Zak’s Daily Round-Up: AHT, BA., GKN, GWP, KOOV and TCM

Market Direction: Dollar/Yen Consolidation Well Below 110

Ashtead (AHT): Wide Rising December Price Channel

It would appear that with the daily chart of Ashtead we have a surprisingly robust technical picture. This idea is backed by the way that we have been treated to higher lows, which have been in place since the floor of the year was made in February. However, the big event of the recent past has been the as yet unfilled gap to the upside made last month, with a two day rebound off the 50 day moving average then towards 860p and now at 891p. Since then there has been the mid May unfilled gap to the upside through the 10 and 20 day moving averages, with the best part of this recovery process being the way that last month also managed a recovery of the 200 day line now at 950p. The hope now is that there will not be any loss of the 200 day line ahead of a fresh leg to the upside. All of this would happen within a wide rising trend channel, one which can be drawn in from as long ago as the December resistance line projection at 1,225p.

BAE Systems (BA.): 2015 Price Channel Target at 530p

If nothing else, this year has served up some fascinating charts, with perhaps the biggest novelty being the way that, as in the case of Ashtead described above, we have an unfilled gap to the upside from February, with its floor running at 468p. What has been interesting since then is that on the May intraday dip we saw the stock probe no lower than 469p. All the while we have been treated to generally higher lows for the stock within a rising trend channel which has been in place since as long ago as November. The implication is that provided there is no end of day close back below the floor of a rising trend channel from November, currently running at 473p, one would be confident of a fresh push to the upside. The favoured destination as soon as the end of next month would be the 2015 resistance line projection, heading as high as 530p. At this stage only cautious traders would wait on a clearance of the 50 day moving average at 493p on an end of day close basis before taking the plunge on the long side.

GKN (GKN): Above 50 Day Line Target 350p

GKN is not in the frontline of blue chip contenders, even at the best of times, with most short term traders fixated by what is going on in the resources space. However, the present position here on a technical basis is noteworthy. This is said on the basis of the February failed gap fill rebound versus the 255p gap floor and the slightly higher low put in later that month. This signal is one of the strongest in the technical analysis book, and is likely to dominate the price action for the near term. Indeed, it means that we remain biased to the upside, with as little as an end of day close back above the 50 day moving average  at 283p over the next few sessions suggesting that we shall be treated to a significant new rally. This should take the form of a decent progression back above the April intraday peak at 306p, and onto the top of a rising October price channel at 350p. The timeframe on the big target here is seen as being as soon as the end of next month, particularly if we receive a decent end of day close above the 50 day line for Friday.

Small Caps

GW Pharma (GWP): 700p Technical Target

I would guess that there will be few who would argue with the idea that the price action of GW Pharma over recent months has represented a rather rough ride. However, what can be seen on the daily chart since the middle of last month is the way that the momentum behind the shares looks to have settled on the upside. This is said in the wake of the gap higher, and the persistent action above the 10 day moving average at 502p. All of this suggests that at least while there is no end of day close back below the 10 day moving average at 502p we could have witnessed a noteworthy new leg to the upside. The ideal scenario is that the technical target may be as great as a January resistance line projection heading as high as 700p. The timeframe on such a move is as soon as the end of July.

Koovs (KOOV): Possible 85p Near-Term Target

What is incredible about the daily chart of Koovs in recent days is the way that we have been looking at a straight and clean clearance of the 200 day moving average at 32p over recent days, with no retracement so far to test this feature as new support. Indeed, the favoured scenario is for a push as high as 85p at the top of a rising trend channel from September, after any dip back to the 40p zone to cool off the overbought RSI is complete.

Telit Communications (TCM): 270p 2015 Price Channel Target

We have quite an intriguing setup with the daily chart picture of Telit Communications over recent months, underlined by the way that there has been a higher low in place for May versus the year lows achieved in February. All of this should ensure that even though there has been a pullback from the area of the 200 day moving average at 241p in early June, we have a decent recovery prospect. Indeed, the best way forward would probably be to assume that provided there is no end of day close back below the 50 day moving average at 206p a significant bull run is indicated. The obvious initial target should be towards the 200 day line at 241p over the next 2-4 weeks. However, the top of a rising trend channel from December as high as 270p looks to be the destination for this stock on a 1-2 month timeframe.