Zak Mir – Going Against The Bears (and old Caaawky!!)

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3 mins. to read

I am sure that one of the reasons why women who trade achieve better results than men (all excpet “Miss Daytrader”!!!) is almost certainly related to a particular “quality” that is something only those with a Y chromosome possess: machismo. It is the macho gene that causes traders to go long and stay long of a stock which is heading for disaster, and to go short of a company they expect to go bust which will ultimately end up in the FTSE 100! Men are bad at taking advice or asking for help – something which was particularly obvious in the era before satnav! What has been interesting over the past year is the way that so many of the conviction shorts that the bears got hold of did not deliver the goods.

This was particularly the case with Ocado (OCDO), Thomas Cook (TCG) and Dixons (DXNS). But I would argue that the biggest of them all has been the Euro, which is now at least a couple of years past its “sell by date” – so to speak.

Of course, as a chartist, it is easy to get involved in the bear game in the sense that you are aware of the angle that they have and the temptation can be difficult to resist. However, since the big rebounds in Ocado and Thomas Cook, and with the FTSE 100 above 6,000, I have tended to give bear targets the benefit of the doubt. For instance, with Thomas Cook I have not made a bear call since below 30p. This reluctance to be bearish has manifested itself especially in terms of mining stocks where I am not so sure of a sustained rebound (unlike our esteemed dear leader and former editor Richard Jennings!), but an intermediate one does seem to viable.

A stock which fits the bill in this respect is Zanaga Iron Ore (ZIOC), even though it has been on a somewhat rocky ride. This is said on the basis of a double May bear trap rebound after which I was bullish on the shares. However, the shares strung the buyers along within a saucer shaped chart pattern which contained a July bear trap towards 10p and a sharp break above initial August resistance at 12p. The message now is that at least while there is no end of day close back below the May uptrend line at 11.5p we should be headed towards the red mid channel trendline at 15p over coming days. That said, the 1-2 month target is as high as the 200 day moving average zone towards 19p  – at the top of a March price channel.

CLEAR DISCLOSURE – TITAN INV PARTNERS FUNDS AND SBM EDITORIAL STAFF ARE LONG ZIOC

Another situation where I have been at odds with the bulls is Cupid (CUP), a company where it is apparent that many of them expect the company to go bust, including our former editor’s old pal (not!) Mr Knievil, or “Caaaawky” as he calls him. From a technical perspective however, while there is no end of day close back below the March price channel floor at 58p, one is theoretically a buyer on dips – that is bound to please Mr Jennings. Indeed, the theoretical target here while 58p is held is as high as the March price channel top of 95p. While it has to be admitted that this is not exactly a slam dunk potential trade, an end of day close back above the 10 day moving average – now at 66p would be a serious, if not a surprising buy signal and another one if the eye for the voluminous one!

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