#Brent #Germany “Defending a Position” was aptly demonstrated this weekend by one of our unwanted cats. Often, folk will find themselves in a trading situation where all sorts of tactics are employed to justify making a horrible mistake in the first place. In the case of the stupid cat (is there any other type?), we witnessed truly spectacular behaviour by a cat intent tearing up its nine lives.
It was a typical winter weekend here in Argyll. Cold outside, wood burning stove lit, two dogs basking in the heat from the fire, dozing quite happily following an afternoon at the beach. To get into trouble, the cat needed slink past one of the Golden Retrievers, the one which utterly detests the moron. Her next obstacle, the younger dog, was sprawled in front of the fire and hogging the best heat. But the idiot cat had a plan. All it needed do was jump over the dog and land on top of the stove.
Luckily for the stupid cat, our stove doesn’t have a searingly hot cast iron plate exposed at the top. Instead, over the years, grand-children have brought unusual stones from the beach, painting some of them, creating a display on top of the fire. We’ve been quite happy with this idea as, even once the fire goes out, the stones retain residual heat for a few hours. And (aside from some stones painted with glitter) the arrangement is visually pleasing.
You would not want to pick up one of these stones while the fire is lit. But the cat decided it was as fireproof as a Formula1 driver, positioned itself on a small, very hot, sandstone block. Then it tried out a marginally less scalding pumice stone and finally opted to lie on its side on a bunch of small stones. To be honest, the entire process took a few seconds as we expected it to jump down immediately. Things started go wrong, attempting to remove the ungrateful monster from the hot rocks. A ‘hissy fit’ ensued, along with attempts to claw fingers as the animal decided it preferred being cooked rather than do anything logical. To avoid being rescued, it opted to jump down and land on the dog which hates her, causing the outbreak of World War 3.
The shambles was faintly reminiscent of a mistake made about 15 years ago, when convinced “Defending a Position” was something all wise traders do… Buying a share, one enthusiastically followed by many on the internet, the price sharply dropped when the company issued what was perceived as good news. Internet chatroom methodology suggested “averaging down” wouldn’t be the worst decision, resulting in the situation where the initial holding of 10,000 shares at 9p each became a holding of 50,000 shares costing an average of 3p each. Meanwhile, the share price was messing around at the 2p level but good news wasn’t far away. The company was going to offer ‘investors’ the opportunity to buy more shares at a ‘Black Friday’ price offer of 1.8p. This was clearly a good idea, allowing further averaging down but utterly ignoring the reality of more shares diluting the overall value. Once the issue completed, the share price became quite active with the value heading toward the 1p level. The share was eventually delisted once trading was suspended.
Doubtless a few folk are reading this, remembering similar experiences over the years. We tend take an extremely suspicious stance, when companies start playing with their issued share numbers as dilution rarely has a happy ending and neither does price consolidation.
Of the big three retail banks, Barclays has avoided (so far) any games with its share price or issued share number since the good old days of the financial collapse in 2009, a period when life was simpler. Thankfully, it looks like December should witness some further price growth with Barclays as price movement next above just 145p calculates as capable of a visit to 154p next. If exceeded, it feels like some hesitation can be anticipated at 175p longer term, despite the Big Picture already insisting the share price is next heading to 190p as a major point of interest.
For it all to go wrong, the share needs decline below 132p as this risks a visit to 123 with secondary, if broken, at a bottom hopefully of 113p.
Visually this feels pretty optimistic at present. But we’re pretty sure the idiot cat was optimistic when it jumped onto a burning stove.
FUTURES
| Time Issued | Market | Price At Issue | Short Entry | Fast Exit | Slow Exit | Stop | Long Entry | Fast Exit | Slow Exit | Stop | Prior |
| 9:13:54PM | BRENT | 48.33 | 47.87 | 47.425 | 46.9 | 48.44 | 48.46 | 48.675 | 49.13 | 47.84 | Shambles |
| 1:59:02PM | GOLD | 1788.32 | 1811 | 1783 | Success | ||||||
| 2:01:31PM | FTSE | 6341.67 | 6377 | 6383 | ‘cess | ||||||
| 2:21:00PM | FRANCE | 5612 | 5578 | 5590 | Success | ||||||
| 2:31:26PM | GERMANY | 13334 | 13239 | 13214 | 13163 | 13286 | 13367 | 13381.5 | 13429 | 13296 | Shambles |
| 2:34:36PM | US500 | 3638 | ‘cess | ||||||||
| 2:44:15PM | DOW | 29928 | ‘cess | ||||||||
| 2:46:34PM | NASDAQ | 12272 | ‘cess | ||||||||
| 3:27:09PM | JAPAN | 26757 | Success |