Zak’s Daily Round-Up: ANTO, FRES, ITRK, SHP, AMER and AVN

Market Direction: Sterling/Dollar Accumulation Zone towards $1.44

Antofagasta (ANTO): Likely Bear Trap

It has not exactly been a pleasant month to date for many holding mining stocks, and some of the gloss of the early 2016 revival has come off many plays. We also have to cope with the “Sell in May” issue as well. But looking at the daily chart of Antofagasta it can be seen the pullback from the March peak towards 600p may have been painful, but so far has been arrested just where one would have wanted, near the floor of a rising trend channel from as long ago as the turn of the year. The floor of the channel is a somewhat grey area. However, the view at this stage is that at least while there is no end of day close back below the initial May support at 405p one would be looking to an intermediate rally here. The favoured destination at this point is seen as being the 50 day moving average now at 478p, a feature which capped the price action at the beginning of this month. Only cautious traders would wait on a break back above former April support at 438p to confirm a bear trap rebound, before taking the plunge on the upside.

Fresnillo (FRES): Persistent Trend

What is interesting about the recent share price trajectory of Fresnillo is the way that although many of its counterparts in FTSE 100 mining have drifted, we have seen this stock only dip slightly, where others have been slammed quite painfully. Perhaps the clue here is that Fresnillo has Silver has one of its main production threads, as well as Gold. As far as the overall technical picture on the daily chart is concerned it can be seen how we have progress within a rising trend channel which can be drawn in from as long ago as September last year. Highlights since then include the way that there was an as yet unfilled gap to the upside in February, and the 50 day moving average at 990p currently backing the price channel as support. On this basis one would say that provided there is no end of day close back below the 50 day line one would be looking for further significant upside. Just how high this could stretch is suggested by the 2015 resistance line projection, pointing as high as 1,390p. This is the 1-2 months timeframe target, especially in the wake of the latest bounce for the RSI indicator, now at 57/100, off an uptrend line in place since the end of January.

Intertek (ITRK): 3,600p Price Channel Target

If nothing else, it can be seen on the daily chart of Intertek how the progression for the shares in recent months has been persistent and consistent in favour of the bulls. The vehicle for the rise is a rising trend channel which can be drawn in from as long ago as September last year. Indeed, the only hiccup in the recent past was the February probe below the floor of the channel and to the 200 day moving average, now at 2,776p, but then towards 2,600p. This “one touch” bounce off the 200 day line is a classic signal, and it is not surprising that the stock has managed to flourish ever since. Indeed, the chances are that provided there is no end of day close back below the 50 day moving average at 3,173p, we should be treated to a top of 2015 price channel target as high as 3,600p over the next 4-6 weeks.

Shire (SHP): 2016 Price Channel Target

If nothing else, there is plenty of charting interest on offer as far as the daily timeframe of Shire is concerned since the start of the year. The most intriguing aspect, perhaps, is the way that the stock has “seen” the main August resistance line, currently level with the 20 day moving average at 4,194p. On the downside we have the floor of a rising trend channel in place since the beginning of the year, with its support line running level with the 50 day moving average at 4,024p. This means we have a notional trading range between the 50 and 20 day moving averages, with an end of day close outside these parameters determining the new trend. Ideally, the stock will follow the RSI uptrend line from February higher, with no end of day close back below the 50 day line. The initial target lies towards 4,700p at the 2016 resistance line projection.

Small Caps

Amerisur (AMER): Support At 200 Day Line

Although Amerisur is a stock which seems to tick all the correct technical boxes, so far the real upside one feels is yet to be explored. But the bulls may be getting nearer to their time of glory. This is said in the wake of the latest bounce off the 200 day moving average currently running at 25.83p. What is helpful regarding the 2016 break of the 200 day line is the way that it has occurred while the feature is still falling – something which is only seen in the most bullish of situations. This allows us to assume that provided there is no end of day close back below the 200 day line, one would be looking to a fresh leg to the upside, back as high as the upper 30s – which has been the ceiling here for the best part of a year. Only cautious traders should wait on an end of day close above the 20 day moving average at 28.26p before pressing the buy button.

Avanti Communications (AVN): 50 Day Line Clearance Awaited

Given the rather divided opinions that one reads regarding the fundamentals of AvantI Communications, it may be wise to stick to the technicals. What is interesting here is the way that there has been an extended base here since the start of the year below 100p. It is backed by an uptrend line in the RSI window from January which has been multi tested. An end of day close above the 50 day moving average at 97p could just about be enough to deliver a 10% – 20% recovery back towards the former March peak at 115p even if the bear run resumes after that.