Credit deflation and the reflation cycle to come (part 2)

[Harley]

3 hours ago, Hunty said:

Hat Tip.

Took a 10k position on Petrofac @ 1.055.

Got powder to ladder all the way to ground zero.

Worth a look.

DYOR.

GL.

Got there before you, unfortunately!

[wherebee]

5 hours ago, Hunty said:

Hat Tip.

Took a 10k position on Petrofac @ 1.055.

Got powder to ladder all the way to ground zero.

Worth a look.

DYOR.

GL.

If you like investing in firms that pay a lot of bribes, I can recommend a few.... 

[jamtomorrow]

8 hours ago, sancho panza said:

ref Hunter,like with any of these people,I use their logic far more than I use a prediction.AS someone else said,you have to make up your own mind based on the info available and your risk profile.I don't follow DH's timing sunless they concur with mien,but I think you should take great care ditching his logic t the same time as you ditch  his timing calls.

Same for Kaplan,Alden,Gromen etc etc.

There's a HUnter video a few months back that was immaculate and arguing for a BK this year around April,that timing may have changed and the possibility has arisen that we get an SK in the bond markets instead,but the reasoning was pretty damned good.WOuldn't short on it tho.

Ref London depopulating Barnsey,that's an interesting dynamic.AS I psoted previously,depopulation of the UK is something which isn't on anyone's radar except amongst weird corners of the web where basement dwellers live

Nice chart.

I agree UK govt is enjoying their power play over the ordinary folk.But here's my thinking

WHO (who hated Trump and were hated back by Trump because he saw them as China puppets),announce change in PCR cycle count guidance one-ONE -day after Beijing Joe gets his white house slippers on.AS you've said,those cycle counts could have a dramatic effect on the case count.Beijing and sleepy Joe aren't in the least bit interested in what Bozza and his clueless crew are up to>I could put forward a pretty strong argument that the current problem in the NHS is down their mismanagement.

I think the decison appears to have been taken that the world needs to get back out of it's foxhole and get trading again.As you say,there coud aslo be the smell of litigation but my read here is that this is Joe,WHO and China calling the tunes.

If the case count in the US drops and the MSM change the tone of the reports to Joe has saved the USA,then I think we'll be out of lockdown before we know it.

As you've said,our govt are chumps really.Been played from the start imho by SAGE,commercial interests,China etc...History wont be kind to them.Starting tosee a lot of lefty friends beginning to make observations to the effect of lcokdowns don't work etc.First time in ten months.

https://coronavirus.data.gov.uk/details/cases

Cases

Deaths

Tests

Intrgiuing .will eb interesting to see how many cycles are deemed the new acceptable limit

Problem with COVID is it was quickly co-opted as another front in the culture war, and there's now a dataset or analysis to suit every hypothesis.

I followed Dr Clare Craig for a while, but quickly realised she's as bad as the scamdemic rampers. She tweeted this study a while back, citing a conclusion that was the *exact* opposite of what was written in the text of the article: https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30180-8/fulltext

But I can't link the tweet, she's deleted everything from last year - that in itself is a huge red flag.

Literally the only data and analysis I feel I can now trust is my own observations made from immediate family, friends, acquaintances (NB: ignoring test results, just looking at illness).

My conclusion: the truth is somewhere in the middle - there's no plague-level killer on the loose, but this isn't a normal flu season either. I've certainly never seen flu rip through a fit and healthy family of 8 adults aged 20 to 60, put every last one of them on their arse for weeks on end, and hospitalise 2 of them.

As ever, DYOR (and I mean that literally).

[Democorruptcy]

7 hours ago, Hunty said:

Hat Tip.

Took a 10k position on Petrofac @ 1.055.

Got powder to ladder all the way to ground zero.

Worth a look.

DYOR.

GL.

Is that a no to Point & Figure then? Your gap chart reminded me about them, someone once told me there were all he used. Just had a quick look and BP is pointing down on the daily, no signal on the weekly. While RDSB is pointing down on daily and weekly.

Good luck about not laddering to zero!

[leonardratso]

18 hours ago, geordie_lurch said:

'Even a Broken Clock Is Right Twice a Day' and all that

Was this you @Barnsey

 

cant see that tweet no more, can they delete them?

Im no twitter expert, in fact i find it quite hard to use so it may just be lost somewhere.

[jamtomorrow]

7 minutes ago, leonardratso said:

cant see that tweet no more, can they delete them?

Im no twitter expert, in fact i find it quite hard to use so it may just be lost somewhere.

Just checked, it's still there. Maybe DH blocked you @leonardratso? 

[Democorruptcy]

4 minutes ago, jamtomorrow said:

Problem with COVID is it was quickly co-opted as another front in the culture war, and there's now a dataset or analysis to suit every hypothesis.

I followed Dr Clare Craig for a while, but quickly realised she's as bad as the scamdemic rampers. She tweeted this study a while back, citing a conclusion that was the *exact* opposite of what was written in the text of the article: https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30180-8/fulltext

But I can't link the tweet, she's deleted everything from last year - that in itself is a huge red flag.

Literally the only data and analysis I feel I can now trust is my own observations made from immediate family, friends, acquaintances (NB: ignoring test results, just looking at illness).

My conclusion: the truth is somewhere in the middle - there's no plague-level killer on the loose, but this isn't a normal flu season either. I've certainly never seen flu rip through a fit and healthy family of 8 adults aged 20 to 60, put every last one of them on their arse for weeks on end, and hospitalise 2 of them.

As ever, DYOR (and I mean that literally).

I'd agree with your conclusion. From a markets point of view being fully invested now would seem to be a big bet on vaccines, given how they trash economies for it. Looking at it for a BK, if we got a 3rd wave in Autumn AND they decided vaccine immunity had already run out or they weren't working, it could be a bumpy ride. It's killed nowhere near as Spanish Flu and of course we have had CB's printing and furlough etc, they had WW1, but then the Dow hit the low at the start of the 3rd wave. They maybe had an "Oh no not that again!" moment.

 

[leonardratso]

10 minutes ago, jamtomorrow said:

Just checked, it's still there. Maybe DH blocked you @leonardratso? 

hmm doubt it, ill have another go...nope says still following, any reply on that? Its not me BTW, but im interested to see if he replies to 'difficult' questions, my feeling is not.

 

edit: ah found it, just rabo giving a reply there.

 

[DurhamBorn]

At the start of this thread i ran my own one man band,but successful import business.I had built up from seed capital a good amount and on paper it was at the stage where you could of really pushed it forward,however my macro roadmap said to me my capital was far better pulled out,the business ran down etc.

https://www.bbc.co.uk/news/business-55740063

If i was running today id of had factory orders made in China that needed to ship.Those costs would destroy you.Instead i bought goldies and then our reflation areas.

Its a great example about how this cycle end is causing massive financial dislocation.Lots of companies will be destroyed,and the ones that survive will be putting up their prices.The shippers getting an inflation pulse will order new ships,the energy use will grow fast.

People mix economics with macro.They dont understand the leads and lags of things.The consumer end of a cycle uses a lot less energy than the capital asset production that comes at the start of a new cycle.

In the above who will make money?

The oil,the gas,the steel etc etc,

Who will loose?

The retailer,the consumer,

The start of the chain gains and passes on  the inflation,the back side of the chain cant and sees margins destroyed.

The above is this threads thesis playing out,yet most have no idea whats going on.

 

[Noallegiance]

10 hours ago, sancho panza said:

 

UK is in a hole here.Once they can't print what are they going to do and what are all the people expecting an inflation proof income from them going to do......?

I'm no Einstein but when pondering this situation my brain stops.

[Chewing Grass]

2 minutes ago, Noallegiance said:

Once they can't print what are they going to do

Take on Private Pension and Housing Assets, stick them on the books and leverage them considerably, it will only end when everyone in the West has been destroyed or brought down to Greek levels of personal wealth.

By 2030 you will own nothing and you will be happy.

[Noallegiance]

13 minutes ago, Chewing Grass said:

Take on Private Pension and Housing Assets, stick them on the books and leverage them considerably, it will only end when everyone in the West has been destroyed or brought down to Greek levels of personal wealth.

By 2030 you will own nothing and you will be happy.

Ok, but that quote isn't mine! 

[spygirl]

2 hours ago, jamtomorrow said:

Problem with COVID is it was quickly co-opted as another front in the culture war, and there's now a dataset or analysis to suit every hypothesis.

I followed Dr Clare Craig for a while, but quickly realised she's as bad as the scamdemic rampers. She tweeted this study a while back, citing a conclusion that was the *exact* opposite of what was written in the text of the article: https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30180-8/fulltext

But I can't link the tweet, she's deleted everything from last year - that in itself is a huge red flag.

Literally the only data and analysis I feel I can now trust is my own observations made from immediate family, friends, acquaintances (NB: ignoring test results, just looking at illness).

My conclusion: the truth is somewhere in the middle - there's no plague-level killer on the loose, but this isn't a normal flu season either. I've certainly never seen flu rip through a fit and healthy family of 8 adults aged 20 to 60, put every last one of them on their arse for weeks on end, and hospitalise 2 of them.

As ever, DYOR (and I mean that literally).

The last 30 odd years have seen people live longer and longer - and Im using the term 'live' pretty loosely.

I was talking about his with my mam as she was off for her jab.

When I was a kid in the 80s there really was not many old people alive. Most blokes were finished off in their 60s heart attack. The women tend to follow, before they were 80.

On the TV news and at my mums vaccine centre, there were loads of OAPS wheeling their parents to get a jab.

'Eeeh, if it was a dog a dog theyd put it down'

The UK has wasted a fortune spending on healthcare which has only gone on keeping very old OAPs sucking soup.

Covid is new flu-like virus. To add to normal flu.

The 95%+ of C19 deaths are 75+ with co morbidities.

30 years ago the majority of these people would have died long ago of something else.

 

 

 

 

 

 

[leonardratso]

11 minutes ago, spygirl said:

The last 30 odd years have seen people live longer and longer - and Im using the term 'live' pretty loosely.

I was talking about his with my mam as she was off for her jab.

When I was a kid in the 80s there really was not many old people alive. Most blokes were finished off in their 60s heart attack. The women tend to follow, before they were 80.

On the TV news and at my mums vaccine centre, there were loads of OAPS wheeling their parents to get a jab.

'Eeeh, if it was a dog a dog theyd put it down'

The UK has wasted a fortune spending on healthcare which has only gone on keeping very old OAPs sucking soup.

Covid is new flu-like virus. To add to normal flu.

The 95%+ of C19 deaths are 75+ with co morbidities.

30 years ago the majority of these people would have died long ago of something else.

 

 

 

 

 

 

dont forget the younger fatties, always seems to be a fatty when they report younger deaths from 'covid'.

Not just slightly plump/rotund, big berthas/berts.

You get the odd one thats not but these seem to be far and few between.

I suppose a lot of it might be to do with your exposure as well, we had it before christmas, my daughter brought it home from school so we were stuck in with 'flu' type stuff for a week, she tested positive, but thats a single hit since she never went back to school again after that. It might have been a lot worse if we were stuck in a ring of death like a care home and just passed it between us with maybe different mutations coming in all the time, and we were already coffin dodgers.

Luckily we aint that old with not too bad health or massively lardy plus we tend to eat quite well normally and dont have any bad habits or other big health issues so we saw it off quite well.

[Harley]

3 hours ago, Democorruptcy said:

Is that a no to Point & Figure then? Your gap chart reminded me about them, someone once told me there were all he used. Just had a quick look and BP is pointing down on the daily, no signal on the weekly. While RDSB is pointing down on daily and weekly.

Good luck about not laddering to zero!

BP could be a nice little exemplar of our various approaches.  I'm still keen to know @DurhamBornbasis for £2.7 (although I agree anything at that historically low level would be an intuitively screaming buy!).

The following is for discussion purposes only, please DYOR!

The BP Signals

My technical based system produced the following (latest) buy signals for BP:

. On the daily:  A buy and confirmation on 5 Jan 21.  This followed one in Oct 20 but that ended.

. On the weekly:  A weak buy on w/c 9 Nov 20 and a weak confirmation on 16 Nov 20.

. On the monthly: A buy on m/c 4 Jan 21, currently awaiting a confirmation.

Buy Signal Confirmations

Confirmations are provided (or not) in the following same time period (i.e. following month, week, or day).  I have to wait for confirmations regardless of their efficacy (which is good) as my charting package only produces auto alerts on that time series, not on the initial buy signal time series.  For the techs, a stochastic of 14,3,3 versus 14,3,1.  Very annoying!  So I only pick up an initial buy signal if I do a manual review of a specific stock (as I did here for BP given I already own it).  However, my chart package is able to give me an alert as soon as the confirmation is met, rather than having to wait until the end of the second month/week/day.  A good compromise.

Which Time Series (Daily, Weekly, Monthly)?

I've spent some effort looking at which time period to use for what.  I originally went middle of the road with the weekly for my buy and holds (income portfolio).  This is where I came unstuck and am still suffering from having bought stocks too soon on this basis.  Weekly signals would be good for a while but would reverse or were a bit weak to start with.  IMO, this is not a place for middle of the road!  I now rely on the monthly data for buy and hold.  That makes me a bit later into the buy but with a higher degree of certainty (which I value as being worth it on the average). 

As an example, I had a lot of weak/false buy signals in the FTSE stocks back in Mar+ 20 and sure enough they retraced their rises, several actually that and more (just like BP has done).  Now that would have been fine for a trade but not as a buy and hold where long term dividends matter.  The other twist with monthly data is I have time on my hands!  Hence my desire, for both reasons, to trade as well.  Question is which data series to use for trading?  Several gurus have said they made the most money trading the longer term.  I need to try a bit of both, although am effectively already trading the monthlies as I am starting to prune my wide number of buys down to the better ones.

I've also been looking at inter-period (say monthly versus daily) dynamics to see if there is anything of use there on the confirmation front but it just does my head in!

Weak Buy Signals

This is where my buy signal is good but not perfect.  It is particularly pronounced during extremes such as the Nov 20 crack up on many stocks.  Very hard to resist but they often don't end well and eventually retrace (BP again).  But what I'm missing is that they often provide a good opportunity (probability) to trade.  As an aside, the best of all buy signals for me are the ones where the signals (initial and confirmed) and valid but price initially pulls back (although without nullifying the buy signal) - something to be welcomed rather than feared!

Chart Patterns and Candles

I look for chart patterns to confirm things but am cautious as you can often read into them what you want to see.  Hence they've been downgraded to a good confirmation.  Additionally, clear divergences between price and select technicals are usually very good predictors.  Candles are getting more interesting for me.  Not down to the anorak level but again as a confirmation/narrative.  I like to see charts like BP's on the monthly where price has retraced to cover the lower wick of prior candles (i.e the Mar 20 one).  Sort of wiping the slate clean.  Additionally, as I mentioned this week, I'm finding the Heiken Ashi candles very interesting for signalling a change of trend (but not a particularly strong one for BP). 

Buy and Hold and Sells Signals

IMO everything is a trade, just some last longer than others!  Buy and hold is just an amicable trade due to a good dividend and other fundamentals (but still need a technically based entry point)!  Technical sell signals are more applicable for trades as I look for a change in fundamentals for a sell of a buy and hold.  Something I did this this week when one stock's debt to equity ratio went from c.30% to c.250%!  But boy I've tried but haven't found anything technical yet to fully use for trades.  The best I can do is have a three lot sell approach where I sell a third after the initial run up on the stochastic, a third when I get nervous(!), and a third when the technicals are clearly down.  Necessary as some stocks shoot up and then crash down while others shoot up and stay up.  However, in this later case, the best of the move in terms of size and low volatility is in the initial run up.  Excitingly, I think those Heiken Ashi candles may be useful to time some selling.

The Current Situation And One More Thing About BP

The current situation on the equity front (i.e. buy and hold on a monthly basis) is very quiet in all international markets.  Many stocks have retraced their recent falls (such as BP) so it's make or break time.  Maybe this is where we'll see that rotation on the value front?  A trader's paradise though!     

I only looked at BP because I already hold it as a result of past sins.  It would not appear on my (buy and hold) radar now as I only get alerts on stocks which have a technical buy signal AND meet select fundamental financial criteria.  BP fails on the second with its high debt levels, etc.  RDSB?  Well that's another story.....!

[jamtomorrow]

53 minutes ago, spygirl said:

When I was a kid in the 80s there really was not many old people alive. Most blokes were finished off in their 60s heart attack. The women tend to follow, before they were 80.

100% this - what used to be *hopes* for how one's health would be post-retirement in the 80s are now expectations, give or take. 

[Harley]

25 minutes ago, Cattle Prod said:

Fully agree. This virus would not have registered 30 years ago (I'd say even 20) so it's not comparable to the past. Our health policies are preserving the weak (obese and old folks with little quality of life left) only for Mother Nature to knock the crap out of them in one go, as she has done periodically since we first crawled out of the ocean.

I was listening to a podcast this morning by George Gammon where he was talking about the move to "helicopter (protective) parenting" which just did not exist in his childhood (or mine).  As he said, this has now been extended to all walks of life and is fundamentally not good.  BTW, I really do like George.

[jamtomorrow]

7 minutes ago, Harley said:

I was listening to a podcast this morning by George Gammon where he was talking about the move to "helicopter (protective) parenting" which just did not exist in his childhood (or mine).  As he said, this has now been extended to all walks of life and is fundamentally not good.  BTW, I really do like George.

See also: helicopter Central Banking

[Democorruptcy]

2 hours ago, Cattle Prod said:

Wouldn't surprise me in the slightest. Fully agree that if the USA opens up, our idiots will too. I think the reason Boris is suddenly cautious is that we're out on our own with vaccinations. Like going into lockdown (thanks a bunch, Italy) they'll want political cover to come out. Israel will stand on its own two feet though, I'm watching them with interest.

A big signal will be if they decide to record deaths of covid rather than with. Could be done at the stroke of a pen, and would probably halve that curve or more. 

Another big signal would be if they decided to drop the required number of PCR cycles. This doc suggests we use 'up to 40'.

In November a Portugese court ruled that the tests were unreliable and lockdowns unlawful. "when running PCR tests with 35 cycles or more – the accuracy dropped to 3%, meaning up to 97% of positive results could be false positives"

WHO finally admitted the tests were flawed in December.

 

 

 

[Talking Monkey]

3 hours ago, leonardratso said:

hmm doubt it, ill have another go...nope says still following, any reply on that? Its not me BTW, but im interested to see if he replies to 'difficult' questions, my feeling is not.

 

edit: ah found it, just rabo giving a reply there.

 

I found whilst I had my twitter account he didn't reply to difficult questions.

[Talking Monkey]

1 hour ago, spygirl said:

The last 30 odd years have seen people live longer and longer - and Im using the term 'live' pretty loosely.

I was talking about his with my mam as she was off for her jab.

When I was a kid in the 80s there really was not many old people alive. Most blokes were finished off in their 60s heart attack. The women tend to follow, before they were 80.

On the TV news and at my mums vaccine centre, there were loads of OAPS wheeling their parents to get a jab.

'Eeeh, if it was a dog a dog theyd put it down'

The UK has wasted a fortune spending on healthcare which has only gone on keeping very old OAPs sucking soup.

Covid is new flu-like virus. To add to normal flu.

The 95%+ of C19 deaths are 75+ with co morbidities.

30 years ago the majority of these people would have died long ago of something else.

 

 

 

 

 

 

Absolutely Spy, the point about OAPs wheeling their 85 to 95 year old parents in for the jab.

 

[Democorruptcy]

28 minutes ago, Harley said:

BP could be a nice little exemplar of our various approaches.  I'm still keen to know @DurhamBornbasis for £2.7 (although I agree anything at that historically low level would be an intuitively screaming buy!).

The following is for discussion purposes only, please DYOR!

The BP Signals

My technical based system produced the following (latest) buy signals for BP:

. On the daily:  A buy and confirmation on 5 Jan 21.  This followed one in Oct 20 but that ended.

. On the weekly:  A weak buy on w/c 9 Nov 20 and a weak confirmation on 16 Nov 20.

. On the monthly: A buy on m/c 4 Jan 21, currently awaiting a confirmation.

Buy Signal Confirmations

Confirmations are provided (or not) in the following same time period (i.e. following month, week, or day).  I have to wait for confirmations regardless of their efficacy (which is good) as my charting package only produces auto alerts on that time series, not on the initial buy signal time series.  For the techs, a stochastic of 14,3,3 versus 14,3,1.  Very annoying!  So I only pick up an initial buy signal if I do a manual review of a specific stock (as I did here for BP given I already own it).  However, my chart package is able to give me an alert as soon as the confirmation is met, rather than having to wait until the end of the second month/week/day.  A good compromise.

Which Time Series (Daily, Weekly, Monthly)?

I've spent some effort looking at which time period to use for what.  I originally went middle of the road with the weekly for my buy and holds (income portfolio).  This is where I came unstuck and am still suffering from having bought stocks too soon on this basis.  Weekly signals would be good for a while but would reverse or were a bit weak to start with.  IMO, this is not a place for middle of the road!  I now rely on the monthly data for buy and hold.  That makes me a bit later into the buy but with a higher degree of certainty (which I value as being worth it on the average). 

As an example, I had a lot of weak/false buy signals in the FTSE stocks back in Mar+ 20 and sure enough they retraced their rises, several actually that and more (just like BP has done).  Now that would have been fine for a trade but not as a buy and hold where long term dividends matter.  The other twist with monthly data is I have time on my hands!  Hence my desire, for both reasons, to trade as well.  Question is which data series to use for trading?  Several gurus have said they made the most money trading the longer term.  I need to try a bit of both, although am effectively already trading the monthlies as I am starting to prune my wide number of buys down to the better ones.

I've also been looking at inter-period (say monthly versus daily) dynamics to see if there is anything of use there on the confirmation front but it just does my head in!

Weak Buy Signals

This is where my buy signal is good but not perfect.  It is particularly pronounced during extremes such as the Nov 20 crack up on many stocks.  Very hard to resist but they often don't end well and eventually retrace (BP again).  But what I'm missing is that they often provide a good opportunity (probability) to trade.  As an aside, the best of all buy signals for me are the ones where the signals (initial and confirmed) and valid but price initially pulls back (although without nullifying the buy signal) - something to be welcomed rather than feared!

Chart Patterns and Candles

I look for chart patterns to confirm things but am cautious as you can often read into them what you want to see.  Hence they've been downgraded to a good confirmation.  Additionally, clear divergences between price and select technicals are usually very good predictors.  Candles are getting more interesting for me.  Not down to the anorak level but again as a confirmation/narrative.  I like to see charts like BP's on the monthly where price has retraced to cover the lower wick of prior candles (i.e the Mar 20 one).  Sort of wiping the slate clean.  Additionally, as I mentioned this week, I'm finding the Heiken Ashi candles very interesting for signalling a change of trend (but not a particularly strong one for BP). 

Buy and Hold and Sells Signals

IMO everything is a trade, just some last longer than others!  Buy and hold is just an amicable trade due to a good dividend and other fundamentals (but still need a technically based entry point)!  Technical sell signals are more applicable for trades as I look for a change in fundamentals for a sell of a buy and hold.  Something I did this this week when one stock's debt to equity ratio went from c.30% to c.250%!  But boy I've tried but haven't found anything technical yet to fully use for trades.  The best I can do is have a three lot sell approach where I sell a third after the initial run up on the stochastic, a third when I get nervous(!), and a third when the technicals are clearly down.  Necessary as some stocks shoot up and then crash down while others shoot up and stay up.  However, in this later case, the best of the move in terms of size and low volatility is in the initial run up.  Excitingly, I think those Heiken Ashi candles may be useful to time some selling.

The Current Situation And One More Thing About BP

The current situation on the equity front (i.e. buy and hold on a monthly basis) is very quiet in all international markets.  Many stocks have retraced their recent falls (such as BP) so it's make or break time.  Maybe this is where we'll see that rotation on the value front?  A trader's paradise though!     

I only looked at BP because I already hold it as a result of past sins.  It would not appear on my (buy and hold) radar now as I only get alerts on stocks which have a technical buy signal AND meet select fundamental financial criteria.  BP fails on the second with its high debt levels, etc.  RDSB?  Well that's another story.....!

Maybe @DurhamBornwas looking at something like @Hunty's gap chart, which had something to fill around the same figure?

BP is make or break time but for trading only?

[Loki]

2 hours ago, Chewing Grass said:

Take on Private Pension and Housing Assets, stick them on the books and leverage them considerably, it will only end when everyone in the West has been destroyed or brought down to Greek levels of personal wealth.

By 2030 you will own nothing and you will be happy.

It gets even better when you realise that stacking PMs could still be forfeit by the COVID regs that allow destruction of property to prevent the spread etc etc.

[geordie_lurch]

1 hour ago, Harley said:

BP could be a nice little exemplar of our various approaches.  I'm still keen to know @DurhamBornbasis for £2.7 (although I agree anything at that historically low level would be an intuitively screaming buy!).

The following is for discussion purposes only, please DYOR!

The BP Signals

My technical based system produced the following (latest) buy signals for BP:

. On the daily:  A buy and confirmation on 5 Jan 21.  This followed one in Oct 20 but that ended.

. On the weekly:  A weak buy on w/c 9 Nov 20 and a weak confirmation on 16 Nov 20.

. On the monthly: A buy on m/c 4 Jan 21, currently awaiting a confirmation.

Buy Signal Confirmations

Confirmations are provided (or not) in the following same time period (i.e. following month, week, or day).  I have to wait for confirmations regardless of their efficacy (which is good) as my charting package only produces auto alerts on that time series, not on the initial buy signal time series.  For the techs, a stochastic of 14,3,3 versus 14,3,1.  Very annoying!  So I only pick up an initial buy signal if I do a manual review of a specific stock (as I did here for BP given I already own it).  However, my chart package is able to give me an alert as soon as the confirmation is met, rather than having to wait until the end of the second month/week/day.  A good compromise.

Which Time Series (Daily, Weekly, Monthly)?

I've spent some effort looking at which time period to use for what.  I originally went middle of the road with the weekly for my buy and holds (income portfolio).  This is where I came unstuck and am still suffering from having bought stocks too soon on this basis.  Weekly signals would be good for a while but would reverse or were a bit weak to start with.  IMO, this is not a place for middle of the road!  I now rely on the monthly data for buy and hold.  That makes me a bit later into the buy but with a higher degree of certainty (which I value as being worth it on the average). 

As an example, I had a lot of weak/false buy signals in the FTSE stocks back in Mar+ 20 and sure enough they retraced their rises, several actually that and more (just like BP has done).  Now that would have been fine for a trade but not as a buy and hold where long term dividends matter.  The other twist with monthly data is I have time on my hands!  Hence my desire, for both reasons, to trade as well.  Question is which data series to use for trading?  Several gurus have said they made the most money trading the longer term.  I need to try a bit of both, although am effectively already trading the monthlies as I am starting to prune my wide number of buys down to the better ones.

I've also been looking at inter-period (say monthly versus daily) dynamics to see if there is anything of use there on the confirmation front but it just does my head in!

Weak Buy Signals

This is where my buy signal is good but not perfect.  It is particularly pronounced during extremes such as the Nov 20 crack up on many stocks.  Very hard to resist but they often don't end well and eventually retrace (BP again).  But what I'm missing is that they often provide a good opportunity (probability) to trade.  As an aside, the best of all buy signals for me are the ones where the signals (initial and confirmed) and valid but price initially pulls back (although without nullifying the buy signal) - something to be welcomed rather than feared!

Chart Patterns and Candles

I look for chart patterns to confirm things but am cautious as you can often read into them what you want to see.  Hence they've been downgraded to a good confirmation.  Additionally, clear divergences between price and select technicals are usually very good predictors.  Candles are getting more interesting for me.  Not down to the anorak level but again as a confirmation/narrative.  I like to see charts like BP's on the monthly where price has retraced to cover the lower wick of prior candles (i.e the Mar 20 one).  Sort of wiping the slate clean.  Additionally, as I mentioned this week, I'm finding the Heiken Ashi candles very interesting for signalling a change of trend (but not a particularly strong one for BP). 

Buy and Hold and Sells Signals

IMO everything is a trade, just some last longer than others!  Buy and hold is just an amicable trade due to a good dividend and other fundamentals (but still need a technically based entry point)!  Technical sell signals are more applicable for trades as I look for a change in fundamentals for a sell of a buy and hold.  Something I did this this week when one stock's debt to equity ratio went from c.30% to c.250%!  But boy I've tried but haven't found anything technical yet to fully use for trades.  The best I can do is have a three lot sell approach where I sell a third after the initial run up on the stochastic, a third when I get nervous(!), and a third when the technicals are clearly down.  Necessary as some stocks shoot up and then crash down while others shoot up and stay up.  However, in this later case, the best of the move in terms of size and low volatility is in the initial run up.  Excitingly, I think those Heiken Ashi candles may be useful to time some selling.

The Current Situation And One More Thing About BP

The current situation on the equity front (i.e. buy and hold on a monthly basis) is very quiet in all international markets.  Many stocks have retraced their recent falls (such as BP) so it's make or break time.  Maybe this is where we'll see that rotation on the value front?  A trader's paradise though!     

I only looked at BP because I already hold it as a result of past sins.  It would not appear on my (buy and hold) radar now as I only get alerts on stocks which have a technical buy signal AND meet select fundamental financial criteria.  BP fails on the second with its high debt levels, etc.  RDSB?  Well that's another story.....!

That's an incredibly detailed and interesting post @Harley
thanks so much

I don't have any experience trying to use the candles and technicals of charts and relying on my gut instincts alongside what I pick up from here and elsewhere but it's definitely something I'm interested in learning more about... any sites or books you'd recommend?

[Democorruptcy]

9 minutes ago, geordie_lurch said:

That's an incredibly detailed and interesting post @Harley
thanks so much

I don't have any experience trying to use the candles and technicals of charts and relying on my gut instincts alongside what I pick up from here and elsewhere but it's definitely something I'm interested in learning more about... any sites or books you'd recommend?

I was just looking at those P&F charts on Investopedia. Says they are for long term trends only, which fits with who mentioned them to me.

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