Shifting Shares (7 May 2019) – Burford’s Breakdown
Last week, Bushveld Minerals released what appeared to be a great RNS:
I had suggested in a previous column that if it tested the 200 EMA then I’d consider shorting it, but that was before an RNS which may appear to arrest the decline in trend (though it did resistance at the 200 EMA). Joel has written about it here.
Augean (AUG) also announced a Trading Update which said those words everyone loves to hear (“materially ahead of market expectations”). Augean is like the postman – it always delivers. Easy to see why the NED loaded up a few hundred thousand pounds worth of stock, too. I love these types of RNSs because very often they gap up and go – it’s a very low risk setup to trade. Stocks don’t tend to go down on surprise good news.
Cluff Natural Resources (CLNR) had some news regarding Shell, which promptly spiked and sold off. When the vast majority of trades in a stock are made by short term market participants, then any share price movement is entirely based on those trades.
Last week’s mentions LIT and MANO fared OK, with LIT getting off to a good start before selling off. Manolete looks to continue that trend.
Alpha FX (AFX)
Alpha FX – not to be confused with Alfa Financial Software (ALFA) – is poised to break out. This stock is in a delightful stage 2 trend where dips are consistently bought. These types of stocks give us plenty of bases to trade from.
I missed my short entry here – here’s a look at the long term chart:
The trend is looking damaged, and as we saw the 200 EMA was significant support. We can see this closer here:
The fact that price confirms the 200 EMA as support means it becomes significant support. Technical analysis is often a self-fulfilling prophecy, and once the price broke down through that level it was telling us something significant had changed. Whether it is a brief dip or the beginning of a downtrend we will see, but Burford has stopped making new all time highs and has not done so since August last year.
The chart is now looking a little better, as it seemed to be drifting.
Two bullish hammers and a positive write-up in a tipping newsletter – let’s see how the stock fares this week.
JKX Oil & Gas
I’m now starting to get very interested in JKX again as it starts to gently curve up to that multi-year high at 65p. A break of that could get the punters jumping on board as FOMO kicks in. I like the consistent high volumes here.
D4T4 is slowly getting to the breakout point too. The results are coming up soon I believe, but they’ve already upgraded expectations. There shouldn’t be any nasty surprises, so I’ll look to take a position as the price slices through that 280p level.
Spectra Systems (SPSY)
Spectra is now looking very attractive as it is almost at the all time high.
It announced it would be buying back shares in the market a few weeks ago, to which I initially reacted with displeasure. As revenue is not growing the way a growth company should, in my opinion, then buying back shares is a way of boosting EPS and papering over the cracks.
However, the point was made that a share buy back can boost the share price also because many punters don’t want to buy into an illiquid stock. A share buyback increases that liquidity and can provide a bid in the market, giving confidence to traders like myself that it may be a little less difficult to get out.
The week ahead
We’ve got CyanConnode (CYAN) results coming up on Wednesday, as well as KEYS (went long here as highlighted on my Twitter). Cyan is a small company that does something with radio frequency solutions (whatever that means – I wouldn’t be surprised if the directors didn’t know either) but the revenues and orders have been dramatically increasing.
On Friday we’ve got Water Intelligence (WATR). The stock has suffered an aggressive sell-off here but looks to be curving back up towards the high. If results continue to be good – and there’s no reason why we should expect them not to be – that could be the catalyst for it to continue and breakout.
At the time of publication, the author has financial interests in shares discussed in this article.