Zak Mir – on “Everyone and their mother”, RRL, RKH & AEX

There are stocks where you just know that everyone and their mother are long, have been so for ages, and are probably ready to bite your head off if you suggest that there will not be a turnaround anytime soon. This description just about fits the bill as far as Range Resources (RRL) is concerned, with the last time that it was even possible to dream of recovery here on a technical basis was at the point of its bear trap rebound from below 3p at the beginning of June.

This, admittedly, did take the stock up nearly 10% but, given the overall flow and decline in the stock even since the beginning of the year,  this rally event was but a mere drop in the ocean.  In fact, there has been one winning strategy here and one alone since the 50 day moving average – currently at 2.48p – was broken at the beginning of April – sell into strength. One should still be happy to do so, with the message being that unless or until shares of Range Resources are able to clear the 50 day line on a weekly close basis there is likely to be further downside here. The favoured destination while we wait on this, at present somewhat unlikely buy trigger, would be the floor of a falling price channel drawn on the daily chart from August last year as low as 1.2p. The timeframe on such a move is seen as being potentially within the next 1-2 months.

While there may have been an initial dead cat bounce buying opportunity here at Rockhopper Exploration (RKH) in the wake of last month’s dive towards 110p, it may very well be that the stock has now revealed its hand in terms of the next major step for the price action today. This is said on the basis of the failure just above the former June 119p support – the prior low of 2013 until last month’s dip to 110p. While one might wish to allow as high as the late July 124p intraday low as the stop loss on the bear argument, at least while there is no end of day close back above this level the risk for Rockhopper is for a partial or even full retest of the October price channel floor at 110p. Even those looking to job on the long side here would probably be best off waiting for the retest of 110p or alternately a break of the RSI 50 level – currently 40, as their momentum buy trigger.

It is of course a case of nothing ventured, nothing gained when it comes to bottom fishing beaten down penny stocks. While you can take every precaution to ensure that you have not been sucked in on a false dawn bull trap, sometimes it is simply unavoidable and perhaps two or three attempts are required to get the correct entry point. The challenges of such an occupation are revealed currently on the daily chart of Aminex (AEX), a highly popular speculative favourite in the small caps zone. 

What can be said currently is that the bull argument rests on at least three points. The first is the extended base at the floor of a falling price channel heading below 2p with the decline accompanied by positive divergence in the RSI window and an uptrend line.  But, perhaps my favourite aspect here is the bull flag in place since the middle of last month with its floor at the former initial August resistance at 2.11p. The implication is that while there is no end of day close back below this old resistance we have a possible turnaround on our hands which could stretch towards the 200 day moving average at 3.5p plus as soon as the end of next month.

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