Zak Mir’s end of week blog – Thomas Cook, Anglo American and AB Foods in focus

A couple of blogs ago I focused on various mining stocks but missed out the technical setup at Anglo American (AAL) and which is of all the more interest since the announcement by the CEO of some five years standing, Cynthia Carroll, that she is heading for the exit. Of course, the situation in terms of the mining sector in South Africa has started to get a little more than sticky of late…

The key technical level for Anglos in my opinion is the former October £17.74 intraday low. Given the way that one would probably have been looking for a bear trap rebound after such and extended period of losses for the platinum mining group, it can be said that Wednesday’s unfilled gap to the upside completed an island bottom reversal formation which should be able to deliver a sustained recovery for Anglo American shares. At the very least, perhaps on a 3-4 week timeframe, we can target the November intraday resistance above £19.70, certainly while there is no end of day close back below the aforementioned £17.74 October support. If there is in fact any momentum behind the idea of Anglo being broken up in an M&A deal, then we should see much more than last month’s resistance of approaching £20 on the upside.

Associated British Foods (ABF) is a company that has fascinated me for quite some time, the main reason for this being how the powers that be at the food producer happened upon the idea of adding the high street phenomenon that is Primark to their business model? For me, this brand is the IKEA of its particular sector, with the timing of the venture within the context of the financial crisis seemingly more than just serendipity!

As far as the charting position of the whole group is concerned it can be seen that there has been a rising trend channel on the daily chart in place since February 2012. While the shares are usually rather difficult to get a handle on in terms near-term price action, it can still be said that while the price is above the floor of the 2012 channel – nominally at £14.20, then one would hope to see a 2 to 3 month target as high as the 2012 resistance line projection heading up to 1650p.

Finally, from my perspective, Thomas Cook (TCG) has been without a doubt, one of the fundamental and technical stories of the year. Indeed, one could have bet good money that company’s share price was heading to 0p – as indeed Evil Knievil did in the early part of this year in one of his calls for SBM. The turnaround in fortunes here has been nothing less than remarkable however, and it is likely that even though the stock is now well off the bottom, that we shall see a continued squeeze higher, if only on the basis that so many bear traders have been wrong footed (sorry Simon!). It would not be surprisingly if during Q1 2013 the shares managed to fill the gap towards 60p which can be seen on the daily chart, especially as we have witnessed insider share buying even at 30p plus.

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