Good morningAfter a few days away I managed to miss a trade in Centrica but with the market still struggling to make any headway and the risks for the US market still in my view weighted towards the downside, I believe the FTSE100 is likely to remain range bound for now. With Brexit now moving ever closer we can expect further two way volatility unless a deal is announced that all sides will push through which seems an ever more distant prospect. Some stocks have been badly beaten up over fears of a hard Brexit such as Aviva and if a deal is done that is going to make it I would expect stocks such as Aviva to rally well.
Interestingly the market has quietly continued to move towards a more defensive stance at the expense of the growth stocks and now even the utilities have moved off their recent lows which make trading them more difficult in the short term. I am however keeping a close eye on SSE who report on Wednesday. They disappointed the market last week with the announcement of a delay in the planned merger of their retail business with Npower. They have also warned on profits this year, but at current levels the shares do seem to discount a lot of bad news. This was a fantastic trading stock for me at the start of this decade, but I haven’t returned to it since. I will see what their numbers bring on Wednesday.
Vodafone have reported this morning and I will be going through their numbers which so far have been well received. Sometimes it is better to let the dust settle before trading a stock after it has announced good numbers. Some of the initial gains tend to be given back and that is when the trading opportunity arises. The same applies to Experian which has delivered very strong numbers this morning.
The tobacco stocks have also been excellent trading stocks in recent years, but again this is a sector which I haven’t traded in a long time. The sector has become something of a regulatory minefield as evidenced yesterday by a report suggesting the FDA in America is about to ban Menthol cigarettes which account for some 36% of the US market. A big decision if they do proceed with this which has significant repercussions for the likes of BAT and Imperial Brands. I quite like the latter simply because the valuation is so low now and it is the cheapest of the consumer staple stocks by quite a large margin. The recent results were quite satisfactory and despite the ongoing regulatory worries the shares do seem to offer some value. If they continue to find support this is one I will be looking at this month.
TRADING BIO: I have been a professional money manager in London for over 25 years and trading my own funds simultaneously. Unlike many popular traders, I have a very different approach to my trading and focus almost solely on risk management and fund longevity. Another difference is that I don’t trade indices, forex, commodities or glamour stocks. My focus is on cyclical UK FTSE 100 blue chips where the leverage of CFDs and spreadbets allows you to take advantage of the more predictable and staid price action. Trade volumes are low so as to minimise costs paid away to the market, often a significant drain on performance for a trading portfolio. At any one time I may be studying around a dozen such equities but unlikely to be holding more than one position I don’t profess to get it right every time as markets and information changes which can cause movements that you simply cannot predict. What I try to do is manage my risk with small enough position sizes which also provides the potential to diversify when conditions are right to do so. I keep strict stop losses to avoid damaging my account when positions go wrong. It is much better to get stopped out and revisit the position than continue holding and hoping! I like the concept of true copy trading as it allows Followers to see the true activity of a trader’s account and make honest and accurate decisions. By taking a lower risk approach and trading in modest sizes my intent is for any Follower to be able to use their ‘multiplier’ to gear up my trade sizes if they personally wish to scale up the trades in search of higher returns.
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