Boohoo Shares | Time to buy?

Boohoo (BOO) shares dropped after a scandal broker finding poor working conditions for factory workers in Leicester. Will Boohoo’s attempt to repair their reputation by improving worker conditions and offering the public greater transparency see a recovery of the fashion retailer’s share price?

Boohoo has just announced they will cut more than 400 firms from their supply chain following allegations of poor treatment of factory workers. 

The fashion retailer is trying to repair its reputation after claims of poor working conditions and low pay for workers in one of their supplier factories in Leicester. It was said that some workers received as little as £3.50 per hour and there was no protection against the virus available. An inspection found workers’ health was at risk due to finding locked fire doors, unsanitary toilets and no proper drinking water. 

Their attempt to remedy serious issues in their supply chain will include working with 78 approved suppliers across 100 factories that ensure respecting staff and to hold a new policy of greater transparency. 

The scandal wiped £1 billion off Boohoo’s share price in just two days. Other retailers such as Next and Asos also removed Boohoo products from their ecommerce sites. Share prices have already lifted 2% in reaction. 

Chart from Yahoo Finance

Boohoo’s share price grew 15% over 2020 as shoppers turned to the online clothing retailer during the pandemic. Despite this growth, Boohoo’s rival ASOS grew an incredible 42%, perhaps due to the saftey of the comapny’s larger market share.

Should I buy?

Analysts recommend BUYing Boohoo due to its huge market potential and safe business model of online sales. 

Yahoo Finance

Price Forecast

On the four-hour chart, we see that the BOO share price found a substantial resistance at 376.5p, where it formed a double-top pattern. A double-top is usually a bearish sign. The stock then dropped to 310p last week and is currently consolidating in this range. It is also slightly below the 25-period and 15-period exponential moving averages. 

Therefore, in my view, while the overall trend is bullish, there is a possibility of more weakness in the near term because of the negative headlines. However, a move above 360p will invalidate this prediction.

Analysts at Berenberg believes that the stock could rise to 460p, which is 27% above the current level. They said:

“We believe the company is making progress in implementing the near-term recommended improvements that can reduce the risk of pervasive issues in the future, but we also believe more can – and should – be done,”

Boohoo’s efforts to repair its reputation will surely boost its share price. Will you buy?

How to invest for Millennials

This guide will walk you through the best ways to invest as a millennial. Time is the biggest thing you have to your advantage as investing as a millennial, so the sooner your start investing, the more wealth you can accrue over time. 

Millennials are people born between 1981 to 1996, dates now clarified by the Pew Research Center. Millennials were named because they welcomed in the turn of the millennium and came of age during the boom of the digital world. If you’re a millennial, digital native or just want to learn more about investing, we welcome you. This isn’t just for those in they’re twenties but can be applied to anyone who is anywhere from 18 to 40!

The problems millennials face

Millennials face the most uncertain economic future since the Great Depression with a massive 15% of those in their early twenties unemployed, compared to the average 7-9%. As a result of decreased labour mobility millennials are stuck in a stage of stagnation. When there is less movement between job to job or even across different areas employers gain the power to negotiate and limit wage increases – a phenomenon called monopsony. Starting off with low earnings compounds, making it harder to save and invest for your future. 

Starting off with less household income relative to older generations, living expenses can take their toll. Not only in a more sluggish job market do millennials tend to invest more time and money in getting higher education and further degrees but entry level jobs are more competitive and are at the bottom of the pay scale. 

Becoming financially independent is hard. You can gain independence by being frugal or through income, growing wealth overall will make the difference and you’ll be thanking yourself for investing long-term. Broadening your income horizons through education or work experience is the route to becoming more financially independent. 

All these things add–up to greater debts and less way to repay them. Some feel that paying off their student debts will be a weight off their shoulders, but this isn’t the smartest move. Student-loan repayments does not make your money work for you, and if you’re in the UK then you are only required to repay 9% of your income once you reach the repayment threshold (£26,575 pa). Furthermore if you don’t manage to repay your outstanding loan balance over 30 years then your debt will be cancelled!  

Another thing to add to the list is the shocking interest rates out there. Older generations could deposit their money in a savings account with their bank and with a steady rate of interest build wealth over time. But now with interest rates at an all time low there is little point holding a savings account. Especially with the UK government threatening negative interest rates meaning you will actually lose money by holding it in a bank! In 1990 (around the time your parents probably started investing) banks offered 14% interest, yet since the financial crash wrecked the economy in 2008 interest rates have been around just 0.5%. Remember there is no point putting money in a savings account that has an interest rate lower than inflation. 

Saving for retirement is getting harder and harder. Also 70% of people surveyed believed as retirees they’ll be able to survive on $36,000 a year. This is a huge problem is that in 2018, the average yearly expenses for those ages 65 to 74 were $56,268 a year, according to the Bureau of Labor Statistics and with inflation and cost of living only going up, this could end millennials in a sticky situation. 

So do Millennials invest?

A Bankrate survey found that only 33% of people under 30 owned stocks in 2016 due to lack of funds. However, since lockdown there has been a huge increase in interest in investing in stock markets from young people. With return rates hovering in the 10% range and those who start investing young benefitting from compound growth. It really is a must!

Why choose ETFs

Get a brokerage account to buy stock – a fractional ownership of a business. The outcome of your investment relies on how that business does, you will get positive investment returns if you invest smart! Buying individual stocks takes a lot of time and research so it might be better to invest in ETFs which allows you to diversify and reap long-term rewards that are stable and reliable. 

If you are just starting out the single most important thing to do is to control your emotions. Investing in an ETF allows you to own stock across the stock market. Losing money is part of investing so being able to cope with loss will teach you how to stick with the long-term. You can buy an ETF for a specific industry for example, tech, green energy or gold. For example if you invest in the FTSE 100. 

ETFs were created to disrupt the success of mutual funds. Although they are similar, a mutual fund is taxed on any capital gains whereas on an ETF you will only be taxed once at the point you sell your stocks. ETFs are also typically cheaper so can give you a headstart if you’re a new investor.

To invest in an ETF, you will need to open an account with a broker to manage your investments. If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Bonds

Bonds are different from a stock, this way you are instead loaning money to that company so they can invest in their business. Over a period of time, the company pays you interest e.g. quarterly, which acts as profit. If the company is failing and cannot pay back their debts then you lose out. 

There are some government backed bonds which are “risk-free”, essentially a government won’t default or fail meaning your investment is safe. 

Now you know a few of the best ways to invest as a Millennial you can start putting your money to work, we recommend eToro and easyMarkets for beginners. 

Trading 101: Micro-cap Stocks

Micro-cap companies are those with a very small market capitalisation and tend to overlap with penny stocks. They have a lot of potential but also carry high risk. Read on to check out our top micro-cap stock picks. 

A micro-cap company can be defined as one publicly-traded market capitalisation between approximately $50 million and $300 million. They fit below small cap companies and above nano caps. 

As micro-caps have little capital to support them they tend to have greater volatility and therefore greater risk than larger-cap stocks. Their small shareholder base and lack of liquidity make them high risk. Although with higher risk, comes higher reward. For example, from 2008 to 2018, the Dow Jones Select Micro-Cap Index returned an annualized 11.6%, while the S&P 500 Index returned an annualized 10.37%.

Is the risk worth it?

As there is a higher risk associated with micro-cap stocks than typical stocks it is advised that you set a stop-loss order and fully understand the price you want to enter and exit the trade at. Micro-cap stocks are high-risk investments, so while it is possible to benefit from explosive gains there is also the potential for you to lose money. 

Photo by Karolina Grabowska on Pexels.com

Here are some reasons why micro-cap stocks are risky:

  • Private records mean the public have a lack of information to use to consider buying micro-cap stocks as these companies are not required to file financial statements with the SEC – who regulate markets. 
  • No minimum standards means micro-cap stocks can be listed on OTC exchanges no matter their performance. Needless to say this makes investing in this type of stock risky. 
  • Low liquidity is inherent to micro-cap stocks as they are not traded frequently. This opens up the opportunity of fraud as traders can manipulate prices.

Before you invest in micro-cap stocks, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Our pick of micro-cap stocks

Foxtons (FOXT) is a London based estate agent that should see a boost with the property market rebounding. The company is on a good track with performance improving throughout the pandemic. 

Abercrombie & Fitch Company (ANF) is a clothing retailer that has seen a 150% growth in stock price since March 2020. 

McBride (MCB) is a UK manufacturing firm that labels products. Shares have increased over 40% since 2019, this sort of growth is set to continue past the end the pandemic with their global expansion plans. 

Alumsac (ALU) is a sustainable building materials producer offering a generous 5.4% dividend yield. With a market capitalisation at £61.7m and analysts rating it as undervalued, you’d be a fool not to invest. 

Will you be investing in micro-cap stocks? Their greater annualised return is worth the higher risk for some. If you are ready to invest, we recommend eToro and easyMarkets for beginners.

7 Passive Income Streams | Make money while you sleep

If you’ve got a steady paycheck but want to earn a little extra on the side why not try one of our top 7 passive income ideas. This way you can truly make money while you sleep.

Passive income is making money for no extra effort. By investing up front you can receive money on an ongoing basis. This is different from Active income which is where you actively swap your time and effort for income which would be a 9-5 job. 

  1. Dividends

Invest in stocks and shares that pay dividends. When a company makes a profit they give a little bit of money to you . Some companies are renowned for paying better dividends than others. There is an added bonus investing in growth stocks as while you invest at the start and get a little bit every now and then the total value of the asset will increase over the period you hold it, so when you are ready to sell you will get a lump sum as a bonus to the dividends to gain whilst you are still holding the asset. 

  1. Vanguard Investments

They have a series of low cost trackers and index funds that can invest your money. They track performance of global stock markets with specific indices for your interests. You can invest initially and then leave them to make you money in the background. Vanguard charges a small fee for managing your account and are much better than the industry average. You can also gain from dividends, companies that payout will be reinvested into your account to compound your investment. 

  1. Company stocks

If you sign a new contract try asking for shares in the company. While this is not often openly offered by most hiring firms it can be a great way to earn passive income. Often the company you work for will give you a great buy in rate or even through in some shares for free as part of your signing package. So whilst you work your 9 to 5 you can rest assured knowing that you are building wealth through company growth stocks. Not only does this earn you a bit of passive income but it also incentivises you to work harder!

To benefit from Dividends, Vanguard Investments or Company Stocks, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

  1. Royalties

Graphics, music, programming, red bubble. If the company continues to be successful or grows you can opt to choose to receive small amounts of money depending on the success of your product rather than taking a flat fee .

  1. Credit Card Cashback

Using cash or debit cards simply hands over your money without benefiting you. But a credit card can be used to pay for pretty much any transaction, food, bills etc. with the hopes that the customer wont pay back the full amount at the end of the month and then can therefore charge interest. But if you pay back your credit card bill in full, you are losing nothing and could benefit from a cashback scheme. You will get rewarded at a percentage, usually 0.25 – 2% for every pound you spend, therefore acting as a great passive income stream as your money is doing the work for you. But make sure you are disciplined and are not just paying more because you are excited by the cashback and are able to pay back your credit card in full by the end of each month. 

  1. Rent

Although a more serious option, in terms of investment and time and energy to organise, renting out property is a highly profitable passive income stream. You can earn anywhere from 0 – 15 % return on your investment depending on costs of maintenance and landlords etc. It is also a great growth asset which should increase in value over time so if there was a time where you wanted a large lump sum of money then you could sell the property. Remember renting out property is a complex and time-consuming matter and isn’t for the faint of heart or for people who want to withdraw their investment quickly and easily. It also only makes you money when you have tenants! 

  1. Host Airbnb

If owning a property and charging rent seems a little too much hassle then why not informally rent as a host on Airbnb. List your home or spare room on Airbnb when you aren’t using it and charge £50+ per night with little effort. 

Passive income can really help create security and supplement your earnings. The work that goes into earning passive income is manageable alongside your 9 to 5. If you are ready to invest, we recommend eToro and easyMarkets for beginners. 

Can Royal Mail keep up? Stock Analysis

Royal Mail PLC (RMG) have announced they will introduce Sunday parcel deliveries nationwide in the efforts to keep up with Amazon. Will this keep their share price bullish when lockdown ends?

From next month, Royal Mail will deliver parcels across the UK seven days a week in response to the high demand of online shopping over the pandemic. The service will allow customers to specifically request delivery on Sundays from retailers who use Royal Mail.

Royal Mail is making efforts to future proof their service with new CEO Simon Thompson making that his focus. He also aims to maintain good relations with trade unions. One of his first moves was to broker an agreement with the CMU on the employee pension scheme and cut the working week by 1 hour which could save £225 million per year. And when the company saves, the investor gains.

The Royal Mail share price has risen by 175% since September 2020. While share price increases were expected from the start of the pandemic last spring due to a surge in parcel volumes, the company has surprised analysts with the rate of recent gains. RMG has certainly made a comeback following a slow decline in share price over recent years.

Chart from Shares Magazine

In Q4 of 2020, Royal Mail delivered 496 million parcels, which is an all-time record for the company. The consumer shift towards e-commerce and online shopping has resulted in a massive increase in parcel delivery whilst a 14% decline in letter delivery over Q4 was found. To keep up with demand, Royal Mail has kept on 10,000 of the 33,000 temporary staff hired to cover the hectic festive season suggesting things are looking up.

An estimated profit of £500 million in 2020 equates to an outstanding 78% year-on-year growth rate. 

Graphic from The Financial Times

Buy or Sell?

The Financial Times’ analysts saw RMG as an outperformer. The outperform rating means the company will produce a better rate of return than similar companies but is not the best stock out there in the industry. 

Before you invest in RMG, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Price Forecast

Over a year, the Royal Mail stock price are expected to fall slightly. The 15 analysts offering 12 month price targets for Royal Mail PLC have a median target of 480.00, with a high estimate of 708.00 and a low estimate of 284.00. The median estimate represents a -3.13% decrease from the last price of 495.50.

Graphic from The Financial Times

If you are interested in dividends it doesn’t look good. In 2020, Royal Mail PLC reported a dividend of 0.08 GBP, which represents a 70.00% decrease from last year. The 9 analysts covering the company expect dividends of 0.05 GBP for the upcoming fiscal year, a decrease of 40.00%.

With the pandemic coming to a close, will online shopping produce enough parcels for Royal Mail to stay bullish? If you are ready to invest, we recommend eToro and easyMarkets for beginners. 

5 Inspirational Female Investors

Let’s celebrate International Women’s Day together. In a male-dominated world it is important to recognise female role models to inspire women to enter the world of finance. Here are five inspirational female investors who rose to the top of the finance industry. 

Finance is a strongly male-dominated industry with only 19% of senior positions in the investment sector held by women (according to Catalyst Research). Entering the world of finance as a woman can be challenging, employers can underestimate, expect unreasonably high standards and be opposed to hiring us all together. The role models we will introduce go above and beyond expectations and with hard work and grit they are willing to stand out and take risks to make it in finance. 

Considering women make up 50% of the world population it is crucial to include women in the workplace to raise the economic potential of a country. Inequalities have long been a barrier for women to participate in business, finance is among the top sectors for gender discrimination.

Read our article on why women make better investors than men.

Geraldine Weiss

Geraldine Weiss was one of the first women to become big in finance. She grew her success by self-learning before studying business and finance. When applying to investment firms after her studies she was rejected multiple times despite being more than qualified for the role. She commented “It was a man’s world, and women need not apply,”. 

After a series of rejections, Weiss decided to start her own investment newsletter in 1966. To avoid further gender discrimination, Weiss signed her newsletter “G. Weiss.” She only revealed her gender identity a decade later after proving her strategies were a huge success. 

Her newsletter, Investment Quality Trends is still going today, based on Weiss’s incredibly successful value-based, dividend-oriented stock-picking strategy. 

Muriel Siebert

Muriel Siebert entered the world of finance as a researcher before climbing the ranks to partner before starting her own brokerage firm Muriel Siebert & Co. in 1967.

Siebert was determined to get her firm registered with the NYSE facing numerous rejections. Eventually she succeeded and her firm became the first woman-owned member of the NYSE. It is still the only national, woman-owned brokerage on the exchange.

Siebert didn’t stop there and went on to bring her financial expertise to politics, another male-dominated field. As New York State Banking Department Superintendent from 1977 to 1982, in a rocky market, she helped prevent bank failures to support the US economy.

Abby Joseph Cohen

Abby Joseph Cohen  served as a Federal Reserve Board economist in 1973 before moving to work for firms such as T. Rowe Price, Barclays, and Drexel Burnham Lambert. In 1990 she joined Goldman Sachs and became a partner just 8 years later.

Cohen was listed on Forbes‘ “Most Powerful Women” celebrating successful women across all professions. 

Lubna S. Olayan

Lubna Olayan probably faced the most challenging cultural barriers of all our women in finance. As a Saudi women, it is not socially acceptable for women to work let alone work in business, and back in the 80’s! Olayan gained support from her family and overcame gender discrimination to become CEO of Riyadh-based Olayan Financing Company, one of Saudi Arabia’s most prominent companies. She now employs more than 540 women in her company and constantly campaigns women in the workforce. 

Linda Bradford Raschke

Last but not least, we explore Linda Raschke’s achievement to become president of not one, but two financial firms that bear her initials: LBRGroup, Inc. and LBR Asset Management. After kicking off her career in the early 80’s Raschke has constantly challenged a male-dominated workforce. Starting as a market maker and then becoming a day trader Raschke has had all the experience needed to write her popular book on high probability trading strategies. She has also lectured on trading at Bloomberg.

Being a woman in finance means high pressure, but also high visibility. Many women in finance still face gender discrimination and lower pay for comparable work. Take inspiration from these women to start changing a male-dominated industry. If you are ready to start trading, we recommend eToro and easyMarkets for beginners. 

Buy the Dip | Abbott Laboratories

Abbott Laboratories has just got emergency use authorisation from the U.S. health regulator or its molecular test to detect and distinguish the coronavirus and two types of flu viruses with a single test. Will this set a bright future ahead for the medical company? 

Shares of Abbott Laboratories (ABT) slid 2.66% to $116.01 Thursday, a rough trading session for the stock market, which saw the S&P 500 Index falling 1.34% to 3,768.47 and Dow Jones Industrial Average falling 1.11% to 30,924.14. Abbott Laboratories closed $12.53 below its 52-week high ($128.54), which the company achieved on February 12th.

Graph from The Motley Fool

The stock underperformed when compared to some of its competitors Thursday, as Johnson & Johnson fell 2.02% to $153.07 and Pfizer Inc. fell 0.55% to $34.20. However, with the announcement today if a new test being launched in the US will the stock make a strong recovery?

Abbott Laboratories announced the U.S. health regulator has granted emergency use authorization for its molecular test to detect and distinguish the coronavirus and two types of flu viruses with a single test, which can also be used worldwide. This is crucial to diagnosing and managing COVID-19 as the viruses present similar symptoms but require different treatment approaches.

Company Performance

So now you know why today we are focusing on ABT stock lets take a look at the company’s performance.

Abbott Laboratories set a record high in 2020 benefiting from their wide range of successful coronavirus tests. 

In December, the company announced the FDA granted its BinaxNOW Covid-19 an emergency use authorization for at-home use. This meant the rapid antigen test was allowed for use in the home, where previously not allowed. ABT has supplied over 180 million BinaxNOW COVID-19 tests to this date. 

In the fourth quarter, sales surged 28.7% to $10.7 billion, with adjusted earnings of $1.45 per share soaring a massive 52.6%. Considering these reports were mid coronavirus pandemic, diagnostic sales soared 108.9% to $4.35 billion and coronavirus testing contributed $2.4 billion in the quarter. This means medical device sales have slightly dropped, although not surprisingly considering the  delay in elective procedures during the pandemic.

Buy or Sell?

Chart from CNN money

Overall Abbott Laboratories’ contribution to tackling the global pandemic has set them in good stead recently. Over the past few months analysts have recommended to BUY, we would like to suggest the current dip and recent announcement as the perfect opportunity to BUY that will give a slight edge over the longer trend seen. 

Before you invest in ABT, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Price Forecast

The 17 analysts offering 12-month price forecasts for Abbott Laboratories have a median target of 137.00 representing a +18.14% increase from the last price of 115.96.

Chart from CNN money

It’s worth noting that Abbott’s earnings and sales gains in the fourth quarter are expected to repeat in the first quarter. Although with the pandemic being better controlled each day, keep an eye on the need for coronavirus testing. 

The overall recommendation is to buy stock in Abbott Industries. Their success through the pandemic and strong R&D bringing out new types of COVID-19 test regularly puts the company in a strong position of growth. If you are ready to invest, we recommend eToro and easyMarkets for beginners. 

Trading 101: Common Candlestick Patterns

After last week’s explanation of how candlesticks are formed and how to interpret them we can now explore what the most common candlestick patterns can indicate. Start analysing charts before you enter a trade, it will almost certainly pay off!

How to analyse a trend

The trend whether up or down can be demonstrated using trend lines, moving averages or other tools as part of technical analysis. It is important to consider the timeframe you are using as what seems like a trend on a 1minute chart is irrelevant if you are looking to hold your position for a few days, it would be better to look at a 30 minute chart, although this is really up to an individual. 

You should use patterns found in combination with other tools to find a good trading setup. 

A Marubozu candlestick is a long candlestick that does not have upper or lower shadows (wicks or tails). This occurs when the low and high are inline with the opening and closing prices presenting either buyers or sellers (depending on whether the candle is green or red) exclusively are strongly in control of the price over the period. A green Marubozu forms when the open equals the low and close equals the high whereas a red Marubozu forms when the close equals the low indicating a  very strong buying pressure and the open equals the high presenting a very strong selling pressure.

Spinning tops are candlesticks with a long upper and lower shadow with a small body. Spinning tops represent indecision as the small body represents little movement in price from open to close with the long shadows indicating both bulls and bears were active during the session. These long shadows show high price fluctuation within the period the candlestick represents despite the closing price being so near the opening price. After a long bullish or bearish trend a spinning top can show a potential change in direction either temporarily or ongoing.

A doji is another key candlestick that even analysed separately of the trend can tell you a lot of information about the markets. A doji forms when the opening price is virtually equal to the closing price giving a very thin body making the overall candlestick looking like a cross. Although an ideal doji looks has the shadows a similar length, a less robust doji can also be used to understand a market trend. If one shadow is longer than another then this could indicate that the bulls or bears might be getting their way, despite the close price not changing from the open price. You may wonder who decides how close the opening and closing price has to be to count as a doji? Well different assets have a different metric for determining the robustness of the doji depending on price, recent volatility and comparing it to recent candlesticks. 

To analyse the market trend you should identify a doji within a trend, judging its position compared to the preceding candlesticks. After a long green candlestick a doji indicates buying pressure has dropped and shows a change in the trend is going to happen soon. The same applies for opposite forces where a trend of red candlesticks is followed by a doji signaling the selling pressure has weakened. A doji after an uptrend is more significant as buying pressure is required to maintain an increase in price whereas the price can fall without an increased selling pressure simply if there is a lack of buyers. Spotting a doji isn’t enough information to signal a reversal in the trend so look out for other patterns to confirm what the doji indicates. To confirm a directional change, look for a long red candlestick lower than the green candlestick.

Long-legged doji have long upper and lower shadows that are roughly equal in length. This demonstrates there is high indecision in the market as long shadows present prices traded much above and below the opening and closing price. 

There are a further two types of doji that deserve special recognition. Dragonfly doji look like a capital “T” with a long stem or using the descriptors of candlesticks, no upper shadow, a long lower shadow and almost no body. This can be seen when sellers are strongly present during the trading session attempting to push down the price yet over that timeframe not achieving a move in price. A dragonfly doji can be significant after a long downtrend or at a support level to indicate a bullish reversal. Similarly after a long uptrend or at the resistance line, the presence of this doji could signify a potential bearish reversal. The opposite of a dragonfly doji is a gravestone doji which looks like an upside down “T” with a long top shadow and almost no bottom shadow. The presence of this doji indicates that buyers are more dominant pushing up prices over the session yet failing to push the closing price higher than the closing price. After a downtrend, long red candlestick or at a support line the presence of a gravestone doji indicates some buyers are active and could lead to a bullish reversal. The opposite also applies. 

Candlesticks demonstrate the fight between bulls and bears or buyers and sellers. The bottom of the candlestick if the close is close to the high represents a win for the bears and the top represents a win for the bulls the closer the close is to the low. As mentioned before if there is a long green candlestick then bulls are in control with a shorter body demonstrating a weaker advantage. The reverse is also true when a long red candlestick is present. When there is a struggle you can see doji forming, with the longer the upper shadow showing bulls are more active and if the lower shadow is longer than bears are creating more pressure. 

Candlestick Positions 

A star position is a candlestick that does not overlap with the previous candlestick and usually has a small body compared to the previous candlestick. The star appears isolating from the previous candlestick and can be above or below. Other special candlesticks like doji, hammers, shooting stars and spinning tops can feature in as a star position candlestick. 

Similar to a candlestick position is a Harami position which has a long candlestick followed by a very short one. The word itself means pregnant in Japanese which makes this position easy to remember as the larger candle holds the little candle within it. After a long candlestick a short candlestick of the opposite pressure is present and should fit within the body of the larger candlestick, say a long green candlestick is followed by a short red candlestick. 

Long shadow reversals

There are two pairs of candlestick reversal patterns which are made from a singlestick with a small body, one long shadow which is about double the length of the body and one very short shadow. One pair consists of the Hammer and the Hanging Man  which are identical candlesticks with short bodies and long lower shadows whereas the second pair, the Shooting Star and Inverted Hammer have identical candlesticks but with small bodies and long upper shadows. The former pair mentioned appear after a long decline whereas the latter pair mentioned form after an upward trend. 

The Hammer and the Hanging Man look the same but mean different things depending on the candlestick patterns that come beforehand. The Hammer indicates a bullish reversal after a decline or a support line. The long lower shadow demonstrates that sellers acted to drive down prices during the session before buyers took over to close the session. Although this seems like a clear indication of a reversal you should watch out for other signs to confirm this. For example, a gap up where there is no overlap between bodies of the current and previous candlestick or a long green candlestick. The opposite is the Hanging Man which can mark the turn to a bearish trend or the resistance line. Like the Hammer, you must look for confirmation in the form of a gap down or long red candlestick. 

The Inverted Hammer and Shooting Star look the same yet depend on the surrounding candlesticks to present a full understanding of a change in the trend. Both candlesticks have small bodies, long upper shadows and very small lower shadows to make a trend reversal. The Shooting Star forms after an advance in the star position to mark a trend reversal or resistance line. These reversal candlesticks can be confirmed by a gap up or down or a long candlestick that follows. The Inverted Hammer looks the same yet forms after a decline or downtrend. The long wick shows a strong buying pressure was present during the session but couldn’t overcome the selling pressure. The bulls failed for a reason so look for confirmation before making a decision on it. 

Before you invest with your new knowledge, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Now you know the most common candlestick charts you can get started with trading! We recommend eToro and easyMarkets for beginners. 

Should you buy Beyond Meat?

After the announcement of Beyond Meat Inc (BYND) earnings report and strategic partnerships with McDonald’s and Yum! the stock has closed at a loss on Thursday. What does the future look like for the plant based burger company?

Beyond Meat Inc (NASDAQ: BYND) saw its share price close 5.5% lower after it reported high Q4 2020 losses. The company saw a Q4 net loss of US$25.1 million, compared to US$0.5 million in the prior year period.

In the fourth quarter of 2020, net loss included US$3.7 million specifically related to COVID-19, including inventory write-offs. Excluding these items, the adjusted net loss was US$21.4 million in the fourth quarter of 2020.

Beyond Meat and McDonald’s have signed a three-year global strategic agreement. This means Beyond Meat will supply the McPlant burger, a new plant-based burger being tested in some McDonald’s markets globally. They will also collaborate on co-developing other plant-based options for McDonald’s.

Beyond Meat have also partnered with Yum! The company will supply large restaurant chains such as KFC, Pizza Hut and Taco Bell over the next several years.

Beyond Meat’s shares were up as much as 53% earlier this year, after the stock hit a year-to-date peak price of US$192 on 27 January. The rally came after PepsiCo and Beyond Meat announced plans to form The PLANeT Partnership, LLC (TPP), a joint venture to develop plant-based products.

Beyond Meat shares are still up some 14.5% year-to-date. In the last year, the alternative food manufacturer’s share price has skyrocketed over 77%, as the Covid-19 pandemic boosted the company’s retail sales in the first and second quarters of 2020.

Before you invest with your new knowledge, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Chart from CNN Money.

Buy or sell?

The stock has received a consensus rating of ‘hold’ and an average price target of US$115.68 from 20 analysts, according to the latest MarketBeat data.

Chart from CNN Money.

Price Forecast

Analysts see a 19.5% downside on the stock in the next 12 months. 

Beyond Meat posted an adjusted net loss of US$0.34 per common share, which is bigger than analysts’ projections of US$0.14.

Beyond Meat have not proven much resilience over the pandemic resulting in a massive loss of earnings which has no doubt affected the stocks price forecast. With vegetarianism on the rise and with a new deal with food giants, will beyond meat make a strong come back over the longer term? If you are ready to invest, we recommend eToro and easyMarkets for beginners. 

Trading 101: How to read candlestick patterns

Candlestick patterns are a really useful way to work out when trend reversals will happen so you can time entry and exit points. If you want to start trading, reading candlestick patterns are essential!

Technical analysis was first used by the Japanese to trade rice back in the 17th century. 

Technical analysis is guided by some essential principles:

  • Understanding the price action is more important than what guides the price as information is fundamentally reflected in the price
  • Traders move markets based on expectations and emotions
  • Markets fluctuate
  • The market price may not reflect the underlying value of an asset.

Candlestick charting was first used around the 1850’s and was developed by a rice trader called Homma. SInce then candlestick charting has evolved to the more complex form we use today to trade better.

What does a candlestick show?

Candlestick charts use the data for opening, high, low and closing values for each time period you want to display. The body of the candlestick is the middle section and can be hollow or filled. The thin lines above are wicks and below are tails – these shadows represent the high and low range of data. If a stock closes higher than it opened then the body is hollow or filed in green and the top of the body shows the closing price and the bottom of the body reflects the opening price. Whereas if the stock price fell over the period then a filled body or red body is drawn with the top of the body representing the opening price and bottom representing the closing price. 

Each candlestick has four data points: 

  • Open: The opening price
  • High: The highest price over a fixed period
  • Low: The lowest price over a fixed period
  • Close: The closing price

Candlestick charts are the preferred chart of choice for traders as they are visually appealing and easy to interpret. Each individual candle summarises price action showing whether the price has risen or fallen and gives an idea of the spread. 

A bullish candlestick is green or hollow and has the open BELOW the close indicating a buying pressure 

A bearish candlestick is red or filled and has the open ABOVE the close to show a selling pressure.

What makes each one different?

Body size: The length of the body explains how much pressure there is to push the price in one direction. A longer body means there is a more intense buying of selling pressure. Let’s say you see a long red or filled candlestick, this means the open is far higher than the close price. This suggests the price dropped quickly and sellers were aggressive over the period. Although the individual candle reflects a bearish market, remember this is part of a series of candlesticks and it is looking at patterns across a number of candlesticks which gives you the best indication of how the market is moving. The same principle applies if it was a bullish candle. A run of long bearish candles can mark a turning point or resistance level as an extended period of aggressive selling can overdo it and push the market into a reversal where buying becomes more dominant – switching from a run of red candlesticks to green candlesticks. 

Shadow Length: The upper shadows represent the session high and the lower shadows show the session low. Candlesticks with short shadows indicate trading action is near to the opening and closing price whereas long shadows show the prices deviate far from the opening and closing prices. 

But what happens when the upper and lower shadows are different lengths? A candlestick that has a long upper shadow and a short lower shadow indicates that buyers are putting the most pressure on the period the candlestick reflects, with more buyers, bidding pushes prices even higher but overall sellers force down prices. Whereas candlesticks with long lower shadows and short upper shadows indicate sellers dominate driving prices down before buyers bid prices higher – this strong close creates the long tail.

Check out our guide to common patterns to learn more.

What candlesticks cannot show you

Candlesticks are great for showing you the relationship between the opening and closing price however there are a few omissions. Simplifying price action over a certain time frame is great when you want to step back and analyse the larger trend. Remember you can always change your timeframe to see a more in depth look at the price data. 

A candlestick shows the extremes of the trading session and the opening and closing price yet this cannot show the change within the time period for example if the high was before or after the low. Although it seems fairly insignificant, its subtleties of change can present the volatility of that particular asset at that particular time. The difference between a strong bullish presence and a switch between bullish and bearish dominance before bulls coming out on top indicates how strong the trend will be. 

Before you invest with your new knowledge, you will need to open an account with a broker to manage your investments. 

Choosing the best online stock broker can make the difference from an easy and exciting new experience to  constant frustration and disappointment. Accessing financial markets through online brokers is easy and inexpensive but there are so many out there tailored to a different sort of customer so choose the right broker that will optimise your user experience and profits. 

If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Now you know the basics on how to read candlestick charts you can get started with trading! We recommend eToro and easyMarkets for beginners.