“Unlikely” Recovery Plays: blinkx, Globo, Monitise

Perhaps just as interesting as the record high for the FTSE 100 is the way that over the past week or so we have seen some remarkable recoveries in stocks which have hitherto been on the back foot. Many of these are also stocks that private investors are up to the eyeballs in from higher levels, and are wishing would come back on side.

None are more significant than Gulf Keystone (GKP) and Quindell (QPP) where both companies appear to be hanging the “for sale” sign outside company headquarters in one way or the other. To say that the sharp recoveries we have seen here were unexpected would be something of an understatement. All we can do now is to wait and see whether or not the Bears will have the last laugh?

Off the back of this it seems appropriate to look at a trio of stocks which have been beaten down over the past couple of years and which exhibit the first signs of stabilisation. Whether this will simply be sold into again by the forces of darkness is difficult to fathom at this stage.

Nevertheless, it seems an appropriate exercise to check out the charting position in order to glean whether it may be worth chancing one’s arm on the long side from current levels in order to at least get exposure to an intermediate recovery, while the FTSE 100 “parties like it is 1999”.

First up is blinkx (BLNX), a company where I suspect Professor Ben Edelman is still not on the Christmas card list. What can be seen here on the daily chart is the way that it is still dominated by the massive unfilled gap to the downside made at the beginning of July.

Ordinarily, one would suggest that until this gap is filled, or is met with an equal and opposite signal to the upside, one would stand aside in terms of thinking of buying blinkx. But for aggressive traders there is the opportunity to go long or remain long while above the old July floor at 27p, especially given the way that since the beginning of this year support has generally come in above the now rising 50 day moving average 28p. The initial target on this basis would be the 200 day moving average of 36.55p, while the best case scenario over the next couple of months would be a top of July price channel destination at 50p plus. However, one would stress that a very strictly enforced stop loss would be placed just below 27p.

As far as Globo (GBO) is concerned, it can be seen that so far 2015 has proved to be a rather better year than last year. This is said on the basis of the recovery of the 50 day moving average in January, and more importantly the 200 day line at 46p last week. So far we have had no less than three sessions with the low of the day above the 200 day line, something which is extremely significant in terms of a possible trend change on a technical basis. Indeed, the message at the moment is that while there is no end of day close back below 46p one would be looking for a top of March price channel target as high as 65p over the next 4 to 6 weeks.

Finally, we have Monitise (MONI) where following the January-February W shaped reversal there has been consolidation around the 50 day moving average at 32p. What is also helpful is the way that support appears forthcoming at the floor of a rising September price channel at 20p, level with the 20 day moving average. If you factor in the way that there has just been a double rebound off RSI 50, then we have a relatively robust looking reversal set up for this beaten down stock. The view at this stage is that while there is no end of day close back below the 20 day line one would be looking for a top of September price channel target as high as 40p over the next 2 to 3 months. Only cautious traders would wait on an end of day close above the initial February resistance at 25.7p before taking the plunge on the upside.