Penny Shares Crazy by Zak Mir – Trinity Mirror, Pure Circle and Transense Tech in focus

Since the arrival of our fourth and almost certainly last child on September 20, I do not think that there has been one night where I have had a decent amount of sleep. But of course, been the positive kind of guy I am, I have decided to turn this to my advantage and rather than being woken up at 2, 4 and 6 o’clock (in the morning!), I have decided merely to stay awake as much as possible and  get on with doing some work!

 As things turned out over the past month (with all this new work) I feel that I have discovered the final frontier of charting, that of the technical analysis of penny shares and particularly those in single figures which we all hope will become the next 10 bagger!

One contender that has already come up with the goods in the recent past is the mighty Pure Circle (PURE). Here, it can be seen how we are on the right-hand side of an extended U shaped reversal.  Despite  the extended gains we have seen already, and the relatively overbought status on the RSI scale at the moment, there could still be decent near-term upside. This is said on the basis of a combination between the grey 20 day moving average and the floor of a rising June price channel at £2.28.  While there is no end of day close back below this double support one would be looking for the stock to fulfil its bullish destiny by hitting the top of  a four-month price channel at 300p. Perhaps as soon as the end of November.

While I like the setup at Pure Circle, it may be that we all feel rather more comfortable in attempting to buy into a situation somewhat nearer the ground floor.?This is what could be on offer at an old favourite – Transense Technologies (TRT). The near-term technical plus points being this month’s double bear trap back below the black 200 day moving average at 9p and, perhaps more importantly, the way that so far the stock has managed to find support on the latest nose above the 7p level  at the end of May.  The view now would be that while there is no end of day close back below 7p, we would be looking for a fully fledged push to the upside and a retest of the July resistance zone above 18p on a three month timeframe.  The reason for such optimism is that many of the best rallies in stocks and markets start with an unfilled gap to the upside as Transense is currently  displaying.

As far as Trinity Mirror is concerned we have one of those very painful Duke of York type scenarios, with the shares rushing to the upside, and then promptly declining as fast or even faster than they rallied in the first place.  On a fundamental basis, the explanation is that traders have got the jitters over the hacking scandal, but in fact this was just as much of a cloud hanging over the shares when they  were under 30p as recently as August, as it is now. In fact, that is why they went down to 30p in the first place!

What can be said now in the wake of a weekly close back below former 55p resistance is that unless the shares quickly recover this level, we have the risk of them coming back to fill that initial unfilled gap to the upside at the beginning of August which started the whole rally off. That said if we were to get back towards 30p, it is likely that bottom fishers would feel attracted towards Trinity all over again – hacking or no hacking.

Editor Note – The ubiquitous Mr Simon Fox is at the helm here. Shareholder in TNI should be VERY wary in my opinion looking at his billion pound plus capital decimation at HMV. Buy potentially at your peril!