Zak Mir on Web Sheriffs, Ivy League universities and Blinkx

Professor Ben Edelman aka Web Sheriff, first came to my attention not so much due to his treatment of video search company Blinkx (BLNX), but actually in relation to how he is faculty of Harvard Business School. This reminded me of my own academic career which “peaked” so to speak with two failed interviews at Oxford, one at Cambridge, and best of all, yes you guessed it, one for Harvard!

I thus have nothing but respect for the likes of Mr Edelman, who is not only an academic, but is one with charisma too boot and comfortable in the media spotlight. In the wake of this, and the “storm in a teacup” over the real fundamental position of AIM darling Blinkx, I emailed the good Prof to ask for an interview. This was after the share price of said UK group had halved. Additionally, given the awe that most of us have for those at the top of the academic tree, you would not really want to be saying buy when someone at the pinnacle of this area is saying sell… But perhaps the main reason for emailing Edelman to ask for an interview 10 days ago is that someone from such an establishment background was effectively acting as a people’s champion in terms of highlighting aspects which they may not be aware of or understand properly. This is a cause that is close to SBM’s heart.

It is interesting that even in the wake of the information explosion (overload some would say) that the internet has brought us over the past decade, the ordinary private investor remains relatively under informed regarding the company he or she may be investing in. While it does not require too much imagination in many cases to work out why there may be a degree of “fogginess” regarding the fundamentals of some more speculative companies, informed blogging remains something of an elusive art form. This is why we should follow the work of Professor Edelman particularly closely in the coming weeks and months. No doubt there will be more from him on Blinkx, and additionally on search engine giant Google (GOOG). The good news from the Google campaign is that our hero has shown himself not to be afraid even of the largest of targets (a bit like our dear founder Richard Jennings!).

But at least for today, the catalyst for writing about the “Web Sheriff” is to actually provide an update on the daily chart position of Blinkx (BLNX). While this is a relatively small company in market capitalisation terms, now less than £500m, it has already been one of the more memorable stock movers of the year to date. The highlight on the daily chart from a technical perspective was actually the very obvious bear flag in place at the end of January. Why was this a bear flag highlighting the prospect of a substantial downside move? The clues was the way that the top of the flag below 190p was well below the old December support below this level.

There was also persistence resistance at the time well below the neutral 50 level – traditionally a state of affairs which is the harbinger of a breakdown for a stock or a market. In fact, the best time to have gone short here was on January 17^th on the end of day close back below former December 191p support.  This was as Blinkx shares were going into the flag – well ahead of the break down the bottom of the flag by which time it would have been too late to enter…

The position to me now is that we have seen a double bounce off the floor of what is a relatively rare charting setup – a broadening triangle. The good news for the bulls is that such patterns are relatively reliable, something which could mean that the second bounce we have seen off the June 2013 support line at 85p could be the last for now and recovery is in sight. As this stage, the ideal scenario is that there is no sustained price action back below initial February support at 100p ahead of a retest of the recent resistance at 140p plus. Of course, it will be interesting to see how any further research from Mr Edelman may sway the technical outlook here. Be sure to read the next edition of SBM in which we have an exclusive interview with him. Oh and it’s free!

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