Zak Mir on top traded tiddlers MTV, ACP & ECR

By Zak Mir. 

Although many more established market commentators can turn their noses up at penny stocks, I often find that the technical analysis I offer which generates the most traffic is usually about the tiddlers. It seems to me that your average trader isn’t so bothered about the direction gold or Sterling are heading in, but rather care far more about the likes of Motive Television (MTV) or ECR Minerals (ECR).

I see a couple of explanations for this. First is that there really isn’t very much serious TA commentary on such stocks, but plenty on things like gold and Sterling. The second, of course, concerns the multiples on offer. Where you might hope to profit from an 8% gain in Rio Tinto, ECR Minerals could multiply your money. The flipside to this is that making 6 or 7 figures on a stock like ECR is nigh on impossible, unless it flies to the moon, as GKP did.

Today I am first looking at the top three traded stocks in the London market yesterday, starting with MTV:

The main technical event that we are all waiting for is probably a run up to a death cross sell signal of the 50MA and 200MA crossing each. These stand at 0.023p and 0.021p respectively. The sweet spot for traders for death crosses (and also golden crosses) is usually in the few weeks preceeding the signal itself. In the case of MTV, this suggests the stock is under pressure. Although the March price channel floor of 0.04p seems a little cruels, it is difficult to imagine how the could avoid a retest of the August support zone towards 0.1p over the rest of the year. At this stage, only a weekly close back above the 200MA would do anything to counter the bearish argument.

The next most heavily traded stock was Armadale (ACP):

The zone of interest here is around August’s intraday peak of 0.19p. This represents the most like area of support, if there is a further pullback from November’s high of 0.33p. To be honest though, it would probably be better if the shares fell further to make the risk/reward more attractive. This said, there is a notional rising trend channel in place on the daily chart, since the end of the summer. Resistance for this is implied at 0.45p. This is clearly a decent distance above current levels and makes the idea of waiting for a further dip to get a better entry point all the more attractive. In fact, at this stage only a weekly close below the August peak would really be incentive to abandon a bullish stance towards this stock.

The final stock in my trio is ECR:

Septembers golden cross of the 50MA and 200MA lines helped consolidate August’s breakout. Since then the share price has gained traction and built on this foundation. This is further supported by the movement since the second week in October, as the 200MA has continued to rise, now standing at 0.21p. As long as there is no end of day close below the former August peak of 0.51p, the upside here should be towards the July price channel top of 0.7p as a “minimum”.