I have to admit that despite the rather rocky ride for this part of the stock market – Quindell (QPP) and Gulf Keystone (GKP) are infamous examples – AIM remains as stimulating as it is challenging. Indeed, it is challenging from both a technical and a fundamental perspective. The selection of stocks covered below will illustrate exactly what I am hinting at:
Abcam (ABC)
It would be pleasant to think that shares of Abcam are as easy to get a handle on as their EPIC code. However, this has not proved to be the case for much of the past year. Things kicked off at the start of 2014 with an unfilled gap to the downside which dragged the shares towards the 350p zone in April. Indeed, after this breakdown Abcam tested for support towards 350p on no less than three subsequent occasions.
The position flipped positively from November with a near vertical push through the 200 day moving average, a move which included a tight bull flag and gap to the upside. Since then the stock has remained well above the 200 day line now at 412p. The view now is that a decent weekly close above the 50 day moving average at 454p later today should be enough to deliver a top of March rising trend channel target as high as 500p over the next 2-4 weeks.
IGas Energy (IGAS)
IGas Energy shares are probably one of the best examples of the highs and lows of life on the AIM market. Going into the first half of 2014 this was a fracking phenomenon, with what was effectively a mania, in this country and beyond, in terms of what could be achieved. Clearly, since then and perhaps in no small part due to the exaggerated expectations, we have seen fracking dialled down as much as the crude oil price. At this stage we do not know whether either will ever be the same again, although the conventional thinking is that there will be a comeback for the commodity as the present inventory of exploration projects are cut back.
Looking at the daily chart of IGas Energy it can be seen how the stock is in classic bear run mode, with the 50 day moving average at 32p capping the price action. The technical view here is that one would be a seller towards the 50 day line in the first instance, with only a full day with the price action wholly above this feature suggesting that a lasting turnaround was in the offing. Otherwise one would fear there is a risk of a partial or even full retest of the lowest levels of 2015 to date below 20p over the next 2-4 weeks, even if this marks the end of the breakdown for this stock.
Scapa (SCPA)
Bounces off a rising 200 day moving average are normally good news for a stock or market, if only on the basis that this feature is an indicator of positive momentum. The present position on the daily chart of Scapa underlines the concept, with dips since May offering bulls the chance to go long. This has been the case with the post October period in particular. What is also noticeable is the way that since the autumn the price action has remained essentially sideways until the past week. But rather helpfully a bull flag breakout has developed in recent sessions, above the January resistance.
The suggestion now is that provided there is no weekly close back below the April price channel floor / 200 day moving average at 131p we can assume a decent breakout. The favoured destination is the 2014 resistance line projection at 170p. The timeframe on such a move is seen as being the next 6-8 weeks.