Zak’s Daily Round-Up: BATS, GSK, HSBA, SKY, PROX, SLP and UJO

Market Direction: Dow Nears 17,500 Support

BAT (BATS): 4,500p Technical Target

It would appear it is onwards and upwards as far as the price action is concerned for BAT, given the setup that can be seen on the daily chart. What helps in particular is the way that the trend is backed by a rising channel which can be drawn in from as long ago as the beginning of last year. Helpful aspects since then are led by the golden cross buy signal between the 50 day and 200 day moving averages in November, and the January bear trap rebound from below 3,600p. Since then the stock has largely been guided higher by the 50 day moving average, now rising at 4,123p. This can be regarded as a dynamic end of day close stop loss for the shares as we look forward to further gains. Just how high the stock could fly is suggested by the angle of the 2015 resistance line projection, pointing as high as 4,500p. This is the 1-2 month timeframe target, while the shares are backed by the 50 day line. They are also backed by an uptrend line in the RSI window running at 50 from as long ago as December, which reassures the more cautious of longs in terms of potentially buying into a very mature rally.

GlaxoSmithKline (GSK): Rising Trend Channel Targets 1,575p

Given that GlaxoSmithKline is a multinational megalith, it is not surprising that the price action does not fly about too much. Instead, we are treated to something resembling the drift of an oil tanker. Indeed, the big, slow move here came as long ago as September, with the final dip and rebound from below 1,250p. Since then we have seen decent progress within a rising trend channel. This currently has its floor at the 50 day moving average, trading at 1,439p. The area just below this provided for a decent risk/reward stop loss zone, especially as there is support for the price action via an uptrend line now at 45 in the RSI window from as long ago as December. The chances now are that with a quick recovery of RSI 50 versus 48 at the moment, and with a clearance of the 20 day moving average at 1,474p, the expected target at the top of the rising 2015 trend channel at 1,575p could be hit as soon as the end of next month.

HSBC (HSBA): Gap Fill Rebound Buy Signal

Things appear to be shaping up reasonably well at HSBC in terms of the recovery argument, even though on a fundamental basis it is difficult to see where the momentum will come from here. Nevertheless, while the shares remain above the floor of the April gap at 420p on an end of day close basis – off which they have just bounced, one would be reasonably confident that there has been a lasting floor in place. The view at this stage is that with this reversal buy signal delivered in the form of the gap fill, we could be treated to decent upside, which may surprise the cynics here. As for what this may be, we are looking to the top of a February trend channel at 450p as the 4-6 week destination.

Sky (SKY): Bullish RSI Divergence

What is interesting on the daily chart of Sky over the recent past is the way that even though for the sake of argument the shares are still very much in the grip of a descending price channel which has ruled the roost since as long ago as November, there is the prospect of at least an intermediate turnaround. This is said on the basis of the bullish divergence in the RSI window, between the 930p floor of last month, and the probe before this level for May to date. What the bulls will be looking for now is an end of day close back above the 10 day moving average at 935p. A clearance of this feature could open up the prospect of a push towards the top of the November price channel/50 day moving average at 991p on a 6-8 weeks timeframe. Cautious traders might wish to wait on a break of the 20 day line now at 955p before pressing the buy button.

Small Caps

Proxama (PROX): 2.5p Price Channel Top

Although there was a false dawn breakout for shares of Proxama in March, it would appear that things are finally underway in terms of a sustainable rally. This is said in the wake of the RSI break above the April resistance peaks, and the clearance of the initial price high for May to date. All of this goes to suggest that provided there is no end of day close back below the 50 day moving average at 1.05p, the potential upside is regarded as being the December price channel top of 2.5p over the next 2-3 months.

Sylvania Platinum (SLP): Above 7p Targets 200 Day Line

Sylvania Platinum is stock which is currently not blessed with a great amount of charting history, but nevertheless looks to be on its way as a decent upside contender. What can be said now is that the shares appear to be delivering a solid enough consolidation either side of the 50 day moving average at 6.77p. The assumption is that in the wake of the May bear trap rebound from below the initial 2016 support, we should be looking to as little as an end of day close back above the 7p leading to the top of this year’s resistance line projection through the 200 day moving average at 8.13p. The time frame on such a move could be as soon as the end of next month, with the stop loss best placed just below the 50 day line once 7p is cleared.

Union Jack Oil (UJO): December Price Channel Setup

Union Jack Oil has been a somewhat frustrating and troublesome stock over the past year, with only the higher lows since February giving the bulls something to smile about. Indeed, the view now is that provided there is no break back below the floor of a rising trend channel drawn in on the daily chart from as long ago as December at 0.13p, we can expect to see a delay on a possible rally towards the 0.21p resistance line over the next 6-8 weeks.