zak mir – Familiarity Breeds Respect

As I have recounted to readers previously, my association with Spreadbet Magazine began last summer when I contacted its editor, purely on the basis that it was actually a pretty good read! This is strange for a couple of reasons. The first is that the last thing I usually read is anything which appears to be designed for the private / retail investor. This is because it is either dumbed down to such an extent that renders it useless or written by career journalists who have no aptitude or interest in the financial markets. Of course the last thing you usually want to read about when you also write about the markets as in my case is someone else writing about the markets. But somehow the attitude and the brass came through in the publications and some 9 months later I am still writing for Spreadbet Magazine…

In fact the point of the first paragraph, apart from being a snipe at career journalists – something which I am in danger of becoming myself, is that I think I now know part of the trading style of the Spreadbet Magazine blog to identifying a possible bottom fish contender. This is over and above the kamikaze approach to certain Central Asian mining stocks as they dangle between the SFO and a bid approach!!! My candidate that I tentatively put forth is Imagination Technologies (IMG). And, I must point out, was lined up as a short just before the 25% collapse. While this may be the one that got away on the downside, there is a chance that it could now be an ace recovery play.

The reason for the bull tack is that we have the stock in an extremely oversold state as measured by the RSI – now down at just 15. This is a rare enough measure to suggest that a dead cat bounce is well and truly overdue.  But, when combined with the way that the massive unfilled gap to the downside in the wake of the chip maker’s profits warning was through previous 378p support in December, then you would have thought a rebound, if only back towards 350p was due. Of course, those who do not wish to try and catch a falling knife would wait on an end of day close back say above the initial May 310p intraday low, before taking the plunge on the long side.

Gaming Software group Playtech (PTEC) has become something of an AIM stock hero in recent months, with the relief being that it is one of the few on the AIM market which is not an our of favour resources play. What is a standout for in the near term as far as the daily chart is concerned is the way that April’s price action not only formed a base at the former March resistance zone – and was a W shaped reversal, but that we were also treated to an island bottom formation. Such combinations of otherwise very strong individual signals only serve to underpin the idea of a momentum buy here. The message is that while there is no end of day close back below the last April 626p intraday high, the upside for Playtech could still be as high as the 2012 price channel of 720p as soon as the end of next month.

Finally, a question. Who is buying Ocado (OCDO) shares and what are they looking for? OK, I will grudgingly admit that their fleet of vans with the pretty logos and the distribution depots must have some value. Even the skilful way of giving you all the middle aged fruit and vegetables when you are foolish enough to order fresh produce does have a role in easing the problem of disposing of past its sell by date foodstuffs! But a £1.1bn price tag for what is essentially a not for profit delivery service? I would like to think that when the reality of whatever a deal with Morrison (MRW) is served up thatthe shares will fall 30% in a day. However, for now that might well be a fall of 30% from 250p not 195p!