10 October 2018 Page 1 Issue 2018/11 www.trendwatch.co.uk 10 October 2018 Blood on the streets! ARNAGE! Well, what did you expect? It is Oc- Austrian newspapers, Mr Juncker suggested a deal Stock market sectors tober after all! could even be done in time for the next EU summit in C ☺ uptrends Today (Thursday) is the sixth straight day of about a week’s time. “I have reason to think that the falls for the S&P500 in America. This is the longest rapprochement potential between both sides has in- Household goods 16 losing streak for the benchmark in at least two years. creased in recent days.”. Industrial metals 12 The ‘FANG’ stocks (Facebook, Amazon, Netflix and Assuming this is not just the grape juice talking – Oil eq. & services 34 Google – now Alphabet) are in an even worse state. Mr Juncker is famously partial to the grape – one Netflix fell more the 8% yesterday alone. Yesterday, wonders why the EU has suddenly stopped being Stock market sectors the Nasdaq had it’s biggest fall for 7 years. As at yes- beastly to us, and actually seems to be keen on set- terday, nearly three-quarters of US stocks were trad- tling. downtrends ing below their 50-day moving average. Equity mar- I have a theory about that. Sometime in the next few * General industrials -1 kets around the world have taken their cue from weeks – possibly even in the next few days – the EU Banks -63 America; they’re plunging too. Yesterday, China’s could be wrestling with a problem that will dwarf Construction & materials -50 Shanghai Composite index fell to Brexit. Electricity -52 its lowest level since late 2014. FTSE 100 This brings me back to the Food & drug retailers -21 What has caused all this? Let 7,800 blood on the streets on global FTSE 250 ex Inv Co -43 me answer that question via a stockmarkets. One reason for 7,600 FTSE Fledgling ex Inv Co -20 somewhat circuitous route. this is concerns over president 7,400 What a difference a year Trump’s trade war with China. FTSE SmallCap ex Inv Co -57 makes! A year ago, Teresa May 7,200 But most analysts see the prima- Gas, water & multiutilities -36 stepped up to the Conservative 7,000 ry reason as a serious sell-off in General retailers -42 conference lectern, barely able to 6,800 global bond markets. Industrial transportation -98 speak for coughing, while a 6,600 Falling bond prices result in Mobile telecoms -103 prankster tried to thrust a P45 N D J F M AM J J A S O N D J F M AM J J A SO higher yields. This week, the Tobacco -14 into her hands, and magnetic let- yield on the US 10-year Treasury Travel & Leisure -40 tering slithered from the backdrop. It could almost bond hit a 7-year high of nearly 3.26%, driven mainly have been a metaphor for Mrs May’s premiership. by the fact that central banks are now well into their Yet a few days ago, at this year’s party conference, tightening cycle as they push up short-term interest Mrs May literally danced to the lectern to the strains rates to try to damp down incipient inflation. of Abba’s Dancing Queen. Whether you found this Less experienced investors are often somewhat per- spectacle embarrassing or rather sweet, it’s undenia- plexed as to why what seems like relatively small ble the she had a new-found spring in her step. Her movements in bond market yields should be so con- speech was well received too, overshadowing Boris’s cerning. The reason is that the bond market ultimately attempt to foment rebellion from the fringes. determines, for example, how much interest compa- What has caused this new confidence in Mrs May nies have to pay on their borrowings, and how much demeanour? Could it be that she has suddenly become homeowners pay on their mortgages. On average, a more optimistic about a Brexit agreement? It seems mortgage holder in this country pays around £700 a so, if European Commission president Jean-Claude month on a 25-year mortgage, assuming the interest Juncker is anything to go by. Interviewed by three rate is about 4.5%. If interest rates go up from 4.5% to, say, 6.75%, your monthly repayments would soar TrendWatch Barometer above £1,000 a month, and you may not be able to af- London-listed shares ford it. The trouble with the low interest rate environment % of total no. of % change 07-Sep 05-Oct that we’ve had since the 2007 banking crisis is that shares monitored on fortnight everyone – companies, individuals, even countries – OFFICIAL LIST: have loaded up on debt like crazy, with little or no thought to what might happen when rates start rising Uptrends 8.43% 7.62% -0.81% again. Indeterminate 64.37% 64.38% +0.01% Which brings us back to the EU, and the problem it Downtrends 27.20% 28.00% +0.80% could have on its hand as early as a week or two, A problem that, as I said, will dwarf Brexit. It could also AIM-LISTED: dwarf the banking crisis. Uptrends 12.53% 11.94% -0.59% That problem is Italy. Indeterminate 68.34% 59.13% -9.21% (Continued on page 9) Downtrends 19.13% 28.93% +9.80% SHARE SELECTIONS IN THIS ISSUE INVESTMENT TRUSTS: Uptrends 7.01% 6.17% -0.84% Boohoo Group (BOO) 8 Indeterminate 75.47% 71.75% -3.72% Geogia Capital (CGEO) 4 Downtrends 17.52% 22.08% +4.56% Savannah Petroleum (SVAP) 5 EXCHANGE TRADED FUNDS: Sigma Capital Group (SGM) 6 Uptrends 5.23% 16.86% +11.63% Speedy Hire (SPDY) 7 Indeterminate 70.93% 80.23% +9.30% Downtrends 23.84% 2.91% -20.93% SThree (STHR) 5 10 October 2018 Page 2 Honey, I shrunk the portfolio! The TrendWatch portfolio: Valuation as at 10 October 2018 Date Buy Price now gain/ F/c gross Mkt. gain/ Outperf. STOP- Share (and EPIC code) bought price (p) * (p) loss (%) yield (%) loss (%) (%) LOSS ** 1pm (OPM) AIM 01/02/18 51.50 46.50 -9.7 1.9 -2.3 -7.6 46 4imprint (FOUR) 13/09/18 2070.00 2090.00 1.0 2.6 0.2 0.8 1615 AFH Financial Group (AFHP) AIM 20/08/15 161.50 404.00 150.2 1.8 14.5 118.4 332 Arena Events Group (ARE) AIM 21/06/18 65.00 66.00 1.5 3.5 -3.4 5.1 56 Ascential (ASCL) 02/03/17 303.30 363.20 19.7 1.6 -0.1 19.9 367 Ashstead Group (AHT) 23/06/16 1045.00 2054.00 96.6 1.7 14.9 71.0 1950 Augean (AUG) AIM 16/08/18 42.50 47.00 10.6 - -3.1 14.1 43 Avation (AVAP) 04/02/16 144.50 253.00 75.1 2.5 23.6 41.7 199 Avingtrans (AVG) AIM 19/07/18 223.50 217.50 -2.7 1.7 -4.8 2.2 184 B.P. Marsh & Partners (BPM) AIM 21/06/18 289.00 280.00 -3.1 1.6 -3.4 0.3 250 Balfour Beatty (BBY) 30/03/17 266.40 265.10 -0.5 2.2 -0.0 -0.4 246 BATM Advanced Comm. (BVC) 29/03/18 27.65 37.40 35.3 - 3.3 30.9 33 Beazley Group (BEZ) 04/02/09 103.90 531.00 411.1 2.7 51.0 238.5 495 Beeks Financial Cloud (BKS) AIM 13/09/18 127.00 104.00 -18.1 0.2 0.2 -18.3 107 Cairn (CNE) 26/04/18 229.00 228.80 -0.1 - -1.6 1.5 211 Ceres Power Holdings (CWR) AIM 21/06/18 152.30 188.49 23.8 - -3.4 28.2 160 Charter Court Financial Serv. (CCFS) 21/06/18 323.00 310.00 -4.0 3.5 -3.4 -0.6 286 Cineworld Group (CINE) 24/05/18 263.00 291.00 10.6 4.1 -5.4 16.9 252 Clarke (T) (CTO) 08/01/18 85.70 79.40 -7.4 4.7 -5.0 -2.5 71 Colefax Group (CFX) AIM 18/07/13 252.50 550.00 117.8 1.0 13.9 91.3 440 Countryside Properties (CSP) 27/04/17 272.60 316.40 16.1 4.1 0.9 15.0 300 DiscoverIE (DSCV) 29/03/18 415.00 398.00 -4.1 2.5 3.3 -7.2 356 dotDigital (DOTD) AIM 24/05/18 82.40 86.00 4.4 0.8 -5.4 10.3 80 Draper Esprit (GROW) AIM 09/11/17 396.50 525.00 32.4 0.2 -2.1 35.3 504 Eland Oil & Gas (ELA) AIM 12/10/17 72.00 113.00 56.9 - -3.1 62.0 107 Elecosoft (ELCO) AIM 13/09/18 81.00 82.50 1.9 1.0 0.2 1.7 68 Entertainment One (ETO) 14/09/17 260.50 387.20 48.6 0.4 0.4 48.0 330 FairFX Group (FFX) AIM 29/03/18 90.00 137.50 52.8 - 3.3 47.9 120 Gordon Dadds Group (GOR) AIM 19/07/18 176.50 178.00 0.8 3.4 -4.8 5.9 152 Gym Group (The) (GYM) 16/08/17 210.00 296.50 41.2 0.6 -0.8 42.4 263 Hurricane Energy (HUR) AIM 13/09/18 52.15 52.50 0.7 - 0.2 0.5 46 IMImobile (IMO) AIM 25/06/15 147.50 314.00 112.9 - 7.7 97.7 301 Inspired Energy (INSE) 01/02/18 21.25 21.25 0.0 3.2 -2.3 2.4 17 iomart Group (IOM) AIM 31/03/16 270.00 376.00 39.3 2.0 17.9 18.1 353 IP Group (IPO) 26/04/18 138.40 116.20 -16.0 - -1.6 -14.7 112 John Laing Group (JLG) 16/08/18 287.20 303.20 5.6 3.0 -3.1 8.9 250 Kenmare Resources (KMR) 13/09/18 240.00 247.00 2.9 - 0.2 2.7 198 Keywords Studios (KWS) AIM 06/02/14 147.50 1552.00 952.2 0.1 13.3 829.0 1600 Kier Group (KIE) 24/05/18 1072.00 887.50 -17.2 8.1 -5.4 -12.5 840 Kromek Group (KMK) AIM 24/05/18 26.50 26.00 -1.9 - -5.4 3.7 25 Marlowe (MRL) AIM 08/01/18 385.00 498.50 29.5 - -5.0 36.3 448 NEX Group (NXG) 01/03/18 665.00 1033.00 55.3 1.8 1.8 52.6 844 Oxford Metrics (OMG) AIM 09/11/17 62.25 69.50 11.6 2.1 -2.1 14.1 63 Patisserie Holdings (CAKE) AIM 25/05/17 365.75 429.50 17.4 1.1 -2.5 20.4 390 Robert Walters (RWA) 16/08/17 505.00 640.00 26.7 2.4 -0.8 27.8 613 Rolls-Royce Holdings (RR.) 21/07/16 744.00 886.20 19.1 1.4 10.2 8.1 875 RWS Holdings (RWS) AIM 19/07/18 448.50 421.50 -6.0 1.8 -4.8 -1.3 405 S&U (SUS) 12/10/17 2005.00 2270.00 13.2 5.3 -3.1 16.8 2208 Smartspace Software (SMRT) AIM 16/08/18 107.00 85.00 -20.6 - -3.1 -18.1 85 1 Sureserve (SUR) AIM 12/10/17 40.50 36.00 -11.1 3.6 -3.1 -8.3 35 Taptica International (TAP) AIM 19/07/18 329.00 335.00 1.8 1.5 -4.8 7.0 300 Tarsus (TRS) 30/04/15 233.50 274.00 17.3 3.9 6.2 10.5 266 Continued on next page..