Zak Mir – Ahead of the Fed, RRS, SXX & EMED
Given the uncertainties this week ahead of the Federal Reserve’s so called ‘tapering’ announcement and the way monumental pig’s ear that has been made out of the process to nominate a new Federal Reserve Chairman, one could say that those situations in the markets which are on the move in the face of this can be certainly regarded as quite compelling.
In the case of EMED (EMED) we have been treated to an extended, and seemingly interminable basing process for the long suffering bulls of the shares, after the March-May period which was a severe breakdown in the stock price. The problem now is that even after today’s 10% plus rally, the jury is, to me, still out as to whether we are facing yet another flash in the pan /false dawn recovery of the type which has interspersed the price action over the past four months or if indeed the stock, finally, is now on the move. However, it is helpful that the late August 7 .1p peak has been broken so easily to start this week.
The message to me is therefore that as little as 3 consecutive end of day closes above the 7.1 – 7.25p mark could be enough of a momentum buy trigger to take the shares through the 200 day moving average at 8.9p as an initial target, and then onto the top of the May price channel top at 10p plus. The timeframe on such a move is currently seen as being as soon as the next 2 to 4 weeks.
It has been such a volatile ride for gold and gold stocks in the recent past, that one is loathe to even try and glean any wisdom from the price action of a stock such as Randgold Resources (RRS). That said, there was a brief bull trap through the 200 day moving average last month, and which was a sell signal to end the two day island bottom at the beginning of the month. This, to me, made the stock a buy around the £45 level for August. In fact, it may be that the two day feature comes into play again for September in that so far the low of this month to date has been just below the floor of the August gap at £44.25 stock. The implication is that at least while we have no end of day close back below this level that there is a valid buying opportunity, if only to retest the 50 day moving average at £47.52 later this week.
One would really want to see a weekly close back above the 50 day line however before considering that a retest of last month’s £52 plus resistance was back on the cards as a viable target for the next few weeks.
Finally, although it perhaps cannot be said that Sirius Minerals (SXX) presently has the lustre in terms of private investor interest that it had going into the summer, from a price action perspective the issue here is whether even after halving in value over recent months, we are now actually looking at the prospect of a fresh leg to the downside? What can be said with reasonable certainty is that the former intraday low of August at 11.25p will be key in terms of any attempt at recovery here. The risk is that even if we are approaching a selling climax for the stock, there could be a final plunge towards a February support line projection at 8p before the bargain-hunters get back in control.
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