Shifting Shares (2 July 2019) – The Joy of June

Shifting Shares (2 July 2019) – The Joy of June

The joy of June is that there are often profit warnings to be traded. Many companies leave their results until last minute because they are incompetent or want to delay the inevitable bad news. Hence, the last few weeks of June always provide trading opportunities.

Costain (COST)

COST announced a trading update last week which was about as popular as a cold cup of tea. The shares gapped down from 300p to 173p.

However, such volatile reactions often see a reversion to the mean, and so I’m long at 181p looking for 200p.

On Level 2 there are plenty of AT buys, which means someone is hoovering, but should there be any change in direction of pressure I’ll be cutting the trade loose and hitting the bid.

Angus Energy (ANGS)

This share was tipped on Twitter to be a ‘mortgage killer’ – unfortunately, it appears to have been a portfolio killer. It also provides a reason why we shouldn’t place little, if any, emphasis on what directors say in the RNSs.

That was a few days ago, before this on Friday:

Many traders would call this chart ‘oversold’, and whilst they may be right, it doesn’t seem an unreasonable for the news. Price action alone can’t tell you if a stock is oversold or not – we have to know what the stock is actually responding to.

This may provide an opportunity if the chart puts in a hammer on the daily candles. However, with the spread and the danger of further bad news, it may be one for the brave.

Allied Minds (ALM)

Renowned activist investors Crystal Amber are getting involved with this, but for me it seems too much of a risk. There are plenty trapped in at much higher levels, and so I’d only be interested if the price broke out at around 89p. That would require a near 30% move from here though, so it may take some time. I’ve set an alert and happy to wait – there’s no point me getting involved unless it’s a hand that I wish to play.

Blue Prism (PRSM)

As highlighted in my tweet this was a great level to sell short. It’s now backtested the resistance and continued.

My personal feeling here is that the uptrend has now ran its course (at least, for now), though I remain open to changing my mind and going long should it break out of its previous high. The price pretty much needs to double from here and so that may be a big ask for it to happen any time soon. The best play is to trade the trend and short more if it breaks through the previous low.

Lookers (LOOK)

This has been in a downtrend for years now, but only recently have the shares accelerated their descent. I still think there is more downside to come in Lookers, but to short right now when price is extended to the downside would mean we may be shorting into previous shorters covering their positions and buying back! It may be best to wait for the stock to take a breather, then short the breakdown.

Solid State (SOLI)

SOLI has formed a lovely base here with the stock giving little back. Given its illiquidity at a £41 million market cap, the drawdowns have been very light which suggests that someone is accumulating or buyers are actively picking up loose stock. I’m not sure about the stock’s fundamentals, but the price action suggests that enough in the stock believe the story to be changing.

I’m watching this closely now because I think when we see setups like this it’s a shame not to attempt to capture some of that strength.

Sopheon (SPE)

SPE is entering last chance saloon – the stock has already broken the 200 MA and is now threatening to dump below the 200 EMA. When a stock trades underneath all moving averages it’s usually in a downtrend (or about to start one). If the price can’t rally here and keep it’s head above the water the the last resistance would be 877p. From what I recall this is a great business, but if the price is going down it’s not something I’d want to own.

D4T4 Solutions (D4T4)

D4T4 released their results last week, which produced a small beat on expectations, yet the stock sold off. It appears that sellers are taking advantage of the liquidity, as I couldn’t see any reason for concern – in fact, I intend to dig deeper here because I think at just under £100 million market cap this stock could (in time) easily be £300-400 million, assuming the facts stay the same and the metrics keep going the right way.

As we can see, the uptrend is still nicely intact, and I’d want to buy that 282p resistance level once broken. I’m sure many other traders are watching this level too, as I recall buying the breakout around 225p – my alert popped up and the price gapped up as someone cleaned out the ask.

Notice how over the last few trading sessions the volumes have been much higher than average, and the price relatively firm, which tells me there is plenty of buying appetite to support the stock at these levels. Once that supply dries up, then we may see a climb to that breakout level.

Proactis Holdings (PHD)

It’s taken a while for PHD to come into play, and aside from a few scalps in March I’ve left it well alone. It’s formed a long base with declining volatility and volume, with the stock eventually reaching its equilibrium point. The stock has broken out of that range on good volume now which means it is now in play. Once profit takers step in, I’ll look to add on a breakout of the high that it will inevitably set. Look for bigger volumes on up days, and lower volumes on down days as market makers try to shake punters out for some stock.

 

The author may have financial interests in shares discussed in this article.

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