Given how many Christmas Cards are now not coming my way after I suggested that Gulf Keystone (GKP) may not be a buy anymore, I now have a tendency to look over my shoulder in the wake of going bearish on any private investor’S favourite. Not that I was the one who sold 17 million shares at 167p or that the number of people long of the stock has changed one bit. It was 99% before and it is 99% now at a leading spread bet firm. So much for my influence eh or the inability of a private investor to take a loss..!
On this note, I go to a stock which is if anything, even more popular among the masses – EMED Mining (EMED). And, like Gulf Keystone, this is presumably also a stock in which one is something of a taboo breaker if you deviate from the 100% bullish stance at ‘the leading spread bet firm’. In fact, just as in the case of Gulf, I was formerly a big fan of the stock on a technical basis and hence was an all round popular chap until recently with the bulletin board ‘brigade’. However, it was the price action in April that really broke the back of the shares with the loss of the initial 9.5p support coming in after a bull trap failure back above the 200 day moving average – then at 10.5p. It can be seen how there were three clear attempts to sustain the 200 day line last month and that worst of all, they found resistance at former March lows above 11p.
But there was even more doom to come. For May, the 200 day moving average came into play again, this time falling into a dead cross sell signal with the 50 day moving average. While such signals can sometimes ironically find the bottom of a move, in this instance it would appear that after all the negativity of the price action of EMED over the last month, we could still be looking at more downside…
Just how much more the stock could fall is implied by support line projection of the 2 year descending price channel I have drawn on the daily chart, and which fits very well despite this being a very volatile market at times. Indeed, the 2 year price channel floor target is currently pointing as low as 5p. This is a destination which could be arrived at as soon as the next couple of weeks at the present rate of decline. The only real mitigating factor for the bulls is that the RSI now at 19 is extremely oversold. But the way that things are going, another low print of the RSI and at least another 1-2 pence downside could be on the cards.
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