My first trade - Shell / BP

[KDave]

59 minutes ago, HGr said:

Today I bought some BP and Shell, I thought I wouldn't see anything as low as March again. Will double down if they go much lower. Had some Shell around 13.50 a few months ago, but I got a bad feeling and sold it at 13ish to buy gold instead, happy I did that. 

Rolls Royce also sucks right now! So I bought some ☺️

 

Well done a good day today for buyers. I have enough now in shell and BP and no immediate targets, next buying will take place at sub £9 and £2 respectively as a 'too good to miss', otherwise I will end up buying next years full allocation before this years Christmas. 

RR is very tempting I have been watching it since £2, but I know very little about the company other than my perception that it is a UK strategic asset given how in bed it is with the military (tech/engineering wise). I think its a good long term bet but I need to have a good look into it. I have bought VOD and FP recently, I would like some more FP then next on the list is AT&T to go along with my other telecoms stocks, decent yield on that one at the moment.

I was 12% down this morning as a portfolio average, logged on to count my dividends. Only metals and tobacco in the green. I am very happy with that, ideally it will stay down as long as possible, lower would be good. Wages and dividends need somewhere to go 

[HGr]

RR are suffering because of obvious reasons, I think it will pick up again one day. Price is down 80% or something daft. 

This guy doesn't like them https://www.fool.co.uk/investing/2020/09/30/the-rolls-royce-share-price-has-tanked-would-i-buy-this-cheap-uk-share-now/

Cancelled dividends, no returns for 2 years - sounds rubbish! 

Edit: just found another article where their price target was 80p! So maybe I was a bit premature. 

Edited September 30, 2020 by HGr
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[KDave]

What is the 80p target based on? I would not worry too much about fool articles, you can read 2 or 3 of them and get opposite opinions from each, then head to seeking alpha and get the same, then go on the silver forum.... opinions are everywhere. 

Like I say I need to have a look into the balance sheets and compare to its peers in the sector, that would be BAE and Boeing off the top of my head (defence/engineering), its something I will look at next year. You can't have everything there are often more opportunities than cash.

[KDave]

@HGr RR. is recapitalising, 10 shares for 3 at a new share price of 32p, hoping to raise £2 billion from new issues as well so its a dilution, plus they are making £1 billion in bond sales. To be confirmed at the next share holder meeting on 27th October (in other words its already decided).

Its not as bad as it looks if my working out is right - 10 shares at 32p vs 3 shares at 121p, 320/363 = 88% of equivalent value or a 12% haircut from dilution is that right? Could be worse if so. I would factor in sentiment as potentially by 27th October the current share price could be lower and a better buying opportunity before the recapitalisation happens, we will see. 

Edit - 88% of current share price = £1.06, that would be equivalent post dilution issue value, if it drops below that then new investors at 32p are paying more than market value, that should give you confidence but given the market is all sentiment who knows what could happen short term. 12% down is hardly worth worrying about, being in the red for a while for a long term investment is nothing. I know what I am doing this month, compare the defence companies and find the change behind the sofa.

Edited October 1, 2020 by KDave
thinking

[JunkBond]

15 hours ago, HGr said:

So maybe I was a bit premature. 

Not as premature as me, buying RR at £2.55. 😬

[Stacktastic]

21 hours ago, HGr said:

Today I bought some BP and Shell, I thought I wouldn't see anything as low as March again. Will double down if they go much lower. Had some Shell around 13.50 a few months ago, but I got a bad feeling and sold it at 13ish to buy gold instead, happy I did that. 

Rolls Royce also sucks right now! So I bought some ☺️

 

Been mental i only looked in the late afternoon as i don't have any more funds to invest.
I will buy a bit more crude if that hits at the level i bought at before. 

Im preparing to sell a lot of my initial mining & the one uranium shares (when they hit a positive), so that should free up some capital. 
I made the right move exiting HOC and took out £600 to put into crude. 
Crude will make a quicker return so I will inject into that for the short term as i have no work now.
I was Kind of banking on it going back to normal, but I should have known better.
I dont have the time for the gold bull run, unless i can buy cheap. 

I do get the impression things can go a lot worse if the whole economy crashes (lets pretend muti millions of millions of people actually die) so i wont be fooled into being a FOMO again any time soon
Might put a bet on whether Shell go bankrupt LOL Bet the odds are pretty good in my favour. 10000 to 1 LOL. 

Edited October 1, 2020 by Stacktastic

[KDave]

Shell at £8.96 I could not resist. No gold for me this month. 

[Stacktastic]

2 minutes ago, KDave said:

Shell at £8.96 I could not resist. No gold for me this month. 

Damn you !!!!

Im £500 down now. }

Not overly bothered though. i have given up 'cost averaging' now. it will go back up at some point. 

Edited October 2, 2020 by Stacktastic

[KDave]

Just now, Stacktastic said:

Damn you !!!!

Im £500 down now.

£500 down if you need the money today

[AndrewSL76]

So.......I have a number of price alerts for RR and have ignored all of them until just now.......my last one was 105. The price is currently 103.6 and falling.............the news re the 32p is all of a sudden VERY interesting. I am going in when it hits 102.50 I may regret this because it could fall down to 90 at this rate.....................................

[JunkBond]

I will buy more RR if we see sub 100.  Also going to buy more BP if it gets to 200.

[Stacktastic]

12 minutes ago, JunkBond said:

I will buy more RR if we see sub 100.  Also going to buy more BP if it gets to 200.

Its certainly looking promising.

[AndrewSL76]

I bought in at 101.3.......if the news is correct re the 10 for 3 at 32p then I am happy with that.

[Kman]

On 22/09/2020 at 18:42, Kman said:

 

 

I was right it was just coming up to test before resuming down but it was the long red trend line instead of a horizontal support I'd drawn in

If I owned shell that would have been the perfect place to take a sell to hedge and be able to buy 20% more shares for the money vs averaging in 

 

Looking at it closer I've drawn in a channel it looks to be travelling down in

 

I don't know the fundamentals to guess just how low it could go, would need to know

• What areas of their business are most profitable
• How covid has effected those areas
• Have they had to take on new debt and how is it financed 
• When will oil demand + price likely be favourable for them again 
• Have they had to make fundamental changes to survive that would prohibit  them from being as profitable even if oil price+demand is getting healthy

I know they're down billions, I think it would something like -20 billion on a normal year

Looking at economic data it doesn't look likely things will improve too much in the next few months but maybe they will, if they do it will show on the charts. Are you guys all using technical analysis?

I'd have very similar questions about Rolls Royce, why is now the bottom? I've not seen anyone give an explanation as to why now is the time to buy

Edited October 2, 2020 by Kman

[KDave]

5 hours ago, AndrewSL76 said:

I bought in at 101.3.......if the news is correct re the 10 for 3 at 32p then I am happy with that.

Well done if calculations are right £1.06 is the equivalent pre-placement/recapitalising price of 32p so you have bought at a lower price than new investment coming in on 27th October.

[KDave]

3 hours ago, Kman said:

 

I was right it was just coming up to test before resuming down but it was the long red trend line instead of a horizontal support I'd drawn in

If I owned shell that would have been the perfect place to take a sell to hedge and be able to buy 20% more shares for the money vs averaging in 

 

Looking at it closer I've drawn in a channel it looks to be travelling down in

 

I don't know the fundamentals to guess just how low it could go, would need to know

• What areas of their business are most profitable
• How covid has effected those areas
• Have they had to take on new debt and how is it financed 
• When will oil demand + price likely be favourable for them again 
• Have they had to make fundamental changes to survive that would prohibit  them from being as profitable even if oil price+demand is getting healthy

I know they're down billions, I think it would something like -20 billion on a normal year

Looking at economic data it doesn't look likely things will improve too much in the next few months but maybe they will, if they do it will show on the charts. Are you guys all using technical analysis?

I'd have very similar questions about Rolls Royce, why is now the bottom? I've not seen anyone give an explanation as to why now is the time to buy

Well done on the price targets did you trade it? Where next do you think based on the charts, is that a support line at 893 or just another line. Fundamentally well I can tell you a story about debt, assets and covid but it will make no difference short term, no one knows which way it will go, even the charts will only tell you a story but with probabilities instead. The times I have timed anything well it was luck, gold included. 

I have listened to a macro podcast today, their theory is that oil will not recover until 2021 with WTI $80-$100 by end 2021, I think that is a bit optimistic at these prices, I was expecting later and more time to keep buying. Ideally I would want oil prices to fall from here and stay low to kill off shale, then I would agree with end 2021 thesis.

To me the charts I am looking at are telling me a story of 25 year lows in several major companies, a rare opportunity to invest in companies that provide a commodity critical to the economy. I am also being told a story that oil is dead by the same people who called gold a pet rock in 2015. Long term this will be seen as a buying opportunity just as gold was 5 years ago, unlike gold I hope to more than double my money I expect at least 200% return from here in a few years time including dividends. We will see 

[HGr]

I sold my RR at a tiny loss. I woke up the next morning and decided to ditch it to rebuy later. I will keep an eye on it all next week, but for now it looks like a good move, if it starts to recover I can rebuy with plenty of headroom but happy to wait for now. 

Shell is so tempting again. No metals for me this month either! Well, I will probably get at least one silver coin 😂

[Kman]

21 hours ago, KDave said:

Well done on the price targets did you trade it? Where next do you think based on the charts, is that a support line at 893 or just another line. Fundamentally well I can tell you a story about debt, assets and covid but it will make no difference short term, no one knows which way it will go, even the charts will only tell you a story but with probabilities instead. The times I have timed anything well it was luck, gold included. 

No  I was thinking more that would have been a nice move to hedge an existing position, I don't want to try and trade equities atm, too nervous of what they will do after/pre market and open percents below stop loss

I'm still learning and things are quite volatile, copper and illumina didn't go as planned but holding GGP is going well so I tell myself why feel any pressure to try and make money elsewhere, better to observe and predict and if I'm getting it right more than not and the markets calm down then I will get back into trying to be clever with trading 

For now I only have a small position selling eur/usd 

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is that a support line at 893 or just another line.

The 893 is where the price was when I screenshot and I have a line at 890 just below because that was around the bottom in March (on the 8 hour timeframe anyway, going down to minutes it might have been a bit lower)

Not sure if that will be an important area or not but drawn a line just in case

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no one knows which way it will go, even the charts will only tell you a story but with probabilities instead.

Indeed but important levels do develop and give you clear indications if it's short term positive/negative 

The recent rejection at 10 for shell was a textbook display of testing former support and finding it as resistance before continuing down, I guessed slightly wrong at what resistance but still 

Gold failing to get above the previous ATH and closing the week below $1900 was negative too as an example, I think that's going to come back down now but we shall see

Quote

To me the charts I am looking at are telling me a story of 25 year lows in several major companies, a rare opportunity to invest in companies that provide a commodity critical to the economy. I am also being told a story that oil is dead by the same people who called gold a pet rock in 2015. Long term this will be seen as a buying opportunity just as gold was 5 years ago, unlike gold I hope to more than double my money I expect at least 200% return from here in a few years time including dividends. We will see 

I've put together something here, it's oil demand (bars), Shell annual gross profit (red) and oil price (black). It might be slightly misaligned because i had to lay charts from different sources over one another

 

I don't know how bad 10% down really is? in 2013 91mb fairly healthy for shell (albeit with oil at ~$100pb), I guess if oil companies are able to produce 10% more than the demand they can flood the world with oil if they want and keep the price low, that's what was happening earlier in the year right?

I also don't know if shell still have the same market share as they did 10 years ago, what % of world demand are they supplying now vs then

One major thing regarding oil price is it's close relationship to bond yields, QE forces down bond yields, this is oil (green) with 30 year bond yields (red)

How is oil price going to go up any meaningful amount? if you know they correlate and you know there's one one way for yields to go

 

 

Edited October 3, 2020 by Kman

[KDave]

Interesting post thanks, yes I am not confident enough to trade either, I tried my hand at elliot wave a couple of years ago with a forum member but could not get to grips with it in regards to consistency, effectively for me it was no better than choosing higher or lower on a slot machine but with limited downside with the correct set up. Its more an art form, a systematic art form. I follow a couple of commentators that do trade (chris A) and some that do not, I have more respect for the ones who do trade because of the additional factors involved in that process which makes it a glorious event when you win but it hurts when they get it wrong on the short term. 

2 hours ago, Kman said:

One major thing regarding oil price is it's close relationship to bond yields, QE forces down bond yields, this is oil (green) with 30 year bond yields (red)

How is oil price going to go up any meaningful amount? if you know they correlate and you know there's one one way for yields to go

 

 

This is very interesting it should tell you something important about the nature of oil, as like the monetary nature of gold. The monetary nature of oil. And they say the petro dollar is dead. I see the loose correlation is in the trend, yet late 2019 the correlation is strangely exact, around September is it (QE began at the FED). That could be an indication in itself perhaps (monetary). Oil does need to drop a bit more to regain true correlation (and to kill of shale) and then move sideways for the rest of the year to form a bottom with rates, then we have both technical and fundamental reasons to reverse the trend. Keep an eye on that one, good spot. Or I could be talking rubbish and the worst is coming - perhaps negative rates are on the way and oil can go to zero to correlate (deflationary collapse). 

[Kman]

On 03/10/2020 at 18:32, KDave said:

Interesting post thanks, yes I am not confident enough to trade either, I tried my hand at elliot wave a couple of years ago with a forum member but could not get to grips with it in regards to consistency, effectively for me it was no better than choosing higher or lower on a slot machine but with limited downside with the correct set up. Its more an art form, a systematic art form. I follow a couple of commentators that do trade (chris A) and some that do not, I have more respect for the ones who do trade because of the additional factors involved in that process which makes it a glorious event when you win but it hurts when they get it wrong on the short term. 

From what I've been told and observed to be true the best way to trade is to work out an important support/resistance level 

The longer this level has shown to be important and held the more likely the success of the trade, especially if it's over months or more

When it finally breaks out, more often than not it will retest the level it broke out from to confirm it has switched to support/resistance (the opposite of what it was before), take your trade on the resumption off that level

A decent example at the moment is gold

Its' been holding around ~1912 since August 12th, ~1912 was the previous all time high in 2011, price turned back up last week which people thought was positive, I think it's just came back up to retest that level and confirm it now as resistance before falling back down

Not encouraging anyone to do it but as an example from a technical point of view looks good as a sell position

 

 

 

[KDave]

10 hours ago, Kman said:

From what I've been told and observed to be true the best way to trade is to work out an important support/resistance level 

The longer this level has shown to be important and held the more likely the success of the trade, especially if it's over months or more

When it finally breaks out, more often than not it will retest the level it broke out from to confirm it has switched to support/resistance (the opposite of what it was before), take your trade on the resumption off that level

A decent example at the moment is gold

Its' been holding around ~1912 since August 12th, ~1912 was the previous all time high in 2011, price turned back up last week which people thought was positive, I think it's just came back up to retest that level and confirm it now as resistance before falling back down

Not encouraging anyone to do it but as an example from a technical point of view looks good as a sell position

 

 

 

Agreed it seems to be the main stay of many traders (resistance/support trading). The gold chart is actually very bearish when you mention it, failed breakout above former ATH before recovering to use ATH as support then tested several times before breaking down. Now back below and testing to the upside (resistance), how likely is it that it will break back above that resistance level, not very? Where is the next support if it breaks down?

[Kman]

3 hours ago, KDave said:

Agreed it seems to be the main stay of many traders (resistance/support trading). The gold chart is actually very bearish when you mention it, failed breakout above former ATH before recovering to use ATH as support then tested several times before breaking down. Now back below and testing to the upside (resistance), how likely is it that it will break back above that resistance level, not very? Where is the next support if it breaks down?

My guess would be the dollar has bottomed out, it's going to break to the upside within the next month or two, in the meantime it will move sideways and gold will be stable sideways along with it until  it drops; If it establishes itself back above $1912 flush that prediction down the toilet

• 1912
• 1880
• 1850
• 1810
• 1750

There's more horizontal levels but these seems to be the major ones as well as the red trend lines 

[AndrewSL76]

In respect of the RR position. I bought in at 101.300 at 12.25 on Friday which is an almighty huge piece of luck as it has gone up to 135 in the past few days. Looking at the chart it was the perfect buy in time. I watched and watched it drop and was going in at 102.50 and then thought, let's see what happens, it dropped to 101.5 and I thought stuff it, went in and by the time the order went though I had bought at 101.300.

Is it likely that the 3-10 move in a few weeks time will still be on at 32p etc.? If so, it would make sense for me to cash out now, right? Excuse the ignorance, I just do not know.......I am full of luck and expecting something terrible to happen very soon!!!

A. 

[KDave]

I have no idea what the market will price RR at post placing because I have done no work as to what the company is worth, but for a short term trade, 150p per share today bought at 101 last week is a decent return if cashing out. If you bought based on the share price as a trade then consider your options before 27th October, but if you bought because you like the company long term then short term share price movement is less important.

Given that 3 shares today are worth 450p today, with new issues coming in at a discount of 32p per share (320p), 13 / 770 = 59p per share post recapitalising? So the market should open on 27th October around that price but who knows honestly mate, it could do anything and will likely move up and down like a yoyo between now and then (27th). If you have not researched the company yet you need to look through the balance sheets to see what its worth against a few metrics, work out how much value is behind each share and see where you think it is in regards to over/under priced. 

[AndrewSL76]

19 hours ago, KDave said:

I have no idea what the market will price RR at post placing because I have done no work as to what the company is worth, but for a short term trade, 150p per share today bought at 101 last week is a decent return if cashing out. If you bought based on the share price as a trade then consider your options before 27th October, but if you bought because you like the company long term then short term share price movement is less important.

Given that 3 shares today are worth 450p today, with new issues coming in at a discount of 32p per share (320p), 13 / 770 = 59p per share post recapitalising? So the market should open on 27th October around that price but who knows honestly mate, it could do anything and will likely move up and down like a yoyo between now and then (27th). If you have not researched the company yet you need to look through the balance sheets to see what its worth against a few metrics, work out how much value is behind each share and see where you think it is in regards to over/under priced. 

Thanks for taking the time to share this. Much appreciated. I absolutely need to take this more seriously if I am going to be in for the long term. For the time being I will follow the advice above and see how things go. It does seem from my initial reading that RR is a good buy for the future. Linked to the new car, the new single seated airplane and the ongoing return of more and more flights meaning more income etc. means that they should get stronger etc. Thanks once again.