Zak Mir’s wise man sketch and his “gold” gifts (oh, and SuperGroup!)

This week, in keeping with the Xmas theme, and deeming myself to be one of the 3 “wise men”, I bring you technical analysis “gifts” of gold stocks!

As can be seen from the daily chart of Randgold Resources (RRS), it has not been a happy autumn for shares in the Mali focused mining group. In a previous edition of Spreadbet Magazine, former commentator Evil Knievil marked them out as a short around the 4500p level. Ouch is all I can say there! See here (page 28) – (http://issuu.com/spreadbetmagazine/docs/spreadbet-magazine-v5_generic?mode=window&pageNumber=1).  I thought it might be useful however to relook again at his short stance and see if the chart “runes” predict that now is in fact the time to go short or indeed long…

Many people have asked is it worth bottom fishing at current levels?  My normal answer in terms of what to do in such situations is that if you have to ask, it probably means that you should avoid! In terms of the recent price action, the key levels in the near-term are both the November intra-day low of £63.50, and the floor of a rising March price channel at £60. While the shares look to have so far found support at and around current levels, in fact, site of pretty much where the 200 day moving average lays, it would appear to me that is worth waiting on the possibility of £60 / former June / July resistance to be tested as new support, before going in on the long side. Indeed,  saying that, I find it hard to rule out the possibility of a final retest of the sub £50 early in the New Year should the March uptrend line / £60 give way for more than a couple of sessions.

Although I have only shown the post-September price action here at Petropavlovsk (POG) on the daily chart, you will have to take my word for it that the stock is only just above 52 week support. Indeed, what has been happening over the past three sessions is that the shares have made quite a meal of being able to rally back above the former late August intraday low of 345p. On this basis it would appear that there is little need to hurry for would be bottom fishers in terms of going long on these shares. That being said, bulls of the stock have been treated to a neat little bear trap rebound from below the initial £3.26 low. This, along with the clear bullish divergence in the RSI window between mid-November and December price action support, would suggest that at for the more aggressive traders, that while there is no end of day close back below £3.26 we could be looking at a lasting turnaround here. Those who find this particular falling knife appealing would regard the late November £3.67 peak as their minimum initial target by the end of January.

And so, now taking off my wise man hat and Gold plays, let’s take a look at one of my fellow commentator Robbie Burns’ favourites in recent months (hell, he can join me as a wise man!)… And so we move onto the daily chart of Supergroup (SGP) which, at the moment, is caught in something of a nasty battle between the bulls and the bears of the stock. This is said on the basis that you could probably come up with equally convincing arguments in terms of both buying or selling the trendy (so I’m told!) fashion retailer’s shares at current levels. 

As a guess, I would assume that most traders would be looking to be short of the stock, particularly after the bull trap failure for the shares resulting them trading back below their 50 day moving average currently at £6.44 that we have seen over the past week. However, while I might be sticking my head in the jaws of a rather ferocious lion (one named HMV – ouch x 2!) on this one, it does seem to me that the two day close back above the former November intraday low £5.69, plus the triple tested RSI support line from last month in the oscillator window, suggests that for the brave we have a possible bottom of the range buying opportunity within the overall confines of a rising trend channel from the end of June. The target above is the aforementioned 50 day moving average centred around 650p.

If you’d like to read Zak’s new “Lessons from the Financial Markets for 2013” book then click here – http://www.amazon.co.uk/Lessons-From-Financial-Markets-ebook/dp/B00AN26ZBS/ref=zg_bs_362213031_20