I remember from the Million Dollar Traders programme a few years back on the BBC that one of the contestants plumped for a short in plumbing materials group Wolseley (WOS). The problem was that even at that time over three years ago traders were being carted away on bear positions in the stock, as apart from the company going bust the valuation had been beaten down too low.
Indeed, Wolseley is rather like the other great bear graveyard among FTSE 100 stocks – fashion retailer Next (NXT). You can only imagine the millions that have been lost shorting these “obvious” post Credit Crunch victims.. Ironically, these two stocks have actually turned out to be included in the list of some of the most resilient plays over the past 5 years.
I cannot actually say why, or how, Wolseley is a winner on a fundamental view – it seems totally irrational, even though the answer in the recent past is supposed to be related to a recovery in the U.S. housing market that continues to gain momentum. The final insult for the bears this week came in the form of the special dividend. As for the other “non short”, I have never met anyone who confesses to wearing Next clothing (as opposed to say M&S)!. But even Mrs Thatcher knew not to try and buck the market, and it is a lesson we are all destined to learn.
EMED Mining (EMED) Primed for a move to 13p+
As this is my inaugural blog on Spreadbet Magazine I feel obliged to come up with a big winner! EMED may not turn out to fit into this category, but the signs are certainly encouraging. What can be seen here on the daily chart below is an obvious uptrend line drawn from May running through 9.5p presrntly. Something a little less obvious in the chart, but a method I use increasingly often, is an RSI support line – this is also confirming the uptrend. Indeed, RSI trendlines are very good for making sure you have actually drawn a trendine in the correct place rather than just where it suits your position… My view on EMED is that whilst there is no probe back below the 4 month old trend lines – both RSI and price at 40 and 9p respectively, we should be looking at a run back towards the old Jul 13p level. If nothing else the risk / reward appears attractive particularly when throwing into the mix the attractive fundamental backdrop with broker targets towards 25-40p .
“No Review? No problem!!
This week has been a celebratory one, something rather rare of late, if you exclude getting married and having four children! Indeed, the last time I won anything was the General Knowledge Prize at Harrow in 1980. But, of course now with Google, you hardly need to know your name, let alone what the capital of Chad is.
The reason for the joy was my first book 101 Charts for Trading Success going to number 1 one in the Amazon Kindle Investing chart. Indeed, for a few hours I had even beaten the Master fellow SBM contibutor non other than the Naked Trader Robbie Burns; a bit like the Beatles with Strawberry Fields losing out to Engelbert Humperdinck’s Please Release Me.
But what surprised me is whereas our Robbie has a thousand positive reviews at 5 stars, I reached the top spot with not even one review – presumably word of mouth or, perhaps more likely, telepathy has been the cause of the sales rush? All there has been to date is a couple of likes, one of which may have been me – accidentally. That said, like all the best actors, even if there is a review I will probably not read it…..
101 Charts For Trading Success is now on sale in the Amazon Kindle store: