Mid Caps Focus: Card Factory, Just East, Ophir Energy

As the FTSE 100 continues to play games with the bulls, having crossed 7,000 briefly this month, we are left wondering whether leading UK stocks are really going to be able to sustain record levels this side of the General Election. If you add in the uncertainties associated with the effects of 0% inflation, it may be argued that only the brave may be entirely happy with the idea of pursuing blue chips to record levels.

But of course, such issues are not necessarily such a big issue further down the market capitalisation scale. Typically FTSE 250 stocks/mid caps are not so much geopolitically affected and hence it is domestic factors which are the most important. At the very least this will ensure imported volatility from war zones and crumbling economies such as Greece will make less of an impression in this particular part of the market. Indeed, just as the FTSE 100 was diving again this week back below 6,900, we have been treated to quite spritely performances from some quite high profile mid cap names.

First in line is Card Factory (CARD), one of the few in any part of the stock market which is a new chart to me. What can be seen in recent months is that the stock has managed to progress well within a rising trend channel from August, with an uptrend line in the RSI window from January running at the 50 level. They should provide the momentum for further gains with the notional stop loss an end of day close back below the 20 day moving average at 283p. Above this should lead to the 2014 price channel top at 325p over the next 1-2 months.

Next up is Just East (JE.) where there would appear to have been quite a battle between the bulls and bears since the company came to market. The case for the shorts is that this is something of a bubble play, with too much hype in the valuation. From my perspective this is too negative a view, something which is borne out by the way that we have been witnessing an acceleration to the upside for the share price within a rising trend channel from July. This channel currently has its floor running towards the 50 day moving average at 356p. But the likelihood is that support in the first instance will come in towards the former February 380p resistance. The message is that provided there is no break back blow the floor of last month, we are looking to a 2014 resistance line projection target as high as 450p over the next 2- 4 weeks.

Ophir Energy (OPHR) has to be regarded as one of the more challenging mid caps from both a charting and a fundamental perspective, a point which has of course been underlined by the way that the stock has suffered in the wake of the Crude Oil plunge since the autumn. However, the present setup does provide some cause for optimism. This is because there has been a bear trap gap reversal for March versus January from below 120p. The implication now is that provided there is no end of day close back below the 50 day moving average at 135p, we can expect a top of December rising trend channel target as high as 160p by the end of next month. That said, even if 160p is hit the overall downtrend here could still be in place and resume, but traders will have an initial buying opportunity.