FTSE250 Update - Good run stretched

FTSE250 has had a very good run of late, no one should be surprised if from here there is at least a decent pullback. More a reflection of the UK economy than the FTSE100, the 250 has defied bear hopes that it should be going the other way. No one should be surprised though that on the expectations of economic improvement to come, the FTSE250 is looking ahead.

Of the two charts, daily and weekly, the latter still looks the more positive. Daily MACD is suggesting that a pullback is on the cards, although it will be interesting to see if we get a period of divergence before price falls. MACD is still a long way from the zero line and the weekly chart gives more hope that this will be a pullback within the prevailing bullish trend. The 250 could lose 1500 points before hitting areas of major support at around 12100.

Charts:

FTSE100 Update - Risk off again?

So, it took the return of Berlusconi and the rise of another comedian in Italy's election, Beppe Grillo, to put the jitters under the markets to start this week. It had to happen, risk on having been a popular phrase for so long with the traders that you would be forgiven for thinking that markets had forgot how to fall. The FTSE survived without a whimper the UK ratings downgrade over the weekend, with talk of it being "priced in", but Italy reminds the markets of the bigger picture of Euro problems and the fact that democracy doesn't always produce what the markets would like.

However, the daily chart on the FTSE100 has been showing for a little while MACD divergence. For most of this month the MACD indicator has been suggesting weakness although it is yet to fall below the zero line and price on the chart continued to test new highs. It will be interesting to see if the FTSE can hold the lower trend line on the chart below at around 6200, but if this is finally the beginning of a bigger sell off then we shall have to see if the support points on the chart holds at around 6100 and then 5900-6000.

FTSE100 - Daily

£30,000 to £60,000 in three months spread betting

Interesting blog spread betting FTSE stocks which I came across yesterday, haven't read through it all yet though, link below.

Spread betting £30,000 to £60,000 in just a few months of a one year goal is quite impressive.  Did note that the £ stakes per point were quite high, far more than is advisable for anyone new to the game to start off at. Also, couldn't find any details on how the shares were actually picked, fundamental, technical analysis or a mixture of both.

Blog can be found here.


http://barefootspreadbetting.blogspot.co.uk/

Printing.com, big dividend but where's the growth?

Looking through company reports today I came across a trading statement from Printing.com.

Trading in the second half of the year has proved softer than anticipated across the Group's various European channels. This coupled with the increased marketing expenditure on the Group's new initiatives means that it is now likely that the Company will be materially behind market expectations in the current year.

Notwithstanding the above, the Directors maintain their belief that the plethora of new initiatives including Templatecloud.com and W3P provide sound prospects for the Company moving forward. Indeed post the last update, the first W3P Licenses have been granted in the UK. These Licenses generate monthly 'system fees' along with incremental print revenues.

At this juncture, also taking into account the Group's Balance Sheet, the absence of debt together with the underlying cash generation, the Board intends to recommend the payment of a final dividend at the same level as the previous year.

http://www.digitallook.com/news/rns/20707398-104241/PDC-Trading_Statement_html

So, the bad news is that the company expects to be "materially behind market expectations in the current year" and the market reaction reflects this with the share price moving down around 10% today. However, what was strange about this announcement was the dividend to be paid which would be at the same level of last year. At the current price that's a yield of between 8-9%, so how come?

Looking at the dividend payments for the company over recent years shows the following.

2008  3.00p    7.9% yield
2009  3.15p  13.4% yield
2010  3.15p    9.3% yield
2011  3.15p    8.6% yield
2012  2.55p    9.1% yield

Source - DigitalLook

The share price however has largely been going nowhere, around 40p back in 2008 to 29p today. No debt but profits have also been falling since 2008, yet the dividend remains high.

What is interesting about this company is that the CEO has around 8.6 million of the 47.5 million shares in issue.

Looks an interesting company, but where's the growth coming from when so much goes to the dividend, even when it is "materially behind market expectations in the current year" with profits falling each year?

Video market round up for the week ending 15th February 2013

A week ending round up of the markets from Steve Briggs YouTube channel. Included this week is a look at the UK mining and banking sector, Randgold Resources and Barclays.

Links:

Steve's YouTube site http://www.youtube.com/user/sjb5555.

Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/

Phytopharm, when blue sky goes wrong

Yesterday the share price of FTSE Fledgling Phytopharm ended the day at around 2p having fallen over 80% on the day after reporting bad news that its clinical trials for what may be its only potential product Cogane, had no beneficial affects on patients. Today it is falling again, around 5% as of writing.

As potential blue sky stories go there are lessons here for investors and traders. Some companies are essentially one trick ponies and if the trick doesn't come off, the downside from failing can be swift and horrendous for both the company and investors. The unexpected announcement will hit a share price hard and this is especially true with the smaller companies. One time big companies, HMV springs to mind, will often have a slow, painful death once bad news sets in, but smaller companies can find themselves going under very quickly.

I quite like blue sky stories, because the potential for big gains is clearly there, but it is important to make sure that the story you are attracted to does have some merit and potential upside from a range of products or services that are attractive. Small pharma companies looking for cures that may deliver a big return if they come good, like cancer, have about as much chance as succeeding as some of the more hyped up oil or mining exploration companies. It can be a goldmine if it comes right, but total disaster when it goes wrong.

Who knows what the future holds for Phytopharm? As of yesterday they didn't seem too sure themselves. For the investor and trader, blue sky opportunities should always be a case of buyer beware and know the potential risk of what you are getting into.

Another Vodafone downgrade comes in

Just when Vodafone investors thought their share price might be in the process of making a recovery, market sentiment moves towards the negative side again. First, the news that Vodafone might bid for Kabel Deutschland didn't seem to please the market and now a broker downgrade, a fairly substantial one comes in.

...broker downgraded issued by Sanford C. Bernstein & Co.

Analysts at the brokerage moved Vodafone's stock from Market Perform down to Underperform - while also issuing a swinging cut to their target share price.

VOD's target now sits at 135, down from 170.

Vodafone’s European assets, which account for about 40 percent of the group operating profit, may shrink by 23 percent in the next three years, Bernstein said.

http://www.economy-news.co.uk/shares/share-price-drivers/2767-vodafone-group-plc-shares-downgraded-4543545

Meanwhile, Vodafone continues to buy up its own shares as part of its buyback plan. One assumes they don't think it will go to 135p, otherwise it might be best to wait to get a better price. On the other hand, companies probably don't try to time the market in the same way traders or investors might do, Vodafone no doubt feels that long term there will be value in buying at the current levels between 160 and 170p.

Vodafone - "damned if they do, damned if they don't".

http://www.economy-news.co.uk/shares/share-price-drivers/2730-vodafone-share-report-and-strategic-vision-questions-443545

Morrison makes a convenient deal

It looks like the food retailer Morrison is finally doing something in the areas that it lags behind FTESE100 rivals Tesco and Sainsbury. Morrison is a long way behind the competition when it comes to convenience stores and buying on the web. In response it is to buy a number of Blockbuster video stores and turn them into Morrison convenience stores.

Convenient deal

The 49 stores being purchased for an undisclosed payment are of strategic value to Morrisons which has lagged other supermarkets in creating a convenience-store format, as well as a home delivery service.

It also wants to increase its presence in the lucrative South East of England.

Nationally, Morrisons has about 11% market share among supermarkets, but in the South it is just 6%.

The firm has previously declared its intention to open 70 convenience stores by the end of this year, primarily in the Greater London area.

To this end, it has already bought up seven stores from the failed camera retailer Jessops, and announced the rebranding of the 12 "M Local" stores that it already owns.

http://www.bbc.co.uk/news/business-21490465

Can't see any reason why the city shouldn't like this move as it shows the company is finally doing something to address its weaknesses against the competition. Now they need to sort out their lack of web presence, although hopes that some have that they might buy FTSE250 web retailer Ocado is probably wide of the mark. Ocado's market cap valuation looks a bit too hot at its current price to interest any bid or takeover.

Greencore Group joins the horse meat controversy

Despite all of the media talk surrounding horse meat being found in the products of many beef ready meal products, so far it has had little effect on the share price of those selling the products. Tesco seems to have survived the initial fallout from the scandal, although it would seem the issue is far wider than first thought and could continue for some time as investigations get under way. Today, news emerged that Greencore Group is the latest to be hit and as a supplier it has arguably more to lose.

Greencore shares fell the most in more than 14 years today, dropping as much as 22 percent to 79.5 pence. The drop reduced the company’s market value by as much as 89 million pounds ($138 million) to 313 million pounds.

Separately, Tesco’s Clarke said in a blog on the grocer’s website that he has ordered a review of the company’s “approach to the supply chain.” Tesco will set a new benchmark for the testing of products, he said, adding that new processes won’t mean more expensive food for customers.

Shares of Tesco, Sainsbury and Morrison fell today, though “that may be due to the noise surrounding the horsemeat issue” rather than “many concerns that it’s going to really hurt long- term business,” according to Andrew Gwynn, a food retail analyst at Exane BNP Paribas in London.

http://www.bloomberg.com/news/2013-02-15/u-k-food-industry-chiefs-determined-to-restore-consumer-trust.html

I've been following Greencore for a while, through its recent bullish upward trend, and noted that Naked Trader Robbie Burns gave it a mention yesterday (he's bought it before and done well out of it), however I suspect that he was not up to date with events when he indicated he would buy big time if it got down to around 90p. It currently stands a little under that having fallen over 22% at one stage today.

The problem with this issue, other than the obvious health concerns, is that the suppliers of the products may well find that regardless of their previous reputation, buyers will simply cut them off because they need to be seen to be doing something and distancing themselves from suppliers of the "horse meat" products.

Greencore may well be a good company, but the share price might be more volatile until the whole issue is sorted out and this is one falling knife where you need to be really confident that the underlying bad news won't keep coming back. No one knows right now where it will end.

A very honest company report

Company reports can often be a good place to start when looking for trading and investing opportunities, share price will often move, good or bad, depending on what is reported. This morning a very small company, Fiske gave its interim results and you don't always find this level of honesty. As it is a tidler the shares may not be that liquid anyway, which may be the reason why the price hasn't moved at all. With this statement you don't have to read between the lines.

Chairman's Statement

The only good thing I can say about the results for the half year ending 30th November 2012 is that the final figure is a plus, albeit a figure so small as to be insignificant. As I am sure shareholders are aware the period under review has been a particularly difficult time to make profits in our business. Basically we have broken even, a totally unacceptable outcome. I can assure you that we are taking steps to reduce costs by a target of 5% and equally to boost income of the same proportion.

It is true that most Stockbrokers have fallen on bad times, mostly because they relied heavily on corporate finance fees. We are not in that position as we regard corporate finance business as having a huge conflict of interest with advising private client funds.

The image of private client stockbrokers has been badly affected by recent events and we continue to stress our old fashioned emphasis on value for money and integrity. In that context it is important to accept that more activity can only be justified if it is in the client's best interest. This has affected our short term results, but we are confident that many interesting opportunities will arise and our clients will be in a position to take advantage of them.

In addition to our private client department, where we are, as always, in discussions to add to our advisors, we have a healthy institutional business. We have strengthened this side of the firm with a new unit, Baden Hill, which is establishing itself as a distinctive and expanding element in that area.

In view of the disappointing level of profit, we will only be paying a token interim dividend of ¼p per share.

http://www.digitallook.com/news/rns/20687900-24826/FKE-Interim_Results_html

Vodafone - a look at the weekly chart

Last week Vodafone reported to the market what looked like a downbeat statement which had little or no effect on the share price. If anything, the share price is simply in line with current market sentiment with a bounce in the trend from the falls towards the end of last year. Not sure there is any conviction in this from the fundamental side, there still seems to be quite a lot of negative news. There is also the news that Invesco's Neil Woodford sold his holdings in the company.

Mitchell Fraser-Jones, a director of Invesco Perpetual, confirmed: “In terms of trading activity, the fund has now completed the sale of its holding in Vodafone.

“The company has reduced its forecasts for revenue growth on the back of ongoing weakness in its core southern European markets and the cash flow cover of the dividend has fallen to what we view as uncomfortably low levels.

“The company announced a share buy-back rather than the hoped for special dividend with its dividend from Verizon Wireless, while we also have reservations about the company’s ability to maintain its margin on data revenues.”

http://blogs.telegraph.co.uk/finance/ianmcowie/100022718/investment-guru-neil-woodford-sells-vodafone-despite-good-results/

The big thing that Vodafone has going for it right now is its share of Verizon Wireless, hedge fund manager David Einhorn recently went bullish on the company because he believes that market is ignoring the value this holding has.

He works for Greenlight Capital and is widely followed on Wall Street.

So when he said in a newsletter to investors that the market undervalues Vodafone’s ‘clearly quite valuable’ 45 per cent stake in Verizon Wireless, and that it could soon sell its shareholding, buyers chased shares of the world’s second biggest telecoms company up to 168.65p before they closed 5.2p better at 168.675p on turnover of £233million.

Einhorn added further spice by suggesting that ‘given the huge valuation disparity between what the market thinks Verizon Wireless is worth to Verizon – at least a couple of hundred billion dollars – and what it ascribes to Vodafone – about zero – combined with Verizon’s increasing dependence on Verizon Wireless, it wouldn’t be a surprise if Verizon decided to buy all of Vodafone to gain full ownership of Verizon Wireless’.

http://www.thisismoney.co.uk/money/markets/article-2267840/MARKET-REPORT-Einhorn-sparks-Vodafone-buzz.html

Charts:

FTSE100 update - a look at the daily chart

The chart is still in a bullish mode, but with a little weakness in the trend which should be expected after the run up in January. So far there has been no big sell off and while the MACd indicator is negative it is still some way off from the zero line. Price is now touching the 20dma, but still has some way to go to hit the 50dma. We seem to be at one of those wait and see junctions, but there is little indication that the market wants to fall a long way.

FTSE100 Daily

Online gambling one step closer in the USA

Some of the biggest movers in the UK markets this morning have been in the gaming sector on the back of a report from the US that legalized online gambling is one step closer.

Gov. Chris Christie (R-NJ) conditionally vetoed the online gambling bill that would authorize Atlantic City casinos the ability to offer New Jersey residents the ability to play poker, roulette, baccarat, blackjack, craps, big six wheel, slot machines, mini baccarat, red dog, pai gow and sic bo online. Despite the conditional veto tag, proponents of the expansion of online gambling believe this is a big victory for the industry.

According to the New Jersey legislature glossary, a conditional veto is "a veto in which the Governor objects to parts of a bill and proposes amendments that would make it acceptable. If the Legislature re-enacts the bill with the recommended amendments, it is presented again to the Governor for signature."

http://espn.go.com/poker/story/_/id/8925250/new-jersey-internet-gambling-bill-conditionally-vetoed-state-allow-online-gambling

This has had a dramatic effect on some of the UK online players this morning so far.

Bwin.Party up 20%
888 Holdings 17%
Betfair 4%
32Red 3.42%

Even behemoths William Hill and Ladbrokes are up slightly on the back of this news, the former has been positioning itself in the US over the last couple of years for the likelihood that sooner rather than later online gambling will be legalized.

While some investors will probably steer clear of these type of "sin" companies because of objections to gambling, for those that don't have a problem with the industry there is massive potential going forward, especially once countries like the US open their doors and legalize the industry. The sky is potentially the limit if the same were to happen in China, although no one should bet on that happening for some time.

Whoops! Why Everyone Owes Everyone and No One Can Pay

Whoops! Why Everyone Owes Everyone and No One Can Pay is actually a pretty good, easy to read and understand book on the financial crisis.

One of the things that Lanchester looks at is the lack of financial education the average person has and how this creates a conflict between modern financial capitalism and democracy. Those running the banks didn't even know or understand much of what was going on, yet the events of the last few years show which of the two has more power.

However, change may be on the way.

Personal finance education to be compulsory

Financial education will likely become compulsory in schools across England for the first time, following the publication of the new draft curriculum today.

The new curriculum will see financial education embedded in both mathematics and in "citizenship" education.  

Campaigners have fought a long battle for children to be taught the basic skills of how to manage their money.  

http://www.telegraph.co.uk/finance/personalfinance/9855051/Personal-finance-education-to-be-compulsory.html 

AIM market and ISA's, what effect will it have on spreads?

At the last budget a mention was made that consideration was being given to allowing AIM listed shares to be allowed into ISA's (UK tax free individual savings accounts). Currently most AIM shares are not eligible as AIM does not qualify as it is not listed as a "recognised stock exchange". A few that are also listed on a recognised exchange overseas do qualify, but most don't. It is hoped that after the consultation period AIM stocks will be allowed into ISA's, if not from this year than in 2014.

One question that this will raise is the issue of the spread on AIM stocks. Smaller companies, especially those listed on AIM, can have the most ridiculous spreads, 5-10% not being uncommon and often more, which can be quite off-putting especially for smaller investors. One of the main reasons given for these wide spreads is the lack of a market, lack of liquidity.

Unlike the FTSE 100, which uses an order book to create a marketplace where buyers and sellers are matched up depending on the price they are bidding or offering, smaller companies rely upon market makers. Market makers do exactly as their name suggests; they make a market for smaller company shares. Unlike FTSE 100 companies, smaller companies attract very few buyers and sellers and thus need an artificial stimulus to enable investors to buy and sell shares. Market makers are firms which provide this service and there are normally a handful of them per listed company, with the investor being matched up with the best price available.

Market makers do not only make markets, they also make money. They do this by charging buyers a higher price than they pay sellers; this difference is called the spread. For bigger companies the spread is very small (for example the spread on Vodafone is around 0.1%) but since smaller companies attract minimal interest and trading activity, the spread needs to be very, very wide in order for market makers to make a nice little earner. Indeed double digit spreads are par for the course, which means you need the share price to increase by 10%+ just to break even

http://citywire.co.uk/money/smart-investor-scary-facts-about-smaller-companies/a462550

So, one of the main arguments for the wide spreads is this lack of investor and trader interest. In theory, adding AIM stocks to ISA's should potentially lead to greater interest from investors and therefore the excuse for such wide spreads will be difficult to justify, although one suspects that those companies with a small number of shares in issue may find the spreads remain wider. It will be interesting to see if and when AIM stocks are included if it has any effect on the spread.

Links:

Recognised stock exchanges http://www.hmrc.gov.uk/fid/rse.htm

Will Vodafone disappoint?

While the Vodafone share price has recovered a little ground in recent weeks, to some degree on the back of the euphoric start to the year in the FTSE, its results to be announced tomorrow have been awaited with some question marks hanging over what is likely to be reported. Could the downward trend continue if Vodafone comes in lower than expected? It looks like the market is ready to be disappointed.

Vodafone Group is expected to post 'growth deterioration' in its financial results Thursday.

Last month Deutsche bank lowered its recommendation from ‘buy’ to ‘hold’ citing concerns about the telecom company’s worsening cash returns.

"We forecast growth deterioration through calendar 2013 with the outlook for financial FY14 set to confirm declining free cash flow (FCF), no further dividend-per-share (DPS) growth and a scaled down buyback to avoid increased leverage."

Deutsche Bank said it anticipates organic service revenues to falter further this year, with a return to positive growth unlikely until 2014.

It also reduced its target price for the shares from 225p to 175p.

http://www.digitallook.com/news/20674165/Thursday_preview_Vodafone_Group_to_report_growth_deterioation.html?username=&ac=

"Growth deterioration" doesn't sound good, but a lot will depend on how much deterioration and it does have its Verizon Wireless investment to help it out, although it appears to be talk around a possible Verizon buyout of Vodafone that seemed to be helping the share price recently. Would Verizon seriously consider a bid for Vodafone? Can Verizon afford it?

A better than expected report tomorrow could see Vodafone continue to recover from its lows in the 150's, worse than expected and we may see 155 tested again over the next few weeks. It will be interesting to see what the charts look like by the end of tomorrow.

Vodafone chart before recent recovery below.

http://sevenpillarstrading.blogspot.co.uk/2012/12/no-christmas-love-for-vodafone.html

Video market round up for the week ending 1st February 2013

A week ending round up of the markets from Steve Briggs YouTube channel. Included this week is a look at the UK mining and construction sectors.

Links:

Steve's YouTube site http://www.youtube.com/user/sjb5555.

Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/

Trading or gambling? The risk addicts.

Pretty good article in the Financial Times this weekend about trading and gambling that is well worth a read.

http://www.ft.com/cms/s/2/788c1930-6b3a-11e2-9670-00144feab49a.html

FTSE100 - A look at the daily chart

The movement on the FTSE100 daily chart suggests that a long awaited pullback could be underway. However, the recent run up has left plenty of room for a minor pullback before the upward trend continues. The MACD indicator has turned negative, but is quite a way from the zero line, a crossover at that point being bearish. Even if it falls that far it doesn't necessary indicate that we are in a sustained bearish move. That would take a downtrend with some lower highs coming in and new support points not holding. For now, the FTSE could fall to around 6100, an old area of resistance from 2011 and now potential support, and still be in an uptrend.

FTSE100