Chart of the Day: Meggitt

The fall in Sterling has already influenced potential and actual takeover deals, and it looks as though this will continue to be the case as the divergence between US and UK interest rates makes assets here like engineer Meggitt that much more attractive after Brexit.

Meggitt (MGGT): 500p Plus Technical Target

From a technical perspective it would appear that shares of Meggitt are very much in play, with this market trading in the wake of a narrow late June bear trap – a great flush out of weak longs – and then the recovery of the 50 day and 200 day moving averages ever since. The position now is that we see the stock having come off a rebound which involved the 50 day line at 403p, as well as an uptrend line from February running at the same level. All of this now goes to suggest that provided there is no end of day close back below the 10 day moving average at 430p we should anticipate considerable further upside. All of this should continue to happen within a rising trend channel in place from as long ago as November. The resistance line projection of the channel is currently heading as high as 510p and this is the assumed target, with or without the latest frisson of excitement on the M&A front from activist investor Elliott. The time frame on the 500p plus target is regarded as being within the next month. In the meantime any dips towards the 10 day line are regarded as buying opportunities.