[CRYSTAL BALLING - APRIL 21ST - 25TH]
I have added 3 companies for this week, while I will continue to track the others. First up, some analysis on my choices - Anglo American (AAL), BP (BP.) and BAE Systems (BA.)
AAL - Anglo American
Quite a clean looking chart from Anglo American. SP has been strong up to resistance at 3470, where it closed on Friday. I feel we might see a drop in price in the coming few weeks. From a technical point of view, there is a high possibility of a double top having been formed last week - and a drop at the start of next week may see the SP down to support either at 2810 or as low as 2480.
AAL is set up well for trading as there are some clear points on this that are important s/r lines. First off, I'm looking for a break of the horizontal resistance at 3470. I'm also looking at a move to the upward trend line and then the top price from November.
I think AAL is in a good position to break the 3470 mark, as the stochastics are still clean enough and the MACD is looking good. I don't envisage AAL breaking this years high and the resistance at 3636 in the short-medium term.
For this week, my prediction is some a brief flight up in price, and then a drop. For those holding, my sell signals would be a long wick reaching the trend resistance and a fall back from there. Spinning tops have been good reversal signals for AAL - which may have just happened as well as a very bearish looking closing on Friday.
However, the sector and the FTSE are both very strong at the moment and could take this up through the resistance in the coming weeks. If I owned the stock, I would hold and neither sell any of my position or add to it until we see some definite movement off the resistance lines.
Buy signals off the trend line, depending on whether the SP looks likely to drop to the 2800 level.
BP. - BP
Another really clean chart here that caught my eye straight away. We've recently seen the a year low double bottom in BP and we're in a very clear sideways channel at the moment. Normally I might see this and think straight off that the resistance at 576 is not likely to be broken. However, there are a lot of positives from a TA point of view that lead me to believe that we will see some good growth up to at least 645 in the next few months.
Firstly, I believe the start of year drop was fundamentally heavily overdone. It was clear to see it coming from the staggeringly clear head and shoulders formation right after a year high double top. There is some excellent support at the 508 level which would have been a good buy a few weeks ago.
The positive divergence on the same lows from the MACD are greatly encouraging. The stochastics are still oversold - and for some reason still look bullish. The EMA golden cross is another positive that didn't occur when last it attempted the resistance at 575. Also consider the double bottom.
Then yet again we have the oil price, FTSE, and oil sector factors to include into the buyers mind - all very nice for the BP SP.
This week I will be looking for a break of 575 for a strong buy signal - followed with a 50p advance to the double top resistance at 625. If BP bounces off 575, I will look for some sideways action at 557, where I believe we might see another, and hopefully successful surge.
For me, BP is a buy at 500-515 and a break of 575 only.
BA. - BAE Systems
Bit of a hammering here the past week. Good H&S formation and a gap down drop to the range of the trend support and horizontal support lines, you could also note strong negative divergence on the MACD and a stochastics turn.
I'm looking for a bounce next week as I think we've seen the last of this drop for now. There is strong rectangular support and resistance at 450 and 513, which up until now have been the trading range.
No that the rectangular S/R channel has had a run in with the overall trend, we're looking at some decisive movement this coming week. Going back to last year we had a similar situation, where the SP was over performing, dropped into the exact same channel as now, and then made a strong push out above the upper trend line.
On the plus side the stochastics are sub 20 and slowing down a little bit, indicating it might be getting ready for a little run - but - the drop on Thursday was quite a lot out of the lower trend line - more than before.
Obviously, the key areas are the lower trend line and the upper trend line - but I believe that before the SP is near the upper trend line, it will be testing the horizontal resistance near 515.
Also, while the lows are getting higher, the highs are staying the same. This possible formation of an ascending wedge pattern has a degree of positivity about it. By the time the SP reaches the horizontal resistance, the wedge will be fully formed and we may see a good and strong breakout.
For me, as it is it's a weak buy - but I would use some very very tight stops at about 457 just in case it doesn't want to reverse. A price target of upper trend line/horizontal resistance/+9% which ever is first - but, run with the winner if the signs point towards a break out.
Now then, I will continue to watch ADN, MGCR, AZN, BG., LMI, SHI, BKG, PMO and SOLA.
MGCR I originally predicted to go down. It went up a little and has found some resistance at 235. Stochastics still OK but did tick down a little as the week closed. This has a lot going for it technically, but I do still think it will go down a little.
ADN had some fantastically bullish moves on Friday off the short term support line. My initial prediction of down, which was correct as it dropped 7.5% at max, has seen reversal and ADN is a buy this week with a target of 150p. Based on bullish engulfing, support line, and stochastics.
AZN attempted a break out but was unsuccesful. This is quite a difficult stock for me to pass judgement on, but I'm looking at moves off 2082 for the action. I think this is a sell this week.
BG., like AZN, had some attempts to make a break out based on a very good RNS. However, the following 4 days were all red and it is back to the price I stated sell. The gap is closed and I'm looking at a move off 1213 - if a bounce, then up again to the upper trend. But more likely I envisage a fall to my lower trend line to the 1135 levels.
I see negativity on PMO and LMI. LMI is potentially off my shortlist this week. PMO just seems a bit too volatile at the moment despite being involved in the oil game.
BKG looks good for a gain in price to at least the horizontal resistance between 1165 and 1180. It was a buy for me at 980 on the 17th and I believe we will see strong some blue percentage gains within a 3 week time frame. It's chart is somewhat similar to my SHI holding, which I also see finishing the week up.
As for SOLA, I see a run to 495 completely unchallenged. The solar stocks were hot in the US for a while, and I believe the UK prices lagged behind. However there were some big drops in the US markets for solar stocks last week and we might see this having a negative effect on the ReneSola SP.
In portfolio terms, SEO is looking stronger in the lead up to the AGM and trading statement - and it looks like I might actually see some profit out of this very bad purchase. My long in Desire Petroleum is paying off nicely, I feel some news on the farm-in will really make this fly. As for SHI, I've covered that enough and I'm looking for 880 to 950.
AAL - Anglo American
Quite a clean looking chart from Anglo American. SP has been strong up to resistance at 3470, where it closed on Friday. I feel we might see a drop in price in the coming few weeks. From a technical point of view, there is a high possibility of a double top having been formed last week - and a drop at the start of next week may see the SP down to support either at 2810 or as low as 2480.
AAL is set up well for trading as there are some clear points on this that are important s/r lines. First off, I'm looking for a break of the horizontal resistance at 3470. I'm also looking at a move to the upward trend line and then the top price from November.
I think AAL is in a good position to break the 3470 mark, as the stochastics are still clean enough and the MACD is looking good. I don't envisage AAL breaking this years high and the resistance at 3636 in the short-medium term.
For this week, my prediction is some a brief flight up in price, and then a drop. For those holding, my sell signals would be a long wick reaching the trend resistance and a fall back from there. Spinning tops have been good reversal signals for AAL - which may have just happened as well as a very bearish looking closing on Friday.
However, the sector and the FTSE are both very strong at the moment and could take this up through the resistance in the coming weeks. If I owned the stock, I would hold and neither sell any of my position or add to it until we see some definite movement off the resistance lines.
Buy signals off the trend line, depending on whether the SP looks likely to drop to the 2800 level.
BP. - BP
Another really clean chart here that caught my eye straight away. We've recently seen the a year low double bottom in BP and we're in a very clear sideways channel at the moment. Normally I might see this and think straight off that the resistance at 576 is not likely to be broken. However, there are a lot of positives from a TA point of view that lead me to believe that we will see some good growth up to at least 645 in the next few months.
Firstly, I believe the start of year drop was fundamentally heavily overdone. It was clear to see it coming from the staggeringly clear head and shoulders formation right after a year high double top. There is some excellent support at the 508 level which would have been a good buy a few weeks ago.
The positive divergence on the same lows from the MACD are greatly encouraging. The stochastics are still oversold - and for some reason still look bullish. The EMA golden cross is another positive that didn't occur when last it attempted the resistance at 575. Also consider the double bottom.
Then yet again we have the oil price, FTSE, and oil sector factors to include into the buyers mind - all very nice for the BP SP.
This week I will be looking for a break of 575 for a strong buy signal - followed with a 50p advance to the double top resistance at 625. If BP bounces off 575, I will look for some sideways action at 557, where I believe we might see another, and hopefully successful surge.
For me, BP is a buy at 500-515 and a break of 575 only.
BA. - BAE Systems
Bit of a hammering here the past week. Good H&S formation and a gap down drop to the range of the trend support and horizontal support lines, you could also note strong negative divergence on the MACD and a stochastics turn.
I'm looking for a bounce next week as I think we've seen the last of this drop for now. There is strong rectangular support and resistance at 450 and 513, which up until now have been the trading range.
No that the rectangular S/R channel has had a run in with the overall trend, we're looking at some decisive movement this coming week. Going back to last year we had a similar situation, where the SP was over performing, dropped into the exact same channel as now, and then made a strong push out above the upper trend line.
On the plus side the stochastics are sub 20 and slowing down a little bit, indicating it might be getting ready for a little run - but - the drop on Thursday was quite a lot out of the lower trend line - more than before.
Obviously, the key areas are the lower trend line and the upper trend line - but I believe that before the SP is near the upper trend line, it will be testing the horizontal resistance near 515.
Also, while the lows are getting higher, the highs are staying the same. This possible formation of an ascending wedge pattern has a degree of positivity about it. By the time the SP reaches the horizontal resistance, the wedge will be fully formed and we may see a good and strong breakout.
For me, as it is it's a weak buy - but I would use some very very tight stops at about 457 just in case it doesn't want to reverse. A price target of upper trend line/horizontal resistance/+9% which ever is first - but, run with the winner if the signs point towards a break out.
Now then, I will continue to watch ADN, MGCR, AZN, BG., LMI, SHI, BKG, PMO and SOLA.
MGCR I originally predicted to go down. It went up a little and has found some resistance at 235. Stochastics still OK but did tick down a little as the week closed. This has a lot going for it technically, but I do still think it will go down a little.
ADN had some fantastically bullish moves on Friday off the short term support line. My initial prediction of down, which was correct as it dropped 7.5% at max, has seen reversal and ADN is a buy this week with a target of 150p. Based on bullish engulfing, support line, and stochastics.
AZN attempted a break out but was unsuccesful. This is quite a difficult stock for me to pass judgement on, but I'm looking at moves off 2082 for the action. I think this is a sell this week.
BG., like AZN, had some attempts to make a break out based on a very good RNS. However, the following 4 days were all red and it is back to the price I stated sell. The gap is closed and I'm looking at a move off 1213 - if a bounce, then up again to the upper trend. But more likely I envisage a fall to my lower trend line to the 1135 levels.
I see negativity on PMO and LMI. LMI is potentially off my shortlist this week. PMO just seems a bit too volatile at the moment despite being involved in the oil game.
BKG looks good for a gain in price to at least the horizontal resistance between 1165 and 1180. It was a buy for me at 980 on the 17th and I believe we will see strong some blue percentage gains within a 3 week time frame. It's chart is somewhat similar to my SHI holding, which I also see finishing the week up.
As for SOLA, I see a run to 495 completely unchallenged. The solar stocks were hot in the US for a while, and I believe the UK prices lagged behind. However there were some big drops in the US markets for solar stocks last week and we might see this having a negative effect on the ReneSola SP.
In portfolio terms, SEO is looking stronger in the lead up to the AGM and trading statement - and it looks like I might actually see some profit out of this very bad purchase. My long in Desire Petroleum is paying off nicely, I feel some news on the farm-in will really make this fly. As for SHI, I've covered that enough and I'm looking for 880 to 950.
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