Shifting Shares (20 August 2019) – Bargain Bucket #ARB #RRE
There are certainly not many longs out there at the moment. It’s tough, and those who are finding themselves overexposed are now hurting. Risk management should always come first, because it is much easier to make up for lost ground than to make back what has been given away needlessly.
It’s psychologically better, too. Those who have spent their time grimly holding on are reluctant to move back into the market, even when the optimal point begins to appear.
It’s quite possible that the easy short money has been made here, but I’m watching all the same.
51p appears to have held firm for the last few months. Is this a sign of accumulation? It appears so. I certainly wouldn’t want to be long of this stock unless it took out 70p, and even then I’d need to see big volumes on up days.
If 51p breaks then there is a short trade opportunity, but this stock is illiquid and so I would use a very tight stop.
Argo Blockchain (ARB)
I covered ARB a few weeks ago here and highlighted the opportunity. Since then, more and more people are starting to see the numbers (and believe them).
Of course, it does rely on BTC staying above $10k (even though if it plummets to $3k, ARB are still profitable). Volumes are consistently up since May, and I think ARB has a lot higher to go (again, assuming $10k holds). I plan to buy back in the future.
This is currently the cheapest stock on the entire exchange aside from Rockrose Energy. Let’s take a look at Bitcoin.
We can see how the charts correlate, which is because Argo is pretty much a geared play on Bitcoin. The problem with Bitcoin is that literally nobody has any way to value it, because in this instance there is no intrinsic value to work with. The price is what someone else is prepared to pay, whether that is $3k or $30k. In any case, I am bullish on Argo. BTC has geld up well with dips under $10k gobbled up. If $14k goes, then we could very well see a retest of the highs, in which case Argo will be printing more cash than a high street FOBT.
Rockrose Energy (RRE)
And now we come to cheapest company on the exchange number two. This has done very well for many readers, and for my Dad, Granda, and myself, and I still believe it can do well for both existing and new shareholders. I am currently long here having significantly reduced my position at 2000p+. When 300-400% gains are on the table as a trader it’s impossible not to take some off and leave some food for the next man. However, the next man didn’t appear to want it, and so we are now trading at not only a discount to cash but the cash-flow producing assets are included in the business for free.
Since re-list, we have seen plenty of profit taking, and the share price dip into negative EV territory.
Given that on relist, cash was around 1845p per share, buying around here offers a nice risk to reward trade as we know that value hunters will provide support to the price. However, we don’t know how many shares are left to be sold, so we must keep a sensible stop on it. Just because a stock is trading sub cash doesn’t mean that it can’t trade even more sub cash.
One thing to note here is that as a producer of oil, obviously the oil price is of importance. It’s not looking great.
Long term, I think we are likely to see $20 oil, as the world is moving away from fossil fuels. It’s going to take time (years) for that to happen, but as demand declines in the future inevitably the price will go down. In the near term, we want that $50 level to hold, and after a breach of that we would then be looking at $45 as the next support. Every drop in the oil price is obviously a drop in Rockrose Energy’s profits.
Ixico had an RNS on Monday, in which it announced it was trading materially ahead of expectations. These are generally the sort of plays that I like, but having noticed that it tends to get sold off a lot on good news I have avoided it for now. I want to see how it reacts over the next few days/weeks. This could be a stage 2 uptrend and a stock that offers a lot of breakout trades, so it now goes on my watchlist.
Redrow looks like it is stuck in a stage three pattern since last October. It’s failed to make new highs and is teetering on the edge of support. I am looking to get short here, and the lows around 475p would also offer another opportunity. In weak markets, I think it makes sense to go after the weak stocks. There’s a reason people say trade the trend.
Superdry is grinding lower to that level. Traders long and short will be looking at it, to either go long underneath the support where the stop loss liquidity is, or to go short if the level breaks.
I personally don’t fancy its chances; it’s a weak stock in a weak sector. They also sell rubbish clothes (not that it matters). The trend is clearly down, and at £322 million market cap it could fall further. However, when shorting we need to be careful of potential bidders – so don’t go overboard on a position!
Serabi Gold (SRB)
Since May, the price has nearly tripled, and volumes have been up.
I think we are likely to see some consolidation here as people understandably bank profits and we have new buyers entering the trend. I’m watching that level at 75p to go long from. Gold is on the move and trending higher, and Serabi Gold just happens to mine it (at least, I think it does given the name!).
The author may have financial interests in all securities discussed.