The AIM Market And Marmite

The AIM market seems to be a place which has a Marmite following: you either love it or hate it. That said, even the worst enemy of the concept would probably deliver a grudging thumbs-up of the concept if a particular stock they are holding in this space is soaring, in the manner of the Horse Hill companies last week. But for this week I thought I would update some of the former favourites among private investors over the past couple of years. It is interesting that their fortunes have been so varied, in terms of both the fundamentals and the price action.

A good case in point is Amerisur (AMER). This South America focused explorer seemed to have everything in its favour until very recently, the plunge in the oil price notwithstanding. Now I read in the financial press that insult has been added to injury with accusations of corporate governance issues. Luckily, as a technical analyst I can put aside such excitement and focus on the daily chart configuration of the post summer period. Here we see the expected breakdown in the wake of September’s loss of the 200 day moving average. This key feature currently lies at 46p, and not surprisingly is still falling. The conclusion to draw at the moment is that one would regard the March/April price action to date as being a possible major reversal. This is on the basis that it is an exhaustion gap reversal. Nevertheless, for the bulls to prove their metal one would wish to see a weekly close back above the top of the gap at 29.75p. If this could be delivered this week/next week, one would at least be able to call the stock back up to the top of a rising trend channel from February at 38p over the following month. Such a scenario could play out even if this was only an intermediate rally. In contrast, back below the 25p floor of last month over the next few days would suggest that the recovery here could be delayed still further.

Ithaca Energy (IAE) has been a standout recovery play on AIM in recent weeks, with the fundamentals of what is apparently a “cheap” stock a reason for the bounce. From a technical perspective the story is arguably quite analogous in the sense that the shares became extremely oversold under RSI 20 and under 30p last month. Since then we have been treated to no less than three unfilled gaps to the upside, and while at least two of them remain unfilled this looks to be a solid recovery situation. The next momentum buy trigger is regarded as being an end of day close back above the 50 day moving average at 48p. A clearance of this should be enough to take Ithaca towards the main 2015 resistance zone from 70p plus.

Finally, it could be said we have the most “difficult” of today’s AIM trio. The would be Yorkshire potash miner Sirius Minerals (SXX) does seem to be something of a binary prospect. However, judging by the price action in the recent past it can be said that the bulls have got the bit between their teeth. The configuration of the latest move through the 200 day moving average at 10.70p implies that at least while there is no end of day close back below the former January resistance at 11.5p, a top of 2014 price channel target of 17p could still be seen over the next 2-4 weeks, even though the shares are currently very overbought. Indeed, cautious traders would look to buy into any dips towards the January peak to improve the risk/reward of going long.