No need to remind you all that September (and October to an extent) have a very poor reputation for Markets globally and it is nice to have put in a strong week for my Portfolio last week, but I still am very much of the view that I need to lower my Spreadbet Exposure and I am not keen to buy much at all until we are through what is often a difficult period.
North Korea has been misbehaving again with claims that they have created and exploded a Hydrogen Bomb - as I understand it this is a major development for them as these have considerably more power than the mere ‘Atomic’ Bomb - which is of course bad enough. A big strategic advantage of a more powerful bomb is that the delivery mechanism (in others words the Firework they stick it on) doesn’t need to be particularly accurate with its targeting - an area where I suspect the North Koreans will be lacking.
God knows how this will play out - although I still think a War in Asia is highly unlikely - along these lines, I am of the view that an invasion by China itself might be far more likely as they do not want the US or its Allies having an even closer base and of course China has form on expanding into other countries on its border. In terms of the Stockmarkets, this kind of scenario and of course a diplomatic resolution (it’s unclear how possible this is with such a bonkers regime) would have very little impact but any kind of military action involving US, South Korea, Japan would perhaps be bad news for Stocks - although any conflagration would probably be over pretty fast as North Korea is clearly a bit feeble in terms of its hardware. But this could only happen with China’s blessing which perhaps makes it very unlikely.
What a mess, and of course the last thing the World really needs is a crazy place like North Korea being able to supply such destructive weapons to non-State actors like ISIS and all the other loons.
The Coming Week
Next week I think the ECB (European Central Bank) has some sort of announcement on Thursday and that might be a focal point for Markets with jitters over the speed of ‘removal’ of Quantitative Easing (QE) - although if the Markets do sell of on SuperMario’s comments, I doubt it will necessarily be a prolonged fall although of course we are in September…..
The German Elections kick off in about 3 Weeks time I think - at some point the Markets might start to focus on these but it looks like Angela Merkel is a shoe-in, although of course ‘Events’ could change this very fast.
On Monday the US Markets are closed for ‘Labor Day’ - sort of ironic because of course not much work will be getting done !! So again we have a disrupted and ‘short’ week.
For me personally I have Somero Enterprises SOM reporting on Wednesday and Molins MLIN on Thursday - I have an over-sized Position in MLIN so this one will definitely be keeping me focused !!
This afternoon I was reading the main Story in Investors Chronicle about Digital TV and Broadcasting and stuff and the first thing to hit me was that the prevailing wisdom that ‘Content is King’ still applies and will continue to do so, and for that reason I am very happy to keep holding Entertainment One ETO and I expect its already hugely valuable Content Library will continue to soar in value - especially as they make more Peppa Pigs and keep bashing out Films like the Hunger Games and their TV Stuff.
The other noticeable trend is how TV Advertising is absolutely collapsing and the Spend is being moved online as the Internet becomes much more about Video and Text is fading to the background in terms of Advertising. Recently some German TV Groups have mentioned how TV Ad spend is tanking and in addition WPP with their recent Results also stressed how Marketing was moving online. Initially the Internet destroyed Print Media Advertising but now it seems to be attacking traditional Broadcast TV in a big way and things are changing with such speed.
I hold St.Ives SIV to play this Online Marketing theme but I think that is too light and in addition to bulking up on that Position, I need to think about buying more Online Marketing type companies - something for me to look into but of course I am in no rush with the Autumn upon us (and certainly not to take a big stake in anything anyhow.)
Ramsdens Holdings RFX
These boys reported on Friday and the Stock utterly leapt up which was helped by some very fast Broker Revisions to forecasts after the Company said they would “Significantly beat Expectations” - music to the ears of Holders but it looks very cheap to me and I think this will run up a lot further. They do Pawn Broking and flogging Jewellery like H&T HAT but they also do Forex which seems to be helping them. In terms of the Forecasts, I saw Earnings Per Share (EPS) Numbers for Next Year of 16p so this puts the Stock on a Forward P/E of 10.4 - that’s great value. I also saw something about a 4.5% Dividend Yield but the veracity of this needs to be checked.
In terms of the Chart, since the recent IPO it has been in a beaut of an Uptrend - very clear and defined as should be clear below. My Green Arrow is pointing to a sweet White Up Candle which closed very near the top and is obviously Bullish. The other great thing here is we got a ‘Breakaway Gap’ which is shown by the Blue Arrows where the Price jumped up and usually such Gaps mean the Share Price will keep rising. Note it is very different to an ‘Exhaustion Gap’ where the Price has already run up to a Peak and then gaps higher in a final Buying crescendo - before then collapsing back. That is clearly not the case here.
Many people would think that they cannot buy RFX now because “I have missed the boat - it has jumped up already” - this is a huge error and dangerous thinking - what matters is Price you pay versus the Value you get. Focus on the Valuation - on a P/E around 10 this is clearly lowly valued and the fact it has moved up strongly shows it has Upwards Momentum - this is exactly what you want as a Bull !!
I just love situations where the Fundamentals (in this case the Valuation and the statement saying they will Beat Expectations) and the Technicals line up - this is a superb way to make money and it never ceases to amaze me how many Investors just do ‘Fundamentals‘ or just do ‘Technicals‘ - combining them is so much more powerful. I don’t hold RFX because I can’t hold everything but if I had a ‘Slot’ it would be very near the top of my list.
By the way, I have been working on a Blog about how Analysts do Upgrades and Downgrades which was inspired by the events from RFX on Friday - I plan to issue this later in the week.
Gym Group GYM
This is another one which IPO’d not so long ago and the Shares were initially moving up before then dropping back a lot and as you should be able to see on the Chart below in early 2017 the Price managed to Breakout of the Black Downtrend Line (Black Arrow) and since then there has been a shallow gradual Uptrend Channel as per my Blue Lines.
My Green Arrow is pointing to where we had a 50/200 Day Moving Average ‘Golden Cross’ - I find these are a very good predictor of the sentiment to a Stock getting better and for there to be more gains ahead.
GYM specialise in low cost gyms and they had a Trading Update last week where they seem to be making some good progress. They are benefiting from Local Authorities closing their gyms and GYM is rolling out more sites which clearly will boost growth. They have Cash and are paying a small Dividend - they go ExDiv for 0.3p a Share this Thursday 7th September. They are on a Forward P/E of 23 which is not screaming ‘cheap’ at me but with some Cash and clearly a good Growth Outlook, this might be worth paying.
I don’t hold GYM but it is one I might certainly consider carefully.
I was discussing this one on email earlier in the Week and it is quite an interesting chart. WIN do Lorry stuff which is obviously a pretty cyclical business but they seem to have been trading pretty well and the Shares have been in a nice Uptrend since 2012 but perhaps that run is starting to falter.
On the Chart below I have tried to draw some Uptrend Channel Lines in Blue but to be honest they are not the easiest ones to draw as there are a lack of ‘Touch points’ at the bottom. Anyway, assuming my Lines are about right, then where my Green Arrow is pointing, we are approaching the Bottom Line - it needs to bounce here because it is breaks down through the line that would be negative.
On the chart below I have zoomed in and you should be able to see how the Price is now pretty close to the Bottom Uptrend Channel Line. My Red Arrow is pointing to a 50/200 Day MA ‘Death Cross’ - this could be a bad sign.
On the Chart below we have the Weekly Candles for WIN - my Black Arrow is pointing to a dirty big Down Red Candle which doesn’t look so good. Note the Level of 232p which is critical support - if this fails, then expect more falls.
This Index had been stuck in a tight range between about 7300 and 7450 for a while but note on Friday (where my Blue Arrow is) that it managed to scale the dizzy heights of 7260 Intraday before falling back. This created an ‘Inverted Hammer’ Candle which after the small move up could mean it has topped out again - although the context is not great for such a prediction because ideally there should be more of a prolonged move up before.
To the downside, there is a lot of Support where those Green Boxes are - 7300 being a key level to hold.
In the bottom window on the Chart below you should be able to see where we had a Bullish MACD Cross (Moving Average Convergence Divergence) on Thursday which is pointed at with my Blue Arrow - this is shown here in the ‘Signal Lines’ format and as the Red and Green Bar ‘Histograms’.
My Huge Black Arrow on the Chart below is pointing to where we are so close to a Bullish 13/21 Day EMA (Exponential Moving Average) ‘Golden Cross’ between the Red and Green squiggly Lines. My Blue Arrow over to the left is showing where a similar Cross happened - they are not perfect by any means, but such Golden Crosses often lead to more gains in coming weeks.
Much of this Index is similar to the FTSE100 at the moment. The Chart below in the bottom window - oh, before I forget, all these ScreenGrabs are from the Formula 1 Winning ShareScope Software that I use (Fake News !!) - where my Blue Arrow is shows we are right on the verge of a Bullish MACD Cross - it might ‘glance off’ and miss it, but it looks quite likely we will get the Cross.
On the Chart below, you should be able to see where my Blue Arrow is that we are on the verge of a 13/21 Day EMA Golden Cross - again, it might not happen, but the set-up is certainly there. As always, if you can’t quite see the details on these Charts, then click on it and it should grow much larger on your device for you to see it in its full glory.
FTSE AIM All-Share
I don’t often comment on this one but it is looking quite Bullish and I am sure many Readers (along with myself) hold some AIM Stocks which could benefit from this trend. The Chart below goes back a long way to 2005 and the thing to note here is that we are currently where the Pink Circle is but my Yellow Box is highlighting a huge band of Resistance which might prove problematic. However, this is from a long time ago so it might not have too much bearing on what happens now.
I am not 100% sure about this but I suspect that this Index has a bigger Weighting to the large AIM Stocks like ASC, ABC, BOO etc. so good performances from those Bigger Stocks might skew the Index a bit.
The Chart below has the Daily Candles and my Pink Circle is capturing where we got a big White Up Candle on Friday and the key thing is that it Broke-out over 1010 Resistance which is bullish behaviour.
In the bottom window on the Screen below we have the RSI (Relative Strength Index) for the AIM All-Share - usually a reading up around RSI 70 would be seen as toppy but for a Smaller Index like this (and for Small Stocks) it is not unusual for the RSI to get up to some pretty extreme levels. In fact, if you look to the left on this screen you should be able to see where the RSI has recently been much higher - as much as RSI 88 at one point recently.
It is only on the bigger Indexes and the bigger, more liquid, Stocks that the usual RSI Rules of RSI 30 being Low and RSI 70 as being High really apply.
In the bottom window on the ScreenShot below you should be able to see the MACD for the AIM All-Share - in this case we have a Bullish MACD Cross which is shown with my Black Arrow in the Signal Lines Format and with my Blue Arrow in the Histogram Bar Format - although it is not easy to see !!
The MACD is shown in the bottom window and where my Blue Arrow is we are right on the verge of a Bullish MACD Cross - it might not happen, but if it does, it is probably good.
DOW Jones Industrials Index
The Chart below shows an ‘Inverted Hammer’ Candle from Friday which is highlighted in my Green Circle. I don’t think it was a huge surprise that the Market was unable to hold the Intraday High when it was faced with a Long Weekend because of the Bank Holiday, but such Candles are often bad news. Perhaps now we will move down again but there is good Support not far below especially from the Blue Wiggly Line which is the 50 Day Moving Average at around 21700.
In the bottom window on the Screen below we have the MACD for the DOW Daily - my Black Arrow is showing how we are right on the verge of a Bullish MACD Cross.
We have just finished August so it is an appropriate time to show the Monthly Candles and they can be quite important to see the ‘Bigger Picture’. I have looked at the Monthly Candles for all the previous Indexes we have looked at but none of them are showing anything particularly conclusive and all have done a very narrow Candle for August just like we will see below on the DOW.
My Blue Arrow is pointing to exactly this kind of extremely narrow Doji Candle which is not necessarily a Reversal Candle although after a Long Tails Narrow Body Doji from July (marked by my Black Arrow) maybe the Markets can turn down from this. It is inconclusive and I don’t think we should panic just on this evidence. If we had a ‘Shooting Star’ or ‘Inverted Hammer’ I would be much more worried.
The S&P500 and Nasdaq Composite are very similar to the DOW so I won’t show them. However, note the Nasdaq is much nearer its All Time High and if it can breakout above this ATH that is clearly bullish.
Pound vs. Dollar
The Pound has been pretty weak lately which the FTSE100 has liked but last week it managed to find some strength again and move up but it looks now like it is topping out around 1.30 and just above this there is a lot of Resistance so I suspect the Pound may wobble around a bit here. To the downside, the area around 1.28 where my Pink Circle is should be Support and a fall below this would be a sign of proper weakness in the Quid. There is strong Support at 1.26 though.
Brent Oil (Spot)
This still looks pretty Range Bound to me - at the Top $53 and $54 are Resistance and below $51 and $50 are good Support. Note my Blue Arrow which is pointing to the 50 Day Moving Average wiggly Blue Line which is turning up and moving towards the Faint Blue Wiggly 200 Day Moving Average Line which is marked by my Black Arrow - so a Bullish Golden Cross could be on the way.
The tide has clearly changed here after the Breakout of my Red Downtrend Line and then the move up over the Key $1300 Level. Now we are needing to get over $1329 but I suspect that could easily happen soon especially with North Korea’s naughtiness. My Green Box is capturing a Long Tails Doji from Friday which hints at uncertainty and indecision so we could easily pull back a bit short term but the key will be that $1329 Level and if it gets taken out, then expect more Gains. To the Downside, $1300 should now be very good Support.
In the bottom window we have the RSI for Gold Spot - on a Reading of RSI 66 I am really surprised as I expected this to be much higher. This implies we can see more Gains in the Short Term and a Reading of RSI 80 is very possible knowing how Gold can perform when it is in the mood - so in other words the RSI is not ruling out more Gains straightaway.
OK, that’s it for this week, have a good ‘un Peeps,
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