Zak mir on Vanity Purchases

3 mins. to read

As most of us are aware, one of the first things that billionaires like to buy when they attain that rarified status is a football team. Mostly, such purchases fall into the category of vanity/toys for the boys and in a classic case of “more money than sense”, they then lose their owners money hand over fist…

Apart from being more than £999 million short of the figure required to be in the position to ask Abramovitch what a fair price for Chelsea would be, I have actually fancied, wallowing in my new status as editor of spread bet magazine, buying a spread betting firm rather than a football team. Ironically, given all the regulatory red tape and the egos of budding Gordon Gekkos in the City of London, it may be that attempting to grappling with the likes of Wayne Rooney or Chelsea’s Frank Lampard represents a walk in the park as compared to being CEO at!

A company which would be of interest to me in the wake of a lottery win and that has been mentioned on several occasions in Spreadbet Magazine by its venerable founder now at Titan Investment Partners, is London Capital Group (LCG), currently valued at £20m.

As can be seen from the daily chart, the bull trap decline from above the 200 day moving average – then at 55p – followed by an unfilled gap to the downside represented a double sell signal which worked well. This gives rise to the reasoning that this is a stock which follows technical rules quite well. If it does, we have a reverse head & shoulders buy set up, with the right shoulder support at 33p. Above this, on an end of day close basis, we have the prospect of a February gap top fill at 49p’ likely over the next 4-6 weeks. Only cautious traders would wait on an end of day close back above the 200 day moving average at 39p before buying into this group currently valued at £20m – loose change and amazingly, less than their cash on hand.

Last weekend, regular readers will recalled that I was looking at the daily chart of Gulf Keystone (GKP) which was sporting a so called “Eve & Adam” chart formation from which the average gain is 35%. So far we have seen a 10% rise in a week, helped along by our good friends at Goldman Sachs suggesting the Kurdistan based explorer could be a bid target. My latest speculative sizzler is AFC Energy (AFC). This may not have the glamour of an Eve & Adam reversal, but a bull flag based at former resistance from June at 41p provides the base to my buy call. The view now is that at least while there is no end of day close back below the former ceiling of last month, that we could be treated to a minimum move towards the initial resistance that was seen earlier this month at 52p, and likely before the end of July and on a 1-2 month timeframe, a retest of the former October 59p peak. The whole idea is backed by the 50 day / 200 day moving average golden cross buy signal which came in at the end of the week and that I cover in my TA Myths exploded book below.

Finally, the mixed messages of Ben Bernanke and friends and the political tortilla in Portugal have understandably caused the Euro to wobble. But, I would venture to suggest that the single currency has not wobbled as much as its detractors and the bears might have liked. Indeed, the latest charting twist is that we have a combination of a sharp bear trap rebound from below the former May floor at $1.28, as well as the likely floor of a rising trend channel starting this time last year at $1.30. While the implied price channel top target of $1.40 may appear a little on the rich side, the message here to me is to trade on the long side and to look towards June resistance at $1.34 before the month is out.

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