The immense turgidness of Summer seems to be grinding on but the most noticeable thing is how the Markets are totally following the usual Textbook Monthly Patterns and so far July (after 2 weeks) is working out a shed load better than June !!
I am quite pleased because I managed to squeeze out a 0.9% Gain on the Overall Portfolio last week and despite still being down on where I was at the end of May, I am gradually clawing things back. I am in no eager mood to be particularly buying stuff (although I have my eye on a TopUp of one of my Stocks tomorrow) but equally I am not desperate to sell either. With the Year so far being so Textbook, I am keeping my eye towards September (historically the Worst Month of the Year) and my plan is to TopChop a few things that have done very well once we get into August so that I can lower my Overall Exposure (particularly with the Spreadbets) and also to give me Firepower to Buy if we do get a decent Drop in September.
I am loathe to sell out of a particular Stock entirely unless it really has got to that stage - I have made this huge mistake too many times in the past only to see the Stock sail on upwards to ever more new Heights. Rather I would like to TopChop where appropriate and I will be looking to Hedge my Long Portfolios a bit using Index Shorts - probably on the S&P500 because the FTSE100 has become almost useless for this purpose lately. I am in no rush to get Shorting because with Markets everywhere up around All Time Highs and the US Markets in particular making new Highs; this is extremely Bullish Behaviour and it is not a time to be Shorting (unless you are turned on by pain).
I will be keeping a careful watch on things and looking for Opportunities to TopChop and to Short - but I am in no rush and I am enjoying the tail end of Summer and making the most of it.
I will start off looking at a few Stocks but the big event of last week was how the Pound shot up on Friday and broke over Resistance which I had expected to hold - this is a really interesting situation not just because of the surprising Technical moves but also because there is such a Narrative about Pound Weakness causing Inflation and hitting Consumer’s Real Incomes - if the Pound continues to rise, this Narrative will be exposed as merely a temporary thing. It also suggests that it is unwise now to be in Overseas Assets simply because of Pound Weakness - that really looks like yesterday’s Chip Wrapping and in this vein I will most likely trim my Henderson Technology Unit Trust this week because the Nasdaq is pretty high (and Valuations look extremely stretched) and with the Pound gaining ground, this will hit my Returns. It is also worth appreciating that this is a story of Dollar Weakness rather than Pound Strength entirely - this could be very supportive of Commodities and therefore Mining Stocks.
Hikma Pharmaceuticals HIK
I was asked to look at this Chart on Twitter the other day but I was unable to find it on my Fone on the otherwise superb ADVFN App that I use (I have no idea why this is - HIK is Israeli I think which might be part of it although lots of other Israeli Stocks are on the App) so I said I would look at it here.
The Chart below goes back yonks (as always, the Piccies are ScreenScrapes from the utterly brill ShareScope Software that I use) and the main thing here is how the Price has recently fallen out of the Huge Pink Rectangle that I have drawn - this is obviously not too good. As always, it is Best Practice when looking at Charts to start with the ‘Big Picture’ first and then to steadily move in with shorter timeframes.
This is a seriously busy Chart !! First off look at the Downtrend Channel which is marked by my Parallel Lines being the Red Line (marked with Red Arrow) at the top and my Blue Line (Blue Arrow) at the bottom. Note the Current Price is down near the Blue Line and it might be able to turn up from here, but whatever happens, it must ‘Breakout’ of the Green Downtrend Line I have drawn which is marked by my Green Arrow. In other words, if it can Breakout of the Green Downtrend Line that then would be a Short Term Buy Signal.
While we are on this subject, the Red Line at the Top could easily cap any gains and longer term if HIK is going to get back up to its previous All Time Highs in the future, then it will need to Breakout over that Red Line.
My Black Arrow is pointing to a 50/200 Day Moving Average ‘Death Cross’ which as always, was extremely good at predicting the Falls that have come in the Price. It is worth noting here how there was a 50/200 Day MA ‘Golden Cross’ a short while before which failed.
My Yellow Circle is capturing a little ‘R’ in a Box - this is how ShareScope indicates that Results are due and if you hover the Mouse over the Box it gives more details - you should be able to see that it says Results are due on Thursday 17th August - it could be that this is the catalyst for a recovery here (if there is going to be one !!).
Oh, before I forget, I keep meaning to say this on my Charts Blogs and forgetting - if you click on the Charts then they grow bigger in your Browser and will be easier to see.
In the bottom window on the ScreenShot below we have the RSI (Relative Strength Index) for HIK - my Yellow Circle is showing where it is now down around RSI 30 and note how it looks to have sort of curved round and formed a bit of a ‘Saucer Bottom’ - with the Price Line falling still, this suggests a Bullish RSI Divergence. From such a low Level, it is very likely the Price moves up soon.
In the bottom window below we have the MACD (Moving Average Convergence Divergence) for HIK on the Daily. This is very near a Bullish MACD Cross (which is obviously good !!) and I have shown this higher up with my Black Arrow in the ‘Histogram’ format and lower down with the Blue Arrow in the ‘Signal Lines’ format.
The Chart below has the Heiken Ashi Candles for HIK on the Daily and my Yellow Circle is capturing 2 Narrow Red Candles from the end of Last Week - until these turn White and get Big, this is still a Sell.
Fulham Shore FUL
These chaps had results recently which were pretty decent - they do the Franco Manca Pizza joints and The Real Greek restaurants. The Chart is quite interesting because the simple fact is there is little point in buying this Stock in any sizeable amount until it Breaks-out of that Blue Line (with the Blue Arrow) at the top of my Chart below.
Note however that the Green Line below (Green Arrow) and the Blue Line are forming a bit of a Triangle and in effect the Green Line is ‘squeezing’ the Price until it pops out the Top and through the Blue Line. When such a Breakout happens, that would be the time to get buying.
Carillion CLLN (or ‘ill-carrion’)
I know many People hold this one and I wanted to have a look at how it was shaping up after the big drop on Bad News last week. My Yellow Circle is highlighting 2 Doji Candles which were bashed out at the end of Last Week and after the 2 Big Red Down Days, this suggests the Drop has halted for the time being. The Key here is my Black Line (Black Arrow) at about 49p and this must hold as Support or CLLN will be dropping lower. If we get some recovery here, then I suspect it will be hard work to get through Resistance up around 80p, 100p then 120p and then 137p.
Time is short as ever so I better get on with some Indexes……
The Quid vs. The Dollar
First off the Big Piccie. My Chart below shows the Daily Candles for £/$ going back about just over a year. The main thing I want to point out here is how after the Huge Drop on the Brexit Vote, the Price fell down into a Sideways Range between about 1.21 and 1.26 and then it Broke Upwards and got into a new Sideways Range between 1.26 and 1.31 - I really expected this Upper Range to hold out for quite some time and this is why the Price Action on Friday surprised me so much - we have now broken above the 1.31 level.
My Yellow Circle is highlighting a 50/200 Day Moving Average ‘Golden Cross’ and this has turned out to be a Key Event here which has predicted the strong move up in the Pound. Next look at my Blue Arrow which is pointing to the 200 Day Moving Average Line - now follow that Line to the Right and as we get near the Current Price, note how that Line has started to level out - if it starts to rise, then this is a Definition of an Uptrend and will suggest more gains for the Pound.
Note - Uptrends and Downtrends are something I can usually just ‘see’ on a Chart from loads and loads of experience - however, many People find this bit difficult and a simple way of telling if there is an Uptrend or a Downtrend (or Sideways for that matter) is to look at the 200 Day Moving Average - if it is rising there is an Uptrend and if it is falling there is a Downtrend - Simples……..
There is now Resistance up above at about 1.32 and through to 1.35. I would expect 1.35 to be a very difficult Level to Breakout over.
Dow Jones Industrials Average (DOW)
As I mentioned earlier, this one is super Bullish - my Green Arrow shows the White Up Candle from Friday and this made another New All Time High - this suggests more gains to come here.
In the bottom window on the ScreenShot below we have the RSI for the DOW - on a reading of RSI 64 this is quite high but can go a lot higher.
In the bottom window on the ScreenShot below we have the MACD for the DOW Daily - my Arrows are pointing to a Bullish MACD Cross which suggests more gains.
Nasdaq Composite (US Tech)
This one looks pretty Bullish, although the DOW is clearly a bit ‘better’ as it has actually Broken-out of the All Time High. The Nasdaq Comp is coming up to the ATH at 6342 and my Yellow Circle is showing an Up Candle from Friday. Note how yet again the Blue 50 Day Moving Average Line (pointed at with my Blue Arrow) has acted as Support recently.
In the bottom window on the ScreenShot below we have the RSI for the Nasdaq Comp Daily - on a Reading of RSI 59 this can go a lot higher.
On the Chart below, my Black Arrow is pointing out a Bullish ‘Golden Cross’ between the 13 and 21 Exponential Moving Averages (the Red Line and the Green Line) - this suggests more gains in the coming weeks.
Note - the S&P500 looks very similar to the DOW and very Bullish - I won’t show the Charts though this week.
If you have read my recent Weekend Charts Updates, you might recall I have a Long Trade running on the DAX which I have made a right balls up of and I am trying to ‘nurse’ it and get myself out of an awkward situation. Fortunately it has turned up again in the last week and reduced my Losses quite a bit but with Markets in general being so Bullish, I am keen to let this run and see if I can escape without too much of a hit.
The Chart below has the Daily Candles for the DAX and note the Blue Line at the Top (marked with my Blue Arrow) which is the Level at which I opened the Long Trade (Don’t ask !!) and below at 12590 is where I had originally placed a Stoploss but I have not triggered it as I have messed the whole Trade up and I am trying to escape it with the best possible result.
Note the DAX fell down to pretty much the Previous All Time High at about 12390 which acted as Support as it should do (“Previous Resistance becomes Support”) and then moved up but on Thursday and Friday last week we got Doji Candles (these are caught in my Yellow Circle) and these suggest the move up has weakened - however, with the US Markets so Bullish I would expect the DAX to be dragged up as well - although Dollar Weakness is leading to Euro Strength which might drag on the DAX.
Note the Price is finding Resistance at the Blue Wiggly Line which is the 50 Day Moving Average - pointed at with my Green Arrow.
Below we have the Weekly Candles for the DAX. My Yellow Circle is catching a White Up Candle from Last Week and note how this ‘pivoted’ off a Doji Candle from the Week before - marked by my Black Arrow. If it can get over that 50 Day Moving Average Line, I reckon it can go higher.
As is often the case, here is the Long Term Chart of the FTSE100 and my Red Line is pointing to the Bottom Line of an Uptrend Channel which has largely been in play since the 2009 Credit Crunch Lows.
The Chart below zooms in on the Daily Candles on the FTSE100 and my Yellow Circle is capturing the recent Price Action over the last couple of Weeks where the Price has been around that Red Line which is the Bottom of that Long Term Uptrend Channel from the previous Chart and note how 7300 is an important Support Level here.
If 7300 were to fail, then my Black Line (Black Arrow) at 7100 would be important Support.
On the Chart below I have zoomed in even more on the FTSE100 Daily and first off note my Yellow Circle which is capturing a Down Red Candle from Friday - this was probably a reaction to the Pound rising as much as anything although the correlation of the Pound to the FTSE100 is not always a perfect match. It looks like the FTSE100 is turning down off of the Doji Candle from Thursday and the key thing now for Bulls is for the FTSE100 to get over Resistance at the 50 Day Moving Average which I have pointed at with my Blue Arrow - this is at about 7450.
Next look at the Sloping Line which is sort of Mauve/Pink and pointed at with an Arrow which is equally Barbie-like. Again, the FTSE100 needs to Breakout of this Downtrend Line.
Here is a Long Term Chart of the FTSE250 going back to the 2009 Lows - again there is a very clear Uptrend Channel.
On the Chart below we have the Weekly Candles for the FTSE250 and I have zoomed in to about the last 10 Months. This is very interesting because we have a ‘Dragonfly Doji’ pretty much which I have pointed at with my Black Arrow - after 6 Down Weeks or so, this suggests a Reversal is coming and we can move up from here in coming Weeks.
If it falls below Support at 19200, then the Dragonfly has failed in its prediction (in other words, don’t blame me, blame the shimmery insect).
Brent Oil (Spot)
On the Chart below we have the Daily Candles for Brent Oil (Spot) and my Green Circle is catching a ‘Doji’ Candle from Friday which shows struggle at about $49 Resistance. Next look at my Blue Arrow which is pointing at the Blue 50 Day Moving Average Line - this is also a Resistance Level at about $49 and if it can get over this, then $50 will probably be difficult to get over.
To the downside there is decent Support at about $46 and $45 and $44.37 - I suspect these Levels can hold for a while if they are tested.
On the Chart below we have the Daily Candles for Gold (Spot) - my Blue Arrow is pointing to a nice Hammer Candle which marked a Reversal after a prolonged fall in the Price for many Days and since the Hammer it has risen. My Yellow Rectangle is capturing a nice Up Candle from Friday but note how it is struggling at Resistance at the 200 Day Moving Average which is pointed at with my Black Arrow up around 1230.
If it can keep moving up then the real test is the Long Term Downtrend Line which is the Red Line marked with my Red Arrow - if it can breakout of this, then that would be really bullish but until that happens, this is not an exciting Chart for Bulls apart from for short term moves.
OK, that’s it for this week, I hope the Market Gods treat everyone bounteously with lots of ££££s.
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