New Blog

So things are changing... dreams are growing... new blog is at https://herenya.co.za/blog/
Check. It. Out!

Is there any value left in this market?

So things and times change; and so do the winners and losers on the stock market. Those stocks who were stellar performers a few years ago do not always stay stellar performers as macro economic circumstances change in favour of other companies, and thus these other companies take the performers of old's place at the top of the ranks. 

I did a very (and I mean very) basic search on the Google finance stock screener (link to it here) and it returned a list of stocks that matched my criteria. Basically I was looking for companies that had EPS growth in excess of 5% over the past 5 and 10 years, an ROE ratio of over 15, a DY higher than 2 and is up over the past 52 weeks. Actually, this is a fairly good set of criteria in my opinion as it isolates companies that are currently, and have been for a decade, growing.

The list of stocks is as follows:

So in they go into my trading universe and the deeper dive into their fundamentals commences. If there is anything I learned from SMBU it's that we have to use technology to our advantage. In other words, stock screeners are the bomb and we need to use them.

Lot's of homework to do on my new list of stocks that I kinda think I might like once I understand them better. 

Things change pretty quick

Well, I don't really know what to say... things change fast. One minute you have a diamond in your hand, then next minute you drop it and it disappears. That however is a metaphor for a situation I don't really want to get into. Life tests our ability to stay resilient, I think. Every time we overcome a challenge, we are presented with a bigger one. This is the nature of life and we need to learn to be ok with it. The bigger the challenges become, the more progress we make in our personal growth. So in a sense we should be grateful that we have these challenges to start off with.

Does the Dow Theory say we can worry yet?

A few months ago I posted about the Dow Theory and how according to it at the time there was not yet anything to worry about. A link to that post can be found HERE. 

In there I looked at the S&P500 and the Russell 2000 and whether they were breaking to new lows roughly at the same time. Well I've still been looking at them and since then, the picture has changed somewhat.

Again based on daily closing prices, the first index to break the lows (which incidentally is no longer the most recent significant low as I am still using the same lows of October 2014) was the Russell 2000.

7 Days ago the Russell 2000 took out the October 2014 lows.

And roughly at the same time (i.e. today), the S&P500 also broke to a new low... temporarily at least.

S&P500 pierced below the lows of October 2014 but managed to close above the level.

Looking closer we see that the lows have not been broken yet, well, not entirely anyway.

Could it perhaps be the hammer of destiny?

Well, ok then. So what now? I think we wait for the weekly candle to close on Friday and we look again once the weekly candles are formed and use those to tell us if this is the making of the greatest hammer formation I have ever seen, or, according to Dow Theory, is the beginning of the end of our 7 year bull market.