG so it clearly listed back in 2011 ish. My Green Arrow is pointing to where it peaked back then and clearly just after IPO it was a bit of a disaster and dropped hugely; but People who were buying down under 10p must be very happy now - although of course many will have sold far too early which is always in the nature of these things. However, since then it has been on a lovely Uptrend and it recently got over that IPO Peak and it has just fallen back a bit from that as we will see in the next Chart.
On the Chart below I have zoomed in to about the last 2 years or so. It is a bit choppy but it seems to be moving pretty much within the confines of my Red Line (marked by the Red Arrow) at the bottom and my Green Line (Green Arrow) at the top - and at the moment it seems to be heading towards the Red Line.
On the Chart below I have zoomed in more and now we just have something like the last 6 months and I am showing the Daily Candles here. The Green Line at the Top and the Red Line at the Bottom are the same as in the previous Chart. My Blue Arrow is pointing to the Wiggly Blue Line 50 Day Moving Average (if you look in the ‘Graph Legend’ Box - “what a Lege !!”) and note how the Price Action at the moment is very much around this Line but if you look further down you should see a much Lighter Blue Wobbling Line which is the 200 Day Moving Average (I have not marked this - it is quite faint and is down near the Red Line at the Bottom) - this should be a good Support Area around 50p.
My Black Arrow is pointing to a Big Red Ugly Down Candle from Friday and this looks pretty Bearish. I have not done this particularly well, but I am trying to capture a sort of Hammer/Dragonfly type of Doji Candle within my Yellow Box but anyway this is not all that important - what matters is the Intraday Low it made on that Day down at 55p - this is now critical Near Term Support and must hold - if it fails in coming Days, then I would expect this to head down towards that 50p Support Level.
The upshot of all this is that the Chart looks a bit weak Short Term and if I was a Buyer I would be stalking it and waiting for a better Entry - down around that 50p Level could be a good place to start Stake Building perhaps.
Dart Group DTG
I don’t hold DTG but I have done in the past and it is a Company I keep an eye on because I have been very impressed by the growth of Jet2 Airlines and I think it is very well managed. I am not so keen on the Fowler Welch Lorry bit but as time goes on this is becoming a smaller and smaller part as the Jet2 bit expands so it is probably nothing to be too bothered about. DTG has recently expanded to new Airports and they put out a Trading Update last week which said they would “Beat Expectations” which is always great News for Holders and usually there is more Upside to come.
Just below I have shoved in the ShareScope ‘Details’ Screen for DTG and as usual if you click on it you might stand half a chance of seeing it (put your Glasses on as well and that might really help a lot !!). In the Top Right Hand Corner it has the EPS Forecast Figures and I tend to find that in these ‘Beat Expectations’ situations they are often far too low. As things stand, DTG is on a Forward P/E of 14.8 (660p divided by 44.53p) which I wouldn’t call expensive for such Quality and if these EPS Figures are too low, then in fact the Price is even more appealing. There is also a paltry Dividend of 1% but obviously this is not a Play on Income.
This is a very interesting Chart - and Readers who suffered Last Weekend’s Charts will perhaps remember all the stuff I garbled about ‘All Time High Breakouts’ (assuming you have sobered up enough by now) and it looks like we have a similar situation here (by the way, you might or might not have noticed that Supergroup SGP did the Breakout as I thought it would - very nice and I expect to do well on this one. Entertainment One ETO has yet to follow it but it has Results on Tuesday so maybe it won’t be long to wait for some action !!).
My Red Arrow on the Chart below is pointing to the All Time High on DTG up at 684p - at the current 660p it is clearly not far from a Breakout and it is worth watching for this as a Breakout usually brings more and fast Gains.
On the Chart below we have the Daily Candles for DTG and I have zoomed in to the last few Months. Anyway, the action here is really in recent Days since the Trading Update and on that Day it jumped up and did a ‘Gap’ which I have filled with my Big Green Box - it is possible that the Price drops back to fill this Gap but I suspect it is more likely it will keep rising - I don’t see this as an ‘Exhaustion’ Gap, it is more likely what the Gurus call a ‘Breakaway’ Gap I reckon (and the Fundamentals support this view which is another reason why I like to combine both Disciplines - Charts and Fundamentals).
My Blue Arrow is pointing to another nice development for Bulls where the 50 Day Moving Average has Crossed up over the 200 Day Moving Average and done a Bullish ‘Golden Cross’ - very nice as this tends to mean more Gains in coming months. The ATH Breakout is key here - if it can do it, then you can expect more Gains to come.
Of course it’s fun and pleasant to look at nice Charts but it doesn’t hurt to look at less pretty ones as well - especially as I don’t hold AUTO although I hold Cambria Motors CAMB which is in the same sort of Sector although AUTO is much more about Internetty things. AUTO is on a Forward P/E around 16 with 2% Dividend Yield which aren’t the worst Metrics I have ever seen but obviously if the Actual Earnings achieved disappoint then this P/E Number will understate the Reality and the P/E could in effect be far higher - so this is where the Danger lies and the Car Sector is clearly not too healthy at the moment after some boom years. In addition, other companies that are more Car Retailers than AUTO, are on much lower P/E Ratings - so AUTO could come under pressure if compared to these (AUTO provides more of a ‘Portal‘ for Car Adverts so it is a bit different).
The Chart below shows the Full Story since IPO back in 2015 and we seem to have a Mirror Image where the Price was in an Uptrend Channel where my Red Line is (Red Arrow) and now it is in a Downtrend Channel where my Black Line is (Black Arrow) - ok, it might be pretty, and nice and symmetrical for all you OCD sufferers, but the sad fact is it is dropping.
Down below we have my Blue Line with the Blue Arrow at about 307p - this is Crucial Support now and must hold - if it fails, then I would expect the Price to fall down perhaps even to the 260p kind of levels where it first Floated.
On the Chart below I have zoomed in to about the last few Months and the Black Line (Black Arrow) is the same one as on the Chart before and the Blue Line at the bottom (unusually with no Arrow this time) which is marked ‘307p’ was the Crucial Support shown before. This time my Blue Arrow is pointing to a Bearish ‘Death Cross’ (A Dead Bear then - I warned Paddington to be careful with those Trains) between the 50 Day and 200 Day Moving Averages; and note how this did its job and predicted more Falls which duly arrived.
I have cheated immensely with my Green Line (Green Arrow) and done some disgraceful and criminal ‘Line Fitting’ to make it look nice - at this stage I have tried to draw it parallel to the Black Line above to form a nice Downtrend ‘Channel’ but there are not really enough clear ‘Touch Points’ and really this is guesswork - it is there as a guide but should be amended as the story develops and we get more Candles.
My Little Yellow Box is capturing a Hammer Candle which was formed back on Wednesday 15th November - this suggests that the force of the Big Push Down from previous Days is waning and the Doji Candles which were put in on the following Thursday and Friday suggest it is trying to build Support - perhaps as a precursor to an attempt to move up but this is a pretty weak looking Chart and I wouldn’t expect much if it does manage to Bounce a bit. There is a lot of Resistance up at about 340p/350p and this could hold back any attempts to move up.
This one is interesting. Here we have the Daily Heiken Ashi Candles for AUTO (remember these behave totally differently to ‘Normal’ Candles because they are based on an Average over a couple of Days which removes a lot of the ‘Noise’) and my Green Circle is capturing where the HA Candles are still Red but they have Narrowed - this often happens before a move up and the HA Candles turn White.
If you look back to where my Yellow Circle is, a similar thing happened and it led to some Days of Gains - this might happen again.
Clarke (T) PLC CTO
This is one my mates Cockerhoop who holds CTO (@RanmoorRuffian) and A1Mhigh (@A1Mhigh) were talking about on the Tweets and I thought it would be a good Chart to dig into. They are some sort of Electrical Contractors business and look very Cheap on a Forward P/E around 5.9 with some Cash by the look of things and a 4.74% Dividend Yield - not bad but it is quite a small Company on a Market Cap around £32m. Anyway, here is the ShareScope ‘Details’ Screen which Readers might find useful:
Starting off with the ‘Big Picture’ which is always best when looking at any Chart, the Screen below has all the History available in ShareScope and with this going back to 1994, clearly CTO has a long existence (usually a good thing I find). The Story here is really 3 distinct Periods - firstly an Uptrend from the Left Hand Side of the Chart to a Peak up around 295p in 2005 ish and then it fell away and we had a Downtrend to about Late 2011 when it hit a Low of 35p ish which is where my Blue Arrow is pointing. Since that we have the 3rd Phase which has really been a pretty steady Uptrend.
My Big Pinkish Circle is trying to highlight a big Area of Resistance in the region of 100p to 170p ish - which could be a difficult Area for the Price to get up through - however I suspect Holders will be Cockerhoop if it gets up around there anyway !!
The Chart below is a pretty simple one and just highlights the Slow Uptrend which has been in place since back in about 2011. The Bottom Line of the Channel, marked by my Black Arrow, should be good Support at around 60p ish and to the Upside, my Red Line (Red Arrow) will probably be Resistance which will limit Gains to up around 95p ish. A Breakout above this Top Red Line would be very Bullish - to put that into Numbers, a move over 100p would be very Bullish.
On the Chart below I have shown the Daily Candles for the last Year or so and the main thing here is the Downtrend Channel which seems to be in force (Green Lines and Green Arrows) since May and the Price needs to get above the Upper Green Line if it is to make proper headway for the Bulls. To the Downside, 70p is an important level in the very near term and this must hold as Support - if it fails, then there is a good chance the Price will visit 60p or less. The Blue 50 Day Moving Average Line up around 79p is acting as Resistance at the moment.
My Blue Arrow is pointing to a Bearish ‘Death Cross’ between the 50 and 200 Day Moving Averages and this suggests we will see more downside. However, CTO is a small Company with a pretty Choppy Chart so the usual ‘Rules’ of Technical Analysis do not necessarily work all that well. Having said that, so far CTO looks a pretty disciplined Chart.
I am very interested in this one myself for my Income Portfolio - I currently have 12 Stocks in it and I reckon a ‘Lucky 13’ is the way to go !! (I am sure any Bakers out there would understand this). It currently has a Dividend Yield of 5.3% and that would suit me fine. It is also worth noting that since Floating many years ago (somewhen in the 1990s I think) they have never cut the Dividend and I think they might have raised it every year - that is an impressive Record and VOD is clearly an important enabler of Mobile Tech and IoT stuff.
So what is the Chart saying?
Big Picture first - the Chart below goes back to before the Dotcom Boom/Bust and my Huge Red Arrow shows this very clearly - what a crazy time !! Since that all went ‘Pop’ (Bitcoin Punters please note !!) there has been a steady Uptrend Channel in place which is shown by my Black Lines (with the usual Black Arrows).
The Chart below has something like the last 4 Years ish and the key thing here is that there has been some sort of Downtrend Line as per my Red Line and Red Arrow - and where my Yellow ‘Part’ Circle is, the Price has got above this Red Line.
I have zoomed in to the very Short Term on the Chart below and the Key thing now is the Resistance Line in Black up at 233p which is the immediate Level that Bulls need to get the Price over. My Skinny Yellow Rectangle is hopefully showing an Inverted Hammer sort of Candle from a few Days ago and this struggled at Resistance up at 231p ish intraday. This could cap Gains in the coming Days.
I am struggling to show this clearly, but where my Black Circle is I am trying to show that the Darker Blue Wiggly 50 Day Moving Average moved down towards the Lighter Blue 200 Day Moving Average but it seems to have narrowly avoided a Bearish ‘Death Cross’ and it seems to have ‘Skimmed off’ which is quite a Bullish thing.
On the Chart below we have the Daily Candles with the Blue Squiggling Bollinger Bands above and below. My Yellow Circle is highlighting where the Price got above and outside the Upper BB in recent Days and this is an Unstable Condition and the Price needs to now get back inside the Bands - this means Sideways or to drop back a bit.
Pound Vs Dollar
I wanted to look at this one because I had noticed during the Week that the Uptrend Channel which has been in force since the Brexit Vote Lows still seems to be controlling the Price of the Pound and I suspect the Pound is moving up again.
Luckily when I went to the relevant ShareScope Screens I found that I had already drawn this Chart below from a few Weeks ago and this has saved me some time - Yippee !! A few tweaks and it is ready for public display.
The Chart below shows the £/$ going back about 4 Years and the Key thing here is the Red Downtrend Line (marked by my Red Arrow) which has been in place all that time - note, the Pound was in a Downtrend against the Dollar long before the Brexit Vote………
The Price of the Pound needs to breakout of this Red Downtrend Line - such a Breakout would be hugely Bullish for the Quid and the narrative that the Weak Pound is causing Inflation would be severely dubious once that point is reached. On the flipside, if the Pound fails at this Red Line and keeps going down then things would look pretty bleak……
The next thing to notice is the Uptrend Channel marked by my Parallel Black Lines (Black Arrows) which has been in place since the Brexit Vote Lows. My Yellow Circle is just there to show where we are now. The Pink Rectangle is just there to show an Area of Resistance up above which will be tough to get through.
The Chart below zooms in and now we can see the Red Downtrend Line from the Chart above (still marked by a Red Arrow) and the Price needs to get over about 1.34 ish to suggest it is Breaking Out. To be more confident a move over 1.365 which I have marked on the Chart would be a very clear Signal that the Pound is going higher.
My Yellow Circle is highlighting the Candles of Recent Days and it looks like the Price is turning up off the Bottom Black Line of the Uptrend Channel.
In the bottom window on the Screen below we have the MACD (Moving Average Convergence Divergence) for the £/$ Daily. My Black Arrows are showing where we have had a Bullish MACD Cross (both in the Signal Lines and Histograms formats) and this supports my idea from the Chart above that the Price is moving up.
On the Chart below I am trying to show how the 13 and 21 Day Exponential Moving Average Lines (the Red Line is the 13 and the Green Line is the 21) are moving and my Black Arrow is pointing to where they are narrowing together but as yet we do not have a Bullish Golden Cross where the Red 13 Day Crosses the Green 21 Day from underneath. If we get this Cross, it suggests gains to come in the Days and Weeks ahead so it is an important thing to watch out for.
OK, I have timed out - Guy Martin is on the TellyBox and I need some Tucker.
I hope everyone has a good week and if you are speaking to the Market Gods then please put in a good word for me - ta.
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