zak mirs weekend missive – Alarm Bells, Croda, Burberry And the One Party State.

2 mins. to read

For some reason I feel that a blog, even boring old financial ones, should carry an element of human interest. The “interest” today is that I woke up at 8am rather than 6am (such an exciting life eh?!) as I intended to, and so as a result I am now horrifically behind in my work duties. And, as anyone who has failed to set their alarm clock will be aware of, you awake with a sense of panic combined with a feeling of exhilaration that presumably even a shot of a class (A) drug cannot compete with!

So, somewhat fully refreshed, I am able to see with 20 / 20 vision what a marvellous charting spectacle we currently have as in Croda International (CRDA) at the moment. This is said on the basis of a massive and deep bear trap rebound from below the post July 2197p neckline support. In fact, the breakdown for the stock via a gap to the downside on November 1st should have been curtains for the bulls. However, we did have the proviso even then that the stock would retest the old April intraday low at 2029p providing there was no end of day close back above the gap at 2197p.

In fact, what happened was an eye watering bear squeeze with an end of day close of 2220p on November 6th. Those who bought on the open the following day at 2227p have had to wear a retreat down to 2,175p, but now look to be on track for further upside. Indeed, while there is no end of day close back below the green 10 day moving average at 2212p it would not be surprising if the stock went back all the way to the former October intraday resistance at 2500p plus by the end of the year.

Switching tack (with my fresh eyes!) and onto China, where I have always had a problem with the one party state concept, something which overshadows their unarguable economic miracle. I am afraid if I had any say in the matter, the West would simply not do business or provide services to any countries that are not democratic. Unfortunately, such high principals are not easy to achieve, especially when as Zak Mir Senior reminded me today, the U.S. is mortgaged up to the eyeballs to our friends in Beijing. You’re probably wondering where all this is leading to? Answer – the daily chart of luxury goods group Burberry (BRBY) where there appears to have been some regrouping after the September profits warning. I fully expect another couple of profits warnings over the next year and am assuming that this week’s 1,280p intraday high will not be beaten anytime soon. Indeed, the view is that while there is no end of day close back above 1,280p –the former August support zone, we could see the shares fill the floor of an October gap as low as 1,018p. All this should happen well before the end of January 2013.

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