I am bashing out this Charts Blog on a Saturday Night for a change because tomorrow I am off to somewhere near Birmingham to attend some sort of ‘Hill Climb’ event in celebration of 60 Years of the Austin Healey Sprite (yeah, that Frogeye thing that evolved into the MG Midget). It’s pretty sobering to realise that I was at the Sprite50 Event at the British Motor Heritage Museum at Gaydon which must have been 10 Years ago and as ever it seems like just a few Years have passed and it just brings home how fast time whittles through our fingers……..
A very close friend has one of the later Sprites from about 1964 I think and that looks much more like a Midget with no Frogeye Headlights but is remarkably quick and fine handling for something so old and with such a piddly engine (I think his is an 1100cc but I might be wrong). So the plan is to meet up with him and perhaps one or more of his offspring (that will be scary because I haven’t seen them for a few Years and they will no doubt be huge teenagers now) and it should be a fun day. I am looking forward to seeing the Healey 3000s and suchlike which are really where it’s at.
I understand there was some sort of Wedding in Windsor today. I have paid it no attention whatsoever - it is not that I am a Republican or anything (god help us if we end up with ‘President Blair’ or ‘President Boris’ or whatever - it is just too ridiculous for words. Besides that, we have a lot of great history in this country and without the Royals populating it I am pretty sure it would all seem very hollow and our Tourist Trade would be a fraction of what it is today) but I really couldn’t care less - I guess I have plenty to do myself and the last thing I want to be is vicariously living someone else’s life. All the Wedding has really meant to me is having to take detours all the time because I cannot drive through Windsor to get to where I want to be - and it has been like this for Weeks so I will be very pleased that it is ending soon. There is nothing worse than wasting 15 Minutes which could be Pub time !!
I seemed to take a lot of ‘hits’ last Week and I recall Stocks like OTB, FEVR, SPRP and some others misbehaving. So to come out just 0.1% down feels like a bit of a result and there were a few Ex-Div on Thursday as well so I pretty much stood still. I guess in some ways that is an important idea - when you have trouble in the Portfolio it needs to be able to take the Blows and to hold up OK and it is how the Portfolio keeps its Value during the tough times that matters. It is easy to make money when everything is rosy.
My Strategy is pretty much unchanged - I am really not doing much and just letting my Stocks do the work and trying to enjoy the Summer. I keep having thoughts about some trouble-makers in my Portfolio with a particular focus on GPM and AGK which I could very easily award the Golden Boot and replace them both with perhaps one Stock that appeals but I am in no great rush. GPM drives me bonkers with the Gold Price being so annoying and I really don’t see a future for it in my Portfolio - in essence it was an error buying it. AGK is something which should in theory be a great Turnaround Story but it is just not happening - my Position is so small it might as well not be there.
I am still stalking a Stock for my Income Portfolio and I might be moving on it this coming Week. I did some more work on a Blog about it last Night and have pretty much made my mind up that I definitely want it so it is now just a case of trying to get my Timing pretty good (as always I will Tweet out when I take the plunge and I will update the Website ‘Trades‘ page soon after). I might also add some VOD soon as that looks a good Income Play and that would use up the Cash I have sat around. As before my Income Portfolio continues to power ahead and has been so impressive this Year when everything else has been very hard work.
Just a quick update on where my quest to buy a Seat Leon Cupra 300 DSG has got. After speaking to the Seat Dealer near me just outside Reading I decided on the precise Spec I wanted and they were coming out at about £28,700 (the List Price was about £31,000) but what irked me a bit was that this was just a Standard Seat Discount that anyone can get - the Dealer were offering me nothing. Anyway, I have been using CarWow for several Months (I must have been driving the Dealers insane with all the Searches I kept doing) and this one Guy at Seat in Tonbridge Wells (by the way it is a Caffyns CYFN Dealership) was always the Cheapest Price and on Tuesday I took a trip down there and placed my Order for a Monsoon Grey Cupra at £26,000 !! In addition I get the VAT off because of my Disability and it means I am paying just £21,000 - I am really pleased obviously. I need to add Hand Controls to it which will probably cost about £3000 but it is still a great deal for me.
There is a catch though - there are none available and the Waiting List goes to about 6 Months - so I might not get it until November. This is a pain but I am a patient chap and to be honest it gives me time to sort out the Cash Flow and all that. Seeing as that is pretty much slap bang in Winter I wouldn’t mind too much if it slipped a bit perhaps to February - we shall see. I have my BMW Z3 for the Summer so I probably wouldn’t be keen to use the Cupra much anyway if I had it !! (although of course the lure of 300bhp might get me in the Saddle).
The other catch is that I am now having ‘Buyer’s Remorse’ about the Colour - as always they look great in the Brochures and on the Website but I have not seen one in the flesh in Monsoon Grey Metallic and I am worried it will look rubbish. I don’t want a Silver one because my old Leon is Silver but when I look at the limited Colour choice Silver is probably the best. Decisions, decisions……..
As I mentioned I have achieved a fair bit on a Blog about the Income Stock I am in the throes of Buying and once I take the plunge I will priortise getting that finished and I suspect it will appear as a 2-Parter with the Valuation and Charts bits coming later.
I wrote a reasonable Draft of a Blog about the importance of Dividends and perhaps that will appear this Week and there is also one I knocked up about the Day I had filming that Top Gear Video which Readers might find interesting. There is also one half-written about the Importance of Patience so clearly I have lots on the go and something should appear each Week as I always try to manage. Sadly I never seem to have the time I would like to get everything in my life done !!!
If you haven’t noticed (always a good plan to check the ‘Changes List’ on the Homepage whenever you visit the WD Website) I updated the ‘Little Black Book’ on the ‘WheelieBin’ page a couple of days ago with lots of ideas for further digging.
From Prehistoric Times……..
Last Week I totally forgot to chuck in a ‘Memory Lane’ Blog but this Week I have managed to get my Brain in gear and include one. Readers who have been around a bit and if you follow me on Twitter you will no doubt have suffered my obsession with Candlestick Charting - this Blog is all about that but in a pretty simple and practical way I think. I remember vividly having the idea for this one and actually producing it:
OK, let’s see what the Charts are up to.
Dow Jones Industrial Average
As always the Charts I will show here are ScreenGrabs from the excellent ShareScope Software I subscribe to and if you click on them then they should grow bigger in your Browser or whatever. The other day I discovered on my Tablet that if you are using Android then if you prod your Finger on it (you could use other parts of your Body but make sure no one can see you !!) then it sort of appears in another Screen and if you then do a quick ‘Double Click’ then it grows again and another Double Click sends it back to what it was. I have no idea what happens on Apple stuff. Works like this on my Android Fone also but I suggest you use a Tablet or PC to look at these Charts as they must be a nightmare to view on a Fone.
The Chart below is pretty much a move on from what I have been showing in recent Weeks. Yet again we have the Legendary Triangle between the Red Line (Red Arrow) and the Black Line down at the bottom marked ‘23344’ which is important Support.
About 2 Weeks ago we ‘Broke-out’ of the Triangle through the Red Resistance Line and this was a Bullish Event - and that is still ‘in force’ I think. It is hard to know what is going on now but my best hunch is it is a bit of a Bull Flag with the action of recent Days in my Yellow Circle being the ‘Flag’ bit forming up and the Green Box is showing the strong move up which could be the ‘Flagpole’. 24994 is clearly a Strong Resistance Level which needs to be broken over and doing so would be very Bullish (in fact we should really call it 25000 as that is an important psychological number). If we drop back into the Triangle that would be bad.
My Blue Arrow is pointing to the Blue 50 Day Moving Average Line and note how it was heading down towards the Lighter Blue 200 Day Moving Average (marked by my Black Arrow) and if they had Crossed, then that would be a worry because it would be a ‘Bearish Death Cross’. As it happens, the 50 Day MA seems to be turning up and moving away from the 200 Day MA - that is sweet. There should be good Support at firstly the 50 Day MA and then at the 200 Day MA if trouble hits again.
We are getting into the arse-end of May (“Sell in May…….” and all that) and perhaps we could see some weakness but this Chart is not really telling me that. After such an awful start to 2018 I suspect such weakness is unlikely but of course I am often very wrong.
The Chart below has the Weekly Candles for the DOW and my Black Arrow is pointing to a ‘Cotton Reel’ Doji (my name - don’t look in your Candles for Dimwits book cos you will be extremely confused) which tells us that neither the Bulls nor the Bears could really make much headway Last Week and as I mentioned earlier it is all about 25000 really and if that gets Broken-over then the Bulls are on a Winner.
My Blue Arrow is pointing to the 200 Day MA - note how it has been very good Support for a long, long time.
The Chart below has the Daily Heiken Ashi Candlesticks for the DOW. Remember, these are totally different to the ‘Normal’ Candles and give ‘slower’ but very clear Buy or Sell signals. After a run of nice Big White Up Candles, we got 4 small Narrow Candles in Red for recent Days as shown in my Green Circle - these are negative at the moment and suggest possible downside but note they are not Big Red Down Candles - that would be more worrying.
The S&P500 is pretty much identical so I won’t show it this week.
Again the US Tech Index is pretty similar to the DOW and the S&P500 but there is something interesting in the very near term which I spotted when sniffing around this Chart. Look at my Little Blue Arrows - they are pointing to an ‘Inverted Hammer’ at the Top and a normal Hammer at the Bottom - we seem to have a Sideways Range between the Levels in my Green Text Box and Pink Text Box. Whichever direction it Breaks-out of this Range will predict the Future Moves - i.e. if it Breaks out of the Top of the Range then that suggests more gains but a fall below the Range would be troublesome.
And people pooh pooh Charting and say it is useless……..
There’s another idea here - if you have a feel for basic Technical Analysis stuff then you tend to be more prepared for what is most likely to happen in the near future - this makes you much more relaxed and helps with a sense of ‘Control’ about what you are doing when mucking about with the Markets.
Obviously the standout features on this Chart of the FTSE100 Daily is the amazing run up which is captured in my Yellow Box (this is why most People’s Portfolios will have had a pretty juicy turnaround recently and also why my heavily FTSE100 Weighted Income Portfolio has done so well) and then the fact we are bashing up against the All Time High marked by the Thick Green Line at the Top - needless to say if it Breaks-out above that ATH it is extremely Bullish.
Next look at how the 50 Day MA pointed at by my Blue Arrow is turning up towards the 200 Day MA which is pointed at with my Black Arrow. If they Cross, then we get a Bullish ‘Golden Cross’ and there are gonna be a lot of Happy Bulls around !!
My hunch is that we won’t break through the ATH just yet and it will need a couple of goes - if it Pulls back, then there is Support at 7687 and 7500 and at a few points in between - so there is decent Support really. The 200 Day MA should also act as Support if we end up going that low (I doubt it).
Two things really seem to be driving the FTSE100 from a high level Fundamentals viewpoint - the rising Oil Price and the Weakness of the Pound. The Middle East is a mess as always and Oil seems in a pretty solid Uptrend so it could well go higher or at least stay pretty high. We are at another Crunch Point with the Brexit Talks and more uncertainty here could hurt the Pound further - which would be positive for the FTSE100 most likely.
The next Chart is the main reason why I am cagey about the FTSE100 going higher straightaway and think it might need to calm down a bit. The Bottom Window on the Chart below has the Relative Strength Index (RSI) for the FTSE100 Daily and on a Reading of RSI 73 it is extremely high and usually this predicts a drop back. However, what we are talking about here is ‘Consolidating’ a strong move Up and this can be done in two ways - either by dropping back and unwinding the ‘Overbought’ situation or by going Sideways and unwinding the condition by using time to calm things down (important concepts worth knowing - ‘Trading Bases’ Jason (@StealthSurf) calls this “Consolidating by Price or Time” I think).
I won’t dwell on this because I want to cover a couple of Stock Charts. To a large extent the FTSE250 Daily is very similar to the FTSE100 but note where my Yellow Circle is that we have just been treated to a 50/200 Day MA ‘Golden Cross’ - this is Bullish and suggests Weeks/Months of Gains ahead (yippee !!).
Watkin Jones WJG
This is one which comes up a lot on Twitter and was an IPO not all that long ago which was pretty much a slam-dunk in terms of being a decent Buy but for me I did not take advantage because I hold Empiric Student Property ESP and WJG do work for them so I did not want more exposure to a similar thing - I can only hold a certain Number of Stocks (even if it is loads !!).
After a Strong Run up in the Uptrend Channel marked by my Black Lines (Black Arrows) the Price peaked out and went soggy for a while and was in a Downtrend Channel as marked by my Red Lines (Red Arrows). Anyway, in recent Weeks it has Broken-out of the Downtrend Channel where my Yellow Circle is and it looks a lot better but seems to be a bit Sideways at the moment.
WJG is currently on a Forward P/E around 12.4 with 3.9% Forward Dividend Yield expected - those look attractive numbers and with a new CEO being appointed perhaps sentiment towards the Stock is improving again. They recently gave an Update with lots of Contract Wins so it is worth looking at. From a quick look it appears to have Cash as well so that needs proper sussing out.
This is one of my favourite Indicators. My Blue Arrow on the Chart below is pointing to a ‘Golden Cross’ between the Red 13 Day Exponential Moving Average and the Green 21 Day EMA - this suggests gains and as you can see its predictive powers clearly worked. Until we get the opposite ‘Death Cross’ you can assume this GX is ‘in force’.
Here are the Weekly Candles for WJG. My Black Arrow is pointing to a Level at about 210p which is clearly Near Term Resistance and the Price seems to be a bit Sideways at the moment and hemmed in by the 200 Day Moving Average (the Light Blue Line). To the Downside, the Darker Blue 50 Day MA Line is acting as Support around 194p.
Somero Enterprises SOM
I hold SOM and I know a lot of Readers do as well. The Chart below is showing a lovely Uptrend and I have used the ShareScope ‘Toggle the Trendlines’ Button to put those Lines in. SOM made a new All Time High last Week and this is Bullish Behaviour. With an AGM on Tuesday 12th June I am expecting SOM to keep moving higher in the run up to that - “Better to Travel than to Arrive” and all that.
On a Forward P/E of 14 and a Forward Divvy of 4.7% it still looks cheap to me (Note, I have taken the Forecast Numbers from ShareScope of 40 Cents EPS and 27 Cents for the Dividend for 2019 and converted them into Pounds/Pence using 1.35 as the Exchange Rate).
XL Media XLM
I don’t hold XLM myself but I know a lot of Readers do and since their IPO a couple of Years ago it has been a very impressive performer and still looks worth owning. Again I have had to convert Dollar Cents to Pounds/Pence and at 1.35 I reckon XLM is on a Forward P/E of 15.7 and comes with a Forward Divvy Yield expected of 3.3% - not bad numbers for a Growth Stock and this is a very acquisitive Business so there is a lot of potential for Upgrades to Forecasts. It looks like they have a Net Cash position as well.
On the Chart the big story here is that Black Uptrend Support Line and that is really driving the Price - as long as it holds, there is not much to worry about. Note the Green Lines which are marking a Downtrend Channel and look how it Broke-out of the Top Green Line (Green Arrow) where my Yellow Circle is - this is Bullish. It reminds me so much of WJG which had a similar Breakout as we saw a few Charts earlier.
XLM has an AGM this Wednesday 23rd of May so if there is a good Update provided then expect some moves up.
These chaps had a Profit Warning the other day which is obviously a reason to be extremely careful but my suspicion is that much of this was down to the awful weather we had at the start of 2018 and there is a lot to like about GRG with a Long Term View and it might be a good Dividend Stock. On a Forward P/E of 15.9 it doesn’t look particularly Cheap but it does throw off a lot of Cash by the nature of its Business and it is expanding a lot with Service Stations and Transport Hubs etc. With a Forward Divvy expected of 3.2% it is not all that big and perhaps it would be best to wait for a lower Entry, although it does look like they have Cash. It is a tough call. I don’t hold GRG.
On a very Long Term Chart we do appear to have a ‘Double Top’ which I have marked with the Yellow Circles.
On the Chart below I have zoomed in a lot and I have left the two Yellow Circles in so you can have a Reference Point to the Chart I just showed. First off note the Green Line at the bottom at 900p - this looks to be good Support and it would not surprise me if this is visited at some point soon. Perhaps for New Buyers of GRG the trick would be to buy a Chunk now but to hold some Firepower back and if it drops to 900p to be Buying more etc. Having said that, it does feel a bit like ‘Bottom Fishing’ so you must be careful.
My Blue Arrow is pointing to a ‘Death Cross’ between the 50 and 200 Day Moving Averages - look how predictive this turned out to be.
OK, I will end it there - Good Luck for the coming week and make sure you get out in the Sun while it is here !!
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.