Friday, 9 January 2015

NEW! Quindell - Technical Analysis/Quant System Update

UPDATE (11/03/2015):



  • Fundamentalists seem to be awaiting the arrival of more news from the Price Waterhouse Cooper report, prior to any sustained buying. Nevertheless, the thin volume over the last week or so has held the share price above the pre-gap level of 75.20p, illustrating that those prepared to take part in this market are trading with a positive bias.
  • Medium to long term technical traders are still likely to be somewhat averse to this stock until the fundamentals become a little clearer, but the movement of the 50 day SMA and the 100 day SMA being only around 0.5p away from crossing upwards over each other would add another reason to be bullish on Quindell at these levels.
  • From February 13th we've now seen a four week upwards trend in the 13 week SMA, which I would remind readers has not been seen since early August 2013, which preceded the last push towards the 680.00p levels.
  • The image below was taken from another market technician on Twitter who can be found by looking for @coolebenji:















  •                                                                                                                                                               
  • On a rare fundamental note, the current stagnation in the share price is effectively due to the binary bet currently in place as we await the accounting review. Personally, I view it as highly unlikely that Quindell would have been able to lie about their profits and forecasting for a  number of reasons, but most prominently, if KPMG were to have let them do this, then it effectively ruins the credibility of KPMG (a top five accounting firm). Put simply, it's in the interests of no-one involved with either the running of the company or the auditing of the company to falsify data.

My Signals Produced today:


# Signals
Buy - 6.3707255803780972214765100672 - 3 crossed 8
Sell - 7.3662107336436742751677852350 - 3 crossed 13
Buy - 6.8145546927430628926174496646 - 5 crossed 8
Sell - 7.6791365760283755302013422820 - 5 crossed 13
Sell - 8.088683936310748711409395973 - 8 crossed 13


The latest backtested results after an adjustment of the risk management system show that the system would have generated the following returns over the last 365 days (the volatility of Quindell in combination with the newer risk management system creates a somewhat more unrealistic environment for the quantitative system to trade in and therefore makes it slightly unrealistic):

 - Profit: 9642767.25p
 - Return: 7.745456025
           10000000p ---> 87454560.25p




UPDATE (28/02/2015):



  • Beginning as I usually do with the UT of Friday's close (92.75p), it's notable that this close was on the ask end of the closing spread, but moreover it's interesting that a lot of trades were being filled in the closing auction for more than if they had been filled during the final half hour of trading.
  • The uptrend from early January to the peak closing price at 121.50p lead us to a short term downwards trend and consolidation between the 67.00p and 74.00p levels. 
  • The current technical uptrend we're experiencing was caused by the gap up to 96.00p through the resistance at 76.00p
  • One especially exciting signal that we should acknowledge is the newly upturned 13 week moving average, which was last seen in the major bullish run from January to April 2014.
  • People looking to go long on Quindell could expect more possible tricks by short players as they continue to slowly move towards the exits, which may create more potential opportunities to buy cheap intra-daily.
  • If we assume an upside potential of the same levels as we saw in the last upturn of the stock in January, we could hope to see highs of 280p at most (although I personally feel this is unlikely unless we receive more news regarding Slater and Gordon or news regarding the Price Waterhouse Cooper report).
  • Support levels can be found at 90.00p, 85.00p and with strong support at the 78.00p gap level.
  • Resistance can also be found at 103.00p, 106.00p 113.00p and at 121.50p - it's positive that these resistance levels are reasonably close, because it makes the chances of breaking through them on the first or second attempts better than if hey had been further apart, as they represent less of a psychological selling point.
  • I feel it's worth speculating (I don't pretend for a moment to be an expert on the matter) that the reason a number of large institutional investors have either sold positions down or obfuscated their holding levels is in order to hedge their positions against news flow risk after the substantial price rises seen in January. Had they not done this, they would have significantly risked losing their (difficult to hedge) unrealised profits and moreover are likely to be bound by rules regarding price rises anyway, which dictate exposure and profit levels/realisation in rising or falling stocks they have positions in.
New Signals:


Buy - 6.6714347477696192796685150632 - 8 Day SMA crossed 34 day SMA

Moving Averages (figures in brackets refer to the previous day):

SMA 3 - 98.25p (98.66)
SMA 5 - 96.95p (93.60)
SMA 8 - 88.15p (85.75)
SMA 13 - 81.53 (79.92)
SMA 21 - 78.77 (78.26)
SMA 34 - 86.33 (86.75)
SMA 55 - 72.35 (71.42)
SMA 89 - 75.00 (75.58)
SMA 144 - 108.23(108.75)
SMA 233 - 104.01(103.80)




UPDATE (24/01/2015):


  • Starting as usual with the UT on Friday's close, it's a positive sign that we closed above the day's low at 115.00p at a price of 116.25p with a bias toward the ask side of the spread at the time (115.50p/116.25p). I feel that these UTs are particularly relevant because they suggest that the remainder of the order book was balanced towards buying shares rather than selling them - a positive sign for next week.
  • Moreover, a large number of delayed trades were shown on Friday's close that were from both the previous day and from Friday itself. Checking within the spreads for the days in question, at the times in question suggests that many of them were buys (looking at values over £50,000), especially on Thursday, when sells that large would have applied a lot of downwards pressure on the share price - Thursdays strong close helps to make it more convincing that the ambiguous trades were also likely buys rather than sells.
  • My quantitative system released another moving average related buy signal as the 13 day SMA crossed over the 89 day SMA, which (as I've said before) is an illustration of the continued bullish momentum moving into the medium and longer term time ranges.
  • More traditional moving average analysis (10, 20, 50, 100 and 200 day SMAs) also suggests further upwards momentum is likely, with the 10 day SMA being only around 7p away from crossing over the 100 day SMA, which would be a nice bullish signal to go long Quindell for traders who use these more traditional methods.
  • I feel that Wednesday's afternoon dip is responsible for a lack of a close above 130p for this past week, as the implied strong close by the morning's movements would have set up a base for Thursday at around 120p rather than at around 110p - hey ho, life moves on! 
  • No signals from my slow stochastic oscillators have been given to suggest either bullish or bearish pressure currently.
  • If you look on the weekly chart, the MACD currently suggests that this is to be the beginning of a particularly strong re-rate in the current share price, as shown by the sustained move of the MACD line above the EMA line (this link may help): https://www.google.co.uk/finance?chdnp=1&chdd=0&chds=0&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1422030600000&chddm=61320&chddi=86400&chls=CandleStick&q=LON%3AQPP&ntsp=1&fct=big&ei=S3HCVKHaFoSSwwOrlYHABQ
  • Importantly for next week will be the lower level resistance at 120p again and the resistance at 130p again. It was encouraging that Friday's close saw a penetration through the 130p mark with as much as 133.48p being paid at asking prices, as this will make it easier to break through it a second time.
  • Downside support now sits at 110p, 100p and 90p.
  • As a general point, the flattening of the 13 day SMA on the weekly chart, I feel is a particularly good indicator, as the consolidation and gentle rise of this average in the beginning of an uptrend tends to yield very strong medium term bullish trends: https://www.google.co.uk/finance?chdnp=1&chdd=0&chds=0&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1422030600000&chddm=61320&chddi=86400&chls=CandleStick&q=LON%3AQPP&ntsp=1&fct=big&ei=S3HCVKHaFoSSwwOrlYHABQ
  • My quantitative system trading Quindell Long (only long) over the past year would have made 89.39% when going long over the same period would have lost around 61-64% - so I like tithing that these Technical Analysis posts must be reasonably accurate/useful.
  • I don't like to give targets, because I feel that there is a certain level of "sod's law" with them, but with the takeover talk regarding S&G and the current technical set up, I think that there are currently many more reasons to be long Quindell shares than short - especially over the medium and short term.
  • When you factor in the very strong fundamentals of Quindell, the possible share price rise is magnified significantly, in my opinion. For fundamental updates, I recommend reading the Quindell Echo: http://quindellecho.com



UPDATE (21/01/2015):


  • The Uncrossing Trade (UT) at 114.50p on yesterdays close is a particularly encouraging sign for bulls on Quindell, as it was only 0.5p away from the day's high at 114.99p. Considering that the trades beforehand were going through between 112-112.5p, this is a bullish sign for this morning at least (assuming a state of "Ceteris Paribus" regarding news-flow).
  • While I don't tend to use "standard moving averages" (10, 20, 50, 100, 200, etc), it is notable that the closing price yesterday was significantly above the 100 day simple moving average (SMA) that had previously been at around 109.75. This is a pretty strong indicator that the bear trend has been broken and confirms the current bullish run.
  • I should add that the 20 day SMA has now moved through the 50 day SMA, which is another standard bullish signal.
  • Arguments regarding a double top can be ignored unless the resistance at the 118p.25 level fails to be broken on many attempts (mostly because the technical set up for a rebound would make this the biggest bull trap ever). 
  • Reasonably strong support levels can now be found at the 85p, 90p and 100p levels.
  • In the short term, the next target to break will be the 118.25 level and then move from there towards 125p, 150p and 175p. In combination with a positive RNS regarding asset sales or the PWC report, this could happen reasonably quickly.
  • It is worth remembering that the current rise we are seeing is a mere product of a momentum change - the news received has been good, but in reality it hasn't been the "Huge News" that both the hedge funds and asset managers currently buying in are waiting for - this will hopefully come later. 
  • My quantitative system is still suggesting reasons to be bullish, with the following bullish signals having been produced:
  1. 3 Day SMA crossed the 89 day SMA
  2. 3 Day SMA crossed the 233 day SMA
  3. 5 Day SMA crossed the 89 day 89
  4. 21 Day SMA crossed the 55 day SMA
  • These short term averages beginning to cross the extreme long term averages (the system goes no further than the 233 day SMA currently) is a particularly encouraging sign as it suggest that further upwards momentum is extending from the short term into the more medium and long term forecasts.
  • For today (21/01/2015), a close above 118/120p would be particularly encouraging, but I wouldn't be disheartened if this takes more than one day to complete. Moreover, we must factor in the theory of "Sean's Dip" - a trend shown by Quindell where a small dip is noticed in the morning prices before further momentum pushes prices up in the afternoon.




UPDATE (19/01/2015):

  • The uncrossing trade (UT) at Friday's close gave us a closing price for the week of 93p, which illustrates a strong consolidate at around (just above in my opinion) the November support line
  • After reaching a high on the opening of the week at 118.25p from the rise starting at 45p from the Monday before (05/01/2015), this week's consolidation was very encouraging, especially because the rebound of the 70p support line, illustrating that this move to the upside is (for the time being at least) more than a correction in a bear market run.
  • In theory, a sell signal was produced by the fall of the 89 day moving average through the 233 day moving average, however, in comparison to the bullish signals produced two weeks ago this is very small, being given a signal strength of 7.32 against the bullish signals of last week - around 18-19. Also, the cause of the signal was a factor of 0.2p (£0.002p), showing an inherent flaw in the program (something I will fix) and also that we could discount this signal.
  • The fall of the slow stochastic oscillator over the past week has removed the sell signal that the system produced towards the beginning of the week - K=59.81, D=61.50 (as of 17/01/2015), as opposed to its position in the 90s previously.
  • As I write this (08:44) the share price sits at 101.75p (+9.45%), which is particularly encouraging, as it suggests that on a good RNS the 100p level wouldn't be a resistance level we would need to worry about. Moreover, in the event of bad news, this will become a new support level if we sustain today's move to the upside.
  • It is notable that the fundamentals have changed in recent weeks as a result of  rumours regarding the sale of a division of the company. Most notably, the sale of Quindell Legal Services (QLS) has been at the top of these rumours, with it being said that Slater and Gordon are to buy the branch of the company for in excess of £1bn. This makes sense, because while £1.1bn (the current number being thrown around) seems a bit fanciful, if you just took the value of 45,000 wip NIHL claims and factor in the money spent on processing these claims already to their various stages, then the payout could be as high as 450 million in the next year to 18 months. Putting a p/e of 10 on the net earnings after tax assuming EBITDA of £300m and profit after tax of £220m would give you a value of £2.2bn pounds. Discount it by 50% for uncertainty you could get to a number of £1.1bn.
  • This is also combined with a new number of institutions purchasing shares in Quindell, which also changes the balance of things and makes the current situation look a little more rosy. 
  • More short term bullish targets and signals for those wanting to enter/exit positions would be a close above 100p on a day with no news (as this would illustrate further bullish momentum) and a close above the resistance at the 120p level.




UPDATE (13/01/2015):


  • Yesterday's closing prices continued to add to the bullish pressure currently on Quindell, with the new signal being 5 SMA crossing above the 55 SMA, showing a continued move towards a more medium term and longer term bullish revival, as opposed to a mere short term upwards retrace.
  • As I write this (14:27PM), a the support line at 90p has held twice intra-daily and a close above this this price will be a further signal of upwards bullish momentum.
  • Regarding future price moves, current strong resistance levels are at 111p, 125p, 150p, 175p, 200p and 300p, but notably after this there is little strong resistance until 600p.
  • Strong support on a break down of the 90p support line can be found at 80p and then at 60p.
  • While I personally don't use these averages, the 10 and 50 SMAs are preparing to cross in a bullish pattern and as long as no major downwards pricing pressure is seen, technical analysis will continue to get more bullish on Quindell as long as prices remain above the 50 SMA of 67.95p over the coming few days and weeks.
All the best,

The Masked Stock Trader






19/01/2015

Morning,


Again, it's time for another brief look at Quindell, using both my own self-designed quantitative trading program.


Some (albeit rather old) details of my quantitative trading program can be found here:

http://themaskedstocktrader.blogspot.co.uk/2014/11/my-experience-with-quantitative-finance.html


Quantitative Trading Program:


  • As per usual, this is excluding intra-daily data from today (09/01/2015).


Bullish Signals:


SMA= Simple Moving Average

3 SMA= 3 Day Simple Moving Average


  • 3 SMA (68.33p) remains above 5 SMA (61.10p)
  • 5 SMA (61.10p) remains above 8 SMA (53.28p)
  • 8 SMA (53.28p) remains above 13 SMA (48.76p)
  • 13 SMA (48.76p) remains above 21 SMA (44.28p)

New Signal:

  • 8 SMA crossed above 34 SMA
- This is a nice signal to appear, because it suggests that this move towards the upside is more than merely a short term upward retrace within a bearish downwards cycle.

- This also suggests that there is a substantial amount of bullish momentum and this was confirmed intra-daily this morning for me by the retrace to 77p that was then filled to a move back towards 1.54% up on the day (as I write this).

- The next resistance level to break is at around 87p and then at 91.5p too, but once this has broken there's the potential for a very resistance free ride up towards the 150p level.


Bearish Signal:

  • The only bearish signal that the system is currently producing is a high slow stochastic figure, suggesting a certain level of over-purchase within this stock.
  • I should state however that the system (obviously) is configured to make the most money as possible and the signal strength provided to this bearish signal is around 1.41 vs the signal strength of 18.72 for the movement of the 8 SMA through the 34 SMA.


For context, the system would have returned (as of today) 51.3% only trading Quindell shares long over the last year, when since then the value of Quindell shares has fallen (as of today) by 82.1%.



To cover my backside, I feel that I ought to state that none of the above should be used for trading purposes, because I have no FCA qualification to give financial advice, etc.


All the very best,

The Masked Stock Trader


2 comments:

  1. Thanks for the update always a good balanced read. Dan

    ReplyDelete
  2. It's always a pleasure to help Dan!

    ReplyDelete