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Not a pleasant close going into the final day of the week.

Should tomorrow, re-ignite the down trend, I'm reasonably confident it won't lead to an eventual lower low, than the very recent one, of circa 122+/-area.

I'm much more concerned of the SP's reluctance to break into/above the low 130's.

That big, bad, single day drop on Q3 results day (Feb 4th) was bound to exert an influence; can't get away with a big nasty like that and treat it as a random one-off.

My immediate thoughts are that if the worse comes to the worse, that circa 122's+/- are as low as the retrace will be if it continues beyond Friday and into next week. (Totally not expecting that low tomorrow, perhaps only if next week continues in this vein).

If this downtrend is reasserting itself, then I would expect the 122 low area to give way, and it's back to the drawing board.
However, I'm still convinced these are the dog days of that downtrend, so I'm betting it hasn't got the legs to break through the lows of last week's 122 area.

Putting a lot of store in no-new lows other than, as mentioned, what was seen on the table in the past weeks since Q3 results day.

Thanks,  Heallywood &  Nige Co,

Bullet points:
* 128p is not significant; just a handy header for the moment when I finally saw enough clear break through confirmation of the Long Term trend crossing cleanly to the bullish upside (it continued micro increasing every day right through this downtrend and now it's cleared visibly to the upside) only ever done that once in the last 5 years - the summer of 2018.
So IMO - it's significant.
Makes it far harder to fail whilst the SP is in new long term bullish uptrend. (Was going to say almost impossible to fail, but never say never and all that :)

* However, trends in general, are somewhat messy so will let some small time pass (busy elsewhere anyway) before posting their respective positions; expecting to see new, clear, positive changes to the remaining bearish trends.
All looking good to accommodate that desire.

* After the poor market response on Q3 results day I brought up the accounts that weekend, from 2010 to current and surprised to discover in this past decade, that broadly, Revenue has been decreasing ever since that date and broadly Net Profit has been increasing ever since that date with the EE contribution muddying the water circa 2016 accounts, but quickly stepped back in line with BT.
 - Yet, the first half of that decade saw a truly stellar rise in the SP and despite not much changing in fundamentals, progress in the second half of that decade saw the exact opposite in the SP performance.
(Figures on those for another occasion, when time allows).

* Expecting a reasonable increase {substantial increase if they dare correct their failings in one fell swoop} in profit progress in next analysts update (even the CEO statement confirmed bullish profit expectations for full year in Q3 results) which the market takes more notice of, than actual results, so pleased I could buy in, before those analysts forecasts are published (maybe out this coming weekend? )

Busy, so time only to place a marker - I'm back in BT, today at 128. (over the years, must be my 6th trade in BT, all told).
Have my own reasons why cheaper 122 was not inticing, but released to do so upon visible sight of 128. First tranche only.

Not in bed with you any more :) sold my position. Bad timing - my fault. Reappraising the situation in near future.

Here's what will interest me tomorrow:

1)
Should this bear trend continue strongly tomorrow, then I'll be looking out for how the SP tackles the mid 1260's. Will it get repelled there
- or worse break straight through? Just as bad is parking up there for the weekend. Treat it as a no-go area.

2)
Wouldn't be surprised though if instead, after today's limited downside travel the SP takes a day off, and if so - neutrality/ indecision for the day is actually given as higher than tonight's close with it sat on the mid-1290's by close.

3)
And for the take no prisoner bulls in GSK, then if their call is on course, a close above those mid 1290's and up to the 1311's area would be a bullish close and would be considered a bullish reaction to events.
But for a strong bull - an initial close on or above the 1311's is the real deal for the day.

Those are the initial areas that will first hold my interest tomorrow.

- Of course the SP will in all probability visit anywhere but the areas I'll be looking at :)

* As said below, quite impressed the SP held from dropping through the first test of the day at 1270's so going to calculate the areas for tomorrow, and might post some of them later if anyone's interested during this "crisis".

I regard them as intraday 'handrails' but for fun use only, they are valid for the life of a single day only, in this case - tomorrow, Friday only.

* Okay, the 2-day 20% minimum fall that is typical of a profit warning-hit stock has not materialised - ergo this SP is not behaving in line with such stocks.
15% to 20% drop over 2 days is the what the studies show. In my experience it can be as high as a 40% drop
- but a single figure% drop over 2 days? No, it's not a profit warning-hit stock it's something else, just as nearly dangerous.

Going to leave it there, as much of the bearishness in my original post is still relevant. It's like the warning was being tested as a heavyweight boxing contender. Not championship material after all, but a worthy international - that's why my bearish tone stays put until the medium to short term bear trends change first.

1 or 2 quick Observations:

* At 12-noon promptly yesterday (The trading release time) the SP fell off a cliff and kept falling.

Today at 12-noon prompt the SP fell of a cliff at the exact same time. Coincidence? However, the similarity ends there as it did recover somewhat.

Last night I had the 1270's down as the first real intraday support of the day. I firmly expected it to give way - easily.

When I realised the second day fall wasn't going to develop into the full Monty, I was pleased I had kept shtum about today's 1270's as the first support likely to fall.

I've not long noticed it's showing that 1270's WAS visited - and the SP was repelled by that intraday-only support area.

That was quite impressive.

So although everything is still bearish IMO and I was regarding the current 1300+ area as a bull trap today, that bounce from the 1270's had me impressed. The entire 1280's area is a longer term support area, so wouldn't be surprised if closing no lower than these 1280's is significant.

It was a good performance considering the situation from the down grade guidance issued.

The trend is still bearish, but today really hasn't performed as bearishly as expected, IMO, is all that I'm observing.

* Although I took the point on adjusted pre-tax profit yesterday, I notice a cerytain someone has gone on to making the error of quoting it as some kind of defence a lot.

He should be made aware that Adjusted Pre-Tax profit is always listed above Reported Pre-Tax Profit because it's always a larger amount. So if a certain percentage drop has been revealed to occur within Adjusted Pre-tax profits that means financially a larger amount in £££'s than had it been only Reported Pre-tax profit.

So contrary to using it as a defence, the likely financial figure decline is going to be even larger than he thought.

I took the point because I thought he was going to follow up with which bits would be reduced, and somehow show the decrease wouldn't be so bad.
But none has been forthcoming. So citing it's ONLY ADJUSTED pre-Tax profits is not a defence; hope that's taken in the right spirit of fair debate.

" what you’ve got to remember is the analyst community is ignoring net profit in their valuations "
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I agree, yes they do Tony, always have done. But the PI shouldn't.

The analysts just love analysing Projected Pre-tax profit, never a word about net profit - nor Reported Pre-tax profit. If they can add complications, then all the more better to minimise criticism and avoid harsh accountability.

That Tong fellow states BT is expensive. Why? Because of this single metric:

" ... Nonetheless, in his opinion the firm was only trading in-line with the sector while its shares were "expensive", trading on an EFCF yield of 4% against 10% for its peers...."

Feck EFCF. (Straight away I know he's a Sharepad user :)

That metric is like adding 18 gears from a lorry bulit into your car, handy but do you need that many?
Honestly how often do you read a report where that metric "EFCF" is quoted and bandied about by all and sundry nodding agreement as a key make or break element in valuing a stock via the FCF?

I ALWAYS refer to the more meaningful Price to FCF (So now he would be pulling a face at me!) and the price to FCF is not only fine - it's approx 50% better, more efficient than competitors within BT's industry!

Where does it end with valuing FCF? - It's fine. It's like arguing over the correct way to make toast. Cook them how you like, there isn't a right or wrong way. But to say BT is expensive on that single metric is pushing the limits of credibility. Liquidity is fine, and liquidity metrics are gold star in BT. So, FCF worries are balanced and not leading to an expensive label valuation IMO.

(Currently, 4.75 whereas the industry group average is at 6.77 the lower the better).
During the last FCF crisis, that metric was up at well over 30+! Yikes.
But once highlighted the BOD took action very quickly indeed and has never been a burden since (round about the time the first forecasts of £1 SP surfaced. It was soon solved the same year.

- What I look for in Analysts forecasts is not their opinions but if their financial forecasts are generally across the board, increasing or declining. Doesn't matter about accuracy, just is their sentiment increasingly bullish or bearish?
----

Cash is fact - everything else on the balance sheet is opinion - Terry Smith, one of the UK's top fund managers.

In the Daily Mail link below I read:
"...adding that it remains on track to meet its expectations for the year..."

- And I thought, Uggh I hope they don't mean the market forecast expectations of only £1.465bn net profit are also on track to be met.

If so their uber low forecast for Q4 might be meaningful.

But further on, I read:
" Philip Jansen, chief executive of BT, said the group expect.....He remains optimistic that the company's profitability will undergo a resurgence."

And I wondered, is Jansen (and the BOD) encouraging the analysts and not correcting them so that should £1.7bn net profit appear for the year end (via Q4) as I now believe is more than likely, then he can turn round to the market and announce proudly - And here is the 'profitability will undergo a resurgence' I spoke of in February?

See? He actually mentioned PROFITABILITY RESURGENCE.
Is that coincidence, or am I guilty of reading too much into Jansen's remarks? Profitability - he mentioned it; didn't talk about increasing revenue only resurgent profitability.

A matter of seeking a cheap entry now.

Poker
- The first day qualified, so maybe it should have been fell at the 2nd hurdle?

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You may, or may not recall, when I last posted on here (Autmun/Nov?) and on my ultra long term trends opined that GSK is still in a 20 year long term bull trend, but that a failed complete higher break above the prior month prevented me from issuing a buy signal to myself, despite 1472 or similar being called out by a poster intra month as the target I was looking out for was now on screen (but failed to see that SP area close to that month).
Hence I was prevented - and protected.

The reason I post that, is also because back then I posted of £21+ being eminently achievable by post Christmas 2021, based entirely on ultra long term trends alone.
Well not know after that RNS yesterday.

Interesting that no one suggested back then, that I should not post of expecting £21+ until it actually occured.

Ergo:
Bearish post? And a wait until hurdles are cleared suggestion appears.

Bullish post? And no one cares when you post :)

- I posted last night under the above header.

In it, I set out some criteria that the vast majority of profit warning-hit stocks display. Those criteria are culled from the financial academic papers from across 3 continents worldwide, and display some amazing similarities, as proven in my own personal experience since then.

Currently (intraday) GSK is not displaying those charcteristics I highlighted last night, and so falls at the first hurdle.
Will let the day close first, and if no change from pretty much the area you see the SP in now, will try and find time to return tonight, and reappraise the profit warning assertion I made.

I'm still overall bearish on GSK, for currently much of this year alone
- but the profit-warning criteria is not being displayed by the SP currently.

As a trend follower I'm not interested in who's right and who's wrong.
I accept the SP whomever it favours and follow that trend until it ends.

Just tagging my post below. The SP is 125.

(I have a ****amamie theory).

Net Profit forecast for the full year and the upcoming Q4 analysts forecast.

Following on from my post below, consider this for Net Profit:

Cumulatively Q3 reported by BT has just delivered:

£1.276bn

It's destroyed the analysts forecast, leaving their year end net profit forecast in tatters - see their current outstanding Jan 22nd forecast here -

https://www.bt.com/bt-plc/assets/documents/investors/financial-reporting-and-news/latest-consensus/btgroup-consensus-22-jan-2021.pdf

Only less than 2 weeks ago, the combined might of 20 pro analysts concluded that the full year net profit forecast will come in as £1.465bn (check out that link under "Full year 2020/21" as they give £1466 as the mean and £1464 as the median; hence I'm showing them as forecasting £1.465bn).

Now consider where BT's Q3 net profit sits this morning
- at £1.276bn

Now just remember before I go on, that in EVERY quarter this trading year, BT has produced £400m+ net profit in every quarter!

So the average from the actual achieved of £1.276bn is £425m.
ie., £400m+ in the shorthand I often use.

---------

With me so far?

Now take BT's Q3 achievement of £1.276bn and add to that, my Q4 forecast of £425m and what do you see?

That's right a potential full year net profit of circa £1.701bn !

Are you seeing that!?!!!

Last year's net profit was £1.734bn
- and after all the terrible market forecasts leading up to their highest so far on 22nd January of only £1465bn for the full year, and comparing to using BT's own regular achievements, then their figure gets blown out of the water, as this current full year is almost restored back to last year in it's entirety.

In round figures last year's net profit was £1.7bn+

I'm now suggesting full year net profits for this year of £1.7bn+

The analysts on Jan 22nd less than 2 weeks ago, are forecasting £1.465bn

Conclusion?

The next update will DEFINITELY involve increasing net profit forecasts yet again. But because they issue several forecast updates in each quarter, just watch them increase it by a thousand cuts so you never notice.

Seeing the SP just now, down - is disappointing after an encouraging start to the day.

Just can't get away from the top line, revenue continuing to fall y-o-y, but at least it is a controlled descent as the cumulative Q3 forecast for revenue was met.

So if analysts and BT were expecting £16bn in revenue, then that's exactly what BT has delivered.
My take away from that is:
that although revenue is looking likely to end the year down against last year (never in doubt it wouldn't)
- for cumulative Q3 it came in, virtually exactly as planned. Thus suggesting the decline in yearly revenue is not running away out of control. The decline in revenue IS under control, otherwise how do you explain both BT and market forecasts being fully delivered as forecast and came in, fully 'in-line'?

But I will admit, the minimum to expect from an ex-growth company (besides a divi) is still a small annual increase in revenue, due to yearly increasing costs being passed on to the customers bills.

How do you explain the forecast-beating net profit though - yet again?
For this year's past 3 quarters, the analysts have grossly underestimated net profit (more on that in a mo').

They'd forecast approx £300m+ on each occasion and on each occasion, BT has delivered £400m+ That's a beat!

With declining revenue, and prior Ofcom competition restrictions preventing BT offering lower prices against the competition, did those help bolster the bottom line against expectations?

Whatever, the net profit is still down against last year, but will it end the year down very much against last year, or just a small amount down?

Will address the full year implications for net profit in the next post, but I will have to be quick about it as I bet the analysts are racing to update their Q4 net profit pronto! As fast as they can - more on that in next post :)

PS. Because the SP gapped-up on opening in the 132's live prices are showing BT as 3% up, minutes in :)

So, initially the market likes what it sees.

Live prices showing the SP up initially in the 132's.

I do hope the analysts keep to their Q4 forecast to maintain the ful year end net profit - as Q3 has maintained BT's actual net profit consistently since Q1 and if repeated in Q4 would be in the territory of coming in nearly double to that currently forecast for Q4.

Therefore full year forecast for net profit has got to upgraded massively. How will they do that with it being noticed?

My position ahead of opening is generally positive, based on today's achievements. But that downbeat sentiment released last night ahead of today's reveal is disturbing.

1) Revenue in line with forecasts. After £16bn in revenue only 2 single million difference to forecasts. Forecast target acquired!

2) Net profit forecast target beaten by £70m!

For 3 quarters running, analysts forecasts for net profit have proven to be far too pessimistic to the actuals.

Didn't like the 5pm analyst news report last night under the news tab above. Called BT "expensive" and admitted sneeringly that BT appears on course to meet expectations, but those expectations are down on last year anyway.

So a bit suspicious of how sentiment might view what I consider - coming in to meet market expectations. So a straight "win" for BT, I'd say.

With the big win on net profit I'd be upbeat, but was that 5pm news item last night a reflection of the downbeat sentiment that analysts hold against BT?

Q3 Quick crib sheet: Beat these - or come in just around these targets =

'
-------------------------------------
.

Cumulative Q3 TARGET for REVENUE = £16.06bn

(to beat - or come in as 'in line')

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.

Cumulative Q3 TARGET for NET PROFIT = £1.207bn

(to beat - or come in as 'in line')

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Doubt I'll have the time first thing tomorrow morning, so will post a quickie "crib sheet" after this post, with just two metrics to speed read against when judging the Q3 actuals.

Before that my personal forecast for a cumulative Q3 Net Profit
of circa £1256bn+ to £1.280bn

Both figures are way above the analysts forecast of £1.207bn for Q3
(as mine are based on BT's previous performance in Q1 & Q2 both of which beat the analysts forecast back then too).