Investors Chronicle says: Sell
My view: I agree
Technical factors that could affect the stock in the short term:
Poor relative strength: the stock has underperformed the FTSE 100 in the last nine months, a continuation of this pattern is expected. Without clear direction in the main index, I do not expect the stock to rally to new high before the next company's announcement due on 7th November (Interim management statement).
General market trend (FTSE 100): negative. As long as the trend is negative the stock is unlikely to make any progress.
Directional movement indicator at the bottom of the chart gave a sell signal on 2nd August, this will be cancelled when the blue line crosses over the red line. At present the lines are no way near crossing each other.
First support broken (50-day moving average) indicating weakness.
Second support broken (200-day moving average). If prices fail to rally above the 200-day moving average in the short term we can expect a continuation of the decline. In general the test of the 200-day moving average is followed by a resumption of the advance. This is not happening, second time the stock drops below the 200-day moving average.
Potential resistance levels:
Previous high at 1328 (29th August high)
Sell signal at 1364 (2nd August close)
The stock should not trade above these levels in the short term otherwise the bearish case would be compromised.
Potential target in the short term: 1136 (100% of the decline from 31st July to 12th August).
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