AIM Stocks Focus: Central Asia, Gulf Keystone, GW Pharma

Despite all the horrors, profit warnings, cash burn, blogger sabotage and the perils of being a “growth company”, the AIM market remains a personal favourite. While it may have all the characteristics of the Wild West, and have governance/regulatory issues, there is of course always the hope and the challenge of finding the next 10 bagger.

My selection of four stocks today provides a decent microcosm of the genre, with the additional message that even against the issues of sudden unexpected newsflow, charting methods can help out both in terms of timing exit/entry points, but most of all, money management. The most common problem private investors have is not bailing out of a situation long after the original reason for entry has evaporated.

We start off with Central Asia Metals (CAML), where there has been a strong break higher through the 200 day moving average now at 161p. While it has to be admitted the shares delivered a similar feat at various stages over recent months, on this occasion the direct clearance of the 200 day line, and the extended RSI uptrend line from January suggest that the shares could keep going. Indeed, the favoured target for the stock is currently regarded as being towards the top of a broadening triangle from June. This has its resistance line projection stretching as high as 195p, a target which is expected to be hit over the next 4-6 weeks at the latest.

A couple of years ago I made a call that Gulf Keystone (GKP) could trade as low as 10p. This was when it was trading towards 200p. Obviously, the call did not go down well with the company’s fans. However, with a low of 33p today, it can be said that the bearishness was not that wide of the mark. In fact, at the time of the 10p target the idea was that in the unlikely event of the stock breaching major 60p support there was a risk of a return to the support zone of 2009 – below 10p. Arguably, this is still what may be on the cards for the Kurdistan focused explorer, given how low the oil price is, and how severe the geopolitical problems of the region are. At this stage we would be looking for a minimum recovery of the 50 day moving average at 43p to delay the prospect of a probe towards the floor of a falling November price channel at 25p over the next month.

GW Pharma (GWP) may have offered us quite a wild ride over the past couple of years, but it would appear that in the aftermath of two golden cross buy signals between the 50 day and 200 day moving averages in January and March, we are set fair on the technical analysis front. Helping out as well is the way that a rising trend channel can be drawn from October. This has its floor towards the 470p level, with the implication being that provided there is no weekly close back below this zone we should be treated to further upside. The favoured destination at this stage is seen as being as high as the 2014 price channel top of 600p, with the timeframe on such a scenario being the next 4-6 weeks. Only cautious traders would wait on an end of day close back above the 10 day moving average now at 512p as a momentum buy trigger before taking the plunge on the upside.