Market Position: Gold above $1,220 Targets $1,300
Morrisons Supermarkets (MRW): 2015 Triangle Target towards 220p
Until today, you might be forgiven for thinking that Northern focused grocer Morrisons, and tech stock hero retailer Amazon (AMZN) were at opposite ends of the retail sector. In most people’s minds, the former represents the 20th century and the latter the 21st century – and beyond. But at least for today we have seen these two unlikely partners team up together as an odd couple. The result is that from now on we shall be treated to the option of being able to order a whole range of Morrisons products via Amazon Prime and Amazon Pantry. By rights this is a marriage made in heaven as the supply deal means that Amazon does not need to fork out millions to get a foothold in the food delivery space, and Morrisons gets even more distribution, and perhaps more importantly, gets quite an image boost. Presumably those hoping for a bid for online supermarket Ocado (OCDO) from Amazon may decide that it is time to head for the exit in terms of speculative positions. But it was revealed today as well that Morrisons has struck up a new deal with Ocado which would improve its distribution throughout the UK. What was interesting, perhaps most of all, is the way that Morrisons finished its announcement by warning that there is no certainty the deal with Ocado will go through, especially if it does not appear it would contribute to making the online offering profitable. Presumably, that is a health warning we would already have worked out for ourselves. But at least from a charting perspective it can be seen how the recovery for Morrisons has been more than just a fundamental one in the recent past. For instance, we have been on the receiving end of a sharp post December bear trap rebound from below 150p, with the big buy signal here the January gap through the 50 day moving average now at 165p. The view now is that provided there is no end of day close back below the 10 day moving average at 185p, one would be shooting for a top of 2015 triangle target as high as 220p over the next 6-8 weeks. At this stage only back below the 10 day moving average at 185p would even begin to delay what appears to be a very robust and accelerating upside break.
Sky (SKY): 2015 Triangle Target towards 1,250p
It is perhaps fair to say that if Sky was not a company which was the brainchild of Rupert Murdoch and family, it would be hailed as one of the great UK success stories, and a fantastic example of disruptive market behaviour at its best. Indeed, the company has gone from being something of a laughing stock in the face of the then terrestrial competition, to a phenomenal growth story. What can be said now at least from a technical perspective is that it would appear the shares have made good on the recent bear trap rebound from below April – August support at 976p. The likelihood now is that at least while there is no end of day close back below the former 2015 support, we shall see acceleration to the upside. This is especially so given the latest break for the RSI indicator back above the neutral 50 level to stand at 53. The ideal scenario would be for a quick a quick break of the 200 day moving average at 1,066p to negate the recent February dead cross sell signal between the 50 day and 200 day moving averages. Indeed, it is expected that back above the 200 day line one would be justified in looking to a top of 2015 triangle formation target at the 1,250p level as soon as the end of April. At this stage only back below the last 1,000p swing low would really question the idea of a rebound here.
Small Caps Focus
Lekoil (LEK): Falling Wedge Targets 200 Day Line
Lekoil has been one of those private investor favourite stocks of decent promise, but which has so far not quite been able to deliver the goods on the upside. Clearly a problem here is the word “oil” in the company name. Nevertheless, the latest break of a falling wedge formation – a bullish set up, does suggest that provided there is no end of day close back below the bottom of the wedge at 12.5p, the upside here is suggested as being the 200 day moving average at 21.75p. The timeframe on such a move is regarded as being the next 1-2 months, or sooner.
Rapidcloud (RCI): Triangle Target at 60p at Best
I rather regret not doing the usual technical analyst approach on Rapidcloud given the turnaround we have seen of late. However, I was rather put off by some negative fundamental comment on the company – something which is rather ironic given that I am biased towards squiggles on charts. However, in the interests of charting and the price action, it is still worth looking at what shares of Rapidcloud have done over the near term. This is said in the wake of the sharp rebound within a broadening triangle which has been in place since the beginning of last year. The latest here is that we have seen an approach of the 200 day moving average now at 27.48p. The message at the moment is that as little as an end of day close back above the 200 day line could lead as high as the triangle top at 60p. While this is obviously a long way away, a 2-3 months timeframe may still be appropriate as an estimate. The only negative near term is the way that the RSI is at 90 and extremely overbought. Nevertheless, one would take the view that at least while there is no break back below the 22p – 23p zone the upside here will be the big triangle target.