Dynamic Mid Caps: James Fisher, Pace, Rotork

Even though the FTSE 100 managed to deliver a 15 year high a few days ago, it is still the case that the blue chips continue to frustrate and disappoint in almost equal measure. That said, further down the food chain of the equity market, the FTSE 250 has actually been quite a star performer, as have many of its constituents. Indeed, a cynic such as myself might suggest that it may actually be easier to gauge the health of UK Plc by looking here, rather than the multinational conglomerates, many of whom are resource-related and are skewed negatively in a deflationary/low growth environment.

As far as the stocks I am looking at from the FTSE 250 are concerned, today it can be seen that many of them currently share a similar theme. This largely relates to the position of the price action relative to the key 200 day moving average. As technical traders will be aware, the 200 day line is usually regarded as a benchmark in terms of trend. The idea is that below it one would regard a stock as bearish and being a sell into strength, and above it a buy on dips within an uptrend.

With this in mind it may be said that there are celebrations in order as far as James Fisher (FSJ) is concerned, given the end of day close yesterday above the 200 day moving average at 1244p. This came in the aftermath of a sharp rebound to start the month from above the 50 day moving average at 1143p and off the neutral RSI 50 support. The view now is that at least while there is no end of day close back below the 10 day moving average of 1184p one should give the benefit of the doubt to the upside and a significant break higher. Just how high this could fly is suggested by the top of a rising trend channel from April last year at £15. The timeframe on such a move is seen as being as soon as the next 6 to 8 weeks.

Next up is a perennial favourite in terms of the fundamentals from set-top box maker, Pace (PIC). It can also be seen how there has been a flourish to the upside through the 200 day moving average of £3.36, with the added bonus being that yesterday left a small gap above this feature, a sign of very positive momentum. In fact, the best way forward here is probably now to follow the move to the upside with an end of day close stop loss back below the last January resistance at 347p. The likelihood now is that while that old January peak remains in place as support, we could see a significant push higher. The favoured destination at this point is regarded as being the top of a rising April price channel 410p, as soon as the end of this month.

While it is clearly disappointing that shares of Rotork (ROR) took so long to establish a base after the autumn breakdown, it has been the way that support built so well early last month above the 50 day moving average at £23.69 that really started the latest recovery for the shares. This point is highlighted by the solid end of day close yesterday above the 200 day moving average, still falling £25.44, with the implication being that while there is no end of day close back below the 200 day line we are very much in trend changing mode. The notional target at this point while the 200 day line acts as support is seen as being the top of last year’s trend channel from March, heading as high as £29.50. This target may be achieved as soon as the next 2 to 4 weeks given the pace of ascent at the moment.