Zak Mir’s weekend missive – A Is For Aspirational AIM Stocks

Going into The Budget this week, and which I personally really hope is the last for George Osborne, as I believe that the Chancellor is totally out of his depth; it appeared that there really would not be anything pleasant emanating from the Despatch Box. It would obviously have been too much to expect that Mr Osborne might resign on the basis of the economic performance of the UK over the past three years but, being such a fan of AIM stocks, by the close of play on Wednesday I was actually feeling that my call for George to quit could be somewhat premature. After all, apart from the abolition of stamp duty on AIM stocks we were also reminded how much wealth is stored up in the UK housing market and how if it were not for this we would certainly be more in the mire like the PIIGS nations.  The Chancellor’s move on the housing market and “fracking”, was an appropriate reminder that while the UK may be drowning in Sovereign Debt there could indeed be a get out of jail card. Indeed, the fracking revolution could do for us in the 2010’s what North Sea oil did to help Mrs Thatcher ride out the Unions and other nasties in the 1980s.

In celebration of the stamp duty free new era I am taking a look at three of my personal favourite AIM stocks of the moment. Of course, it would be a crime not to look at the charting position of arguably the “number 1” stock in this area – Gulf Keystone (GKP). Looking at the chart, we can see how the price action has disappointed so far in March after quite a bright start to the year and which turned out to be a bull trap through both the 200p level and the 200 day moving average now at 198p. There is fresh hope for the longs however on the basis of Thursday’s end of day close back above the initial March 182p low – not much to go on, but a buy signal of sorts. On this basis, aggressive longs may choose to go long to target 200p plus again over the next few weeks, but only while there is no break back below the initial 2013 floor at 172p. In fact, below 172p would turn the picture here quite dangerous looking.

There are two types of charting, what I term ordinary and also “flash”. Flash does not refer to it being done in a hurry, but rather when something a little out of the ordinary is pulled out of the hat. In the case of Coal of Africa (CZA) I would class the trendline from the former September 13p intraday low as being “flash” if only on the basis that it is something that you would not normally have drawn. But it maps out both a bear trap below 13p for November and December, as well as another one from below the 14.25p initial March low. The likelihood now is that while there is no end of day close back below 13p we could see Coal of Africa at least head back towards the late February resistance zone around the 18p mark over the next 4-6 weeks.

Finally, a stock which the Editor may have a thing or two to say about on a fundamental basis, but where I have plenty to offer on the technical side – Ceres Power (CWR). There are plenty of charting plus points here including the way that since the beginning of February, the black 200 day moving average has start to arch upwards, there was just a one day touch of the 200 day line in January. We also have multiple support points around 8p in recent weeks – the top of the October gap, and while the 8p zone is held on a weekly close basis we have the chance of a top of September price channel target of 24p. All this with no stamp duty, who could ask for more?