Zak Mir’s midweek missive – High Street Heroes And Villains

In another example of the collective worth (or not as is the case) of front page financial journalism, the proclamation of the Death of the High Street in the financial press in the autumn of 2011 unleashed one of the  greatest rebounds in this area of the stock, as anyone who has been following the price action of names such as Dixons Retail (DXNS) and Thomas Cook (TCG) will be well aware. However, it seems appropriate to look around at other constituents, if only to take the temperature across a selection of names whose share price charts are currently of interest.

First up is chocolate retailer Thorntons (THT), and where my most recent attempts at getting a cocoa fix from a local store ended up in the first instance in the door being closed in my face (staff do have homes to go to). Nevertheless, the shares have doubled since I first marked them out for greatness in November around the 30p mark (applause not required!). My view now is that it would be a mistake to underestimate the momentum behind the move higher here. The likelihood is that while there is no end of day close back below the 57p support zone of last week – the floor of the current bull flag, the upside here should be at least as high as the November 2011 price channel top of 70p. Indeed, at this stage I would suggest that 70p is the  “minimum” on offer here – coincidentally the price of a chocolate bar!

I was going to discuss Topps Tiles (TPT) last today, but it would appear that the chart configuration here on the daily timeframe is so similar to Thorntons that I’ll slot it in second. Not only do you have to look twice to identify the differences, we also apparently have a very similar target. In fact, in Topps Tiles case the price action has been captured by a rising November 2011 price channel, with the difference being that here you would probably be gunning for a 73p target at the 2 year resistance line projection. There is also the added help for the bulls of having the blue 50 day moving average (now at 58p) as a convenient end of day close stop loss should it be broken.

Given how many profits warnings and generally adverse / pessimistic news there has been coming from Carpetright (CPR) over recent months, it is surprising that the shares are not trading at multi year lows. Instead, it would appear that there has been, and continues to be, an almighty bear squeeze here. A squeeze that I detect is now coming to an end… As a chartist I have to insist that the technical’s here come first and now are aligning with the negative fundamental backfrop, especially after the extended failure at 700p since the beginning of last year. This may not be enough to break the shares down, but it can be said that while there is no end of day close back above the 200 day moving average at 663p – just above today’s intraday high – the downside for Capetright should be toward s a falling support line from the end of 2010 heading as low as 560p. This would be my 1-2 month price target for the stock.

Finally, although Burberry (BRBY) is supposed to be a member of the personal goods sector, it has a shop window or two which, in my book, makes it a High Street name. What is intriguing here are the recent insider share sales, and the spin we have been treated to with regards to the negative exposure the group has to a possible Chinese bubble burst. Thus far however,  the house of cards here has not cracked  –chart wise – and therefore, kicking and screaming I am forced to do a volte face from my Q1 bear call on this (see link below) and go with the recent recovery. Only a weekly close back below the 50 day moving average at 1,367p abandons the prospect of further strength towards the October price channel top and 1,600p. That said, I still think (hope?) there will be a “surprise” profits warning later this year.