Zak’s Daily Round-Up: IAG, PSON, WPG, NRRP, MTPH and STAR

Market Direction: Euro/Dollar above 10 Day Line Targets $1.16

International Consolidated Airlines (IAG): Above 50 Day Line Targets Range Highs

While we are looking at the financial markets and attempting to work out what the next major move may be, it seems wise to look at individual stocks within the FTSE 100, marooned as it is within a surprisingly tight range between 6,100 and 6,200. What can be seen on the daily chart of International Consolidated Airlines is the way that the stock has been in a range between 500p and 620p, with the only exception to this being the brief February bear trap from below 500p. After that the 500p zone was recovered relatively quickly, while the 50 day moving average now at 537p took until last month before being conquered. This provides us with a decent bullish opportunity in the sense that the shares are both back above the 50 day line and RSI 50 to leave them at 54. This should provide the momentum for a new leg to the upside. The favoured destination is the December resistance zone towards 620p. Only cautious traders would wait on a clearance of the 200 day moving average at 559p as a momentum trigger before taking the plunge on the upside.

Pearson (PSON): Above 50 Day Line Targets 1,000p Plus

It has been an interesting six months at Pearson, given the way we are trading in the aftermath of the sale of the “Jewel in the Crown” – the Financial Times. The problem now is that there is a vacuum of sorts, one that reminds us of the old advertising slogan, “No FT, No Comment.” What we have now since the floor was made under 700p in January is the way that there has been a recovery of the 50 day moving average now at 825p. This feature also ties in with the floor of a rising trend channel currently running at the same level. Therefore, with notional double support at 825p we can look to a further squeeze higher towards the top of the rising trend channel from the autumn heading as high as 1,050p. Ahead of this, those looking for extra confirmation of a break higher would look to an end of day close back above the 10 day moving average at 887p as their cue to go long.

Worldpay (WPG): Triangle Floor Rebound

We have an intriguing setup with the present position at Worldpay, where it can be seen how for the first part of this year in particular there has been what looked like an extended topping out process. However, with the higher lows since February, with the long lower wicked candles, we have the chance of at least an intermediate recovery. The position now is therefore that while there is no end of day close back below the October uptrend line at 275p we could see a break up to the January resistance line projection at 290p. But at least it could be the case that above the 2016 resistance line a retest of the intraday peak of the year to date at 320p is indicated over a two month view.

Small Caps Focus

North River Resources (NRRP): 200 Day Line Clearance Awaited

North River Resources is one of those stocks that one keeps in mind in the background, given the hope that at some point there will be a sustainable recovery. What can be seen on the daily chart of the shares since the start of the year is the way that there have been at least a couple of false dawns. The hope is that on this occasion we shall be treated to a lasting rebound. But rather than hoping, the best way forward here may be to wait on an end of day close back above the 200 day moving average now at 0.15p. At least one would expect that a clearance of this barrier could lead to a top of September price channel target at 0.3p. The timeframe on such a move is seen as being by the end of next month.

Midatech (MTPH): Possible Wedge Reversal

One of the better charting setups in the book is that of the bullish falling wedge formation, or wedge pattern, which means a trader can go long very low in the range. This is what we may be seeing on the daily chart of Midatech, where there has been a rebound off the December formation at 135p, with the cue to go long being a break back above the old December floor at 150p. The message now is that at least while there is no decline back below 150p one would consider we are looking at a bona fide recovery situation. Only cautious traders might wait on a clearance of the 50 day moving average at 165p before going long, on the basis that there will at least be a retest of the January resistance at 200p plus over the next month or so.

Starcom (STAR): Broadening Triangle Heading Towards 6p

Sustained price action back above the 50 day moving average tends to be a very reliable sign of a stock or market turning around after an extended bear move. This would appear to be the case as far as Starcom over the past couple of weeks, with the intraday support points coming in at or above the 50 day line now at 1.68p. What helps for the start of April is the way there has been a quick clearance of the 2.5p former March resistance, with the stock quickly approaching the 200 day moving average at 3.02p. The message at the moment is that as little as a weekly close above the 200 day line should be enough to trigger a journey up to the top of the broadening triangle over the next 2-3 months as high as 6p. In the meantime any weakness back towards the 50 day line to cool off the present overbought RSI at 78 is regarded as a buying opportunity.