An update on ISAT, State of the markets, Easyjet and Debenhams

Wednesday, Feb 14 2018 by

This is an update to the comments I posted on this article
https://www.stockopedia.com/co...
Or to go straight to the comment here
https://www.stockopedia.com/co...
Here’s a great a great stocko article on overtrading and impatience when investing, and its one of the rules I have followed in my process. It refers to action bias
https://www.stockopedia.com/co...
However this doesn’t mean that we should just invest, forget and bury our heads in the sand. It’s been 3 months since I commented on Inmarsat (LON:ISAT). This 3 month is my invest and be patience time frame with the discretionary exception of profit warnings, unexpected negative news announcements or red flag occurrence. I’ve chosen 3 months as it represents a quarter. It’s now time to analyse evaluate and reconsider the Gartey pattern which formed on Inmarsat (LON:ISAT) charts and the price action in the potential reversal zone (PRZ). So let’s have a look at £ISAT’s chart

5a83efa0d9bd9ISAT.JPG

The gartley formed 1st downward blue arrow on left. From there we had what appeared to be a symmetrical bottoming pattern forming A-G (Note reversals often follow 7 wave sequences A-G) followed by G-A.  So the bears tried to force prices lower on 7 occasions and the bulls responded. From point G the bulls had the upper hand taking prices above the first harmi candlestick pattern (dark blue arrow) and back inside the gartley formation. From this point if price fails to continue rising look for the next development, looking at the chart we are able to identify a 1:1.272 AB=CD. At this time one is unsure whether the pattern has been completed or whether it is only the AB wave of a larger AB=CD. It would appear that only the AB wave of a larger AB=CD has completed as the CD leg dominates both in price and time (price is accelerating higher in CD leg) hinting at higher prices. 
From here I’m looking for a retracement in the form of another AB=CD and have annotated one on the charts this terminates at the 2nd highlighted red arrow and a doji is visible. (This is also a 1:1.272, bear in mind this was annotated on the charts when it happened).  Once this doji fails the only other positive outcome I could envisage is a Double bottom, where a Morningstar candlestick pattern then forms. For me the low of the Morningstar is the line in the sand and a daily close below the pattern indicates a failure in the PRZ. When a pattern fails in the PRZ the price has a tendency to accelerate in the direction of the trend! There’s one really niggling thing going on though, volume just isn’t confirming the price action. Today saw another day of above average volume and most of it coming off the lows of the day pushing price higher. Is it possible that the market is chasing stops? This is the one hour chart.

5a83efdae3d31Volume.JPG

More on candlestick patterns here. 
http://thepatternsite.com/Morn... 
and here
 https://www.candlesticker.com/...
So what next? 
Over the last 3 months £ISAT’s stock ranks have improved as anticipated and it now sits at the top of its industry group (QV)

5a83f002d17daISAT_QV.JPG

The share now also qualifies for Warren Buffet hagstorm screen.  
https://www.stockopedia.com/sc...
Bottom line, the analysis hasn’t changed but price action isn’t good. Unless price reverses sharply from here I’m going to rule out the volume data and stop hunting theory and consider price has failed in the PRZ, 
In one of the comments Tom mentioned Inmarsat (LON:ISAT), as a tempting short. So hats off and many happy returns to him, I may now join Tom and short ISAT with price targets of 400 and 360 below that. I only consider shorts as a hedge/market neutral strategy (anyone short bear in mind the next ex div date in April). Another consideration is the currency effect as Inmarsat (LON:ISAT) is priced in Euro. In the time since commenting the EUR is up .5% against the pound and looks like it may break higher.

Also mentioned was easyJet (LON:EZJ), FTSE and short on Debenhams Debenhams (LON:DEB), Let’s look at EZJ and FTSE so we can evaluate what should happen following a gartley and why the current market sell was no surprise to some. 
First off £EZJ 

5a83f0ca748f4EZJ.JPG

The validity of this gartley pattern can be questioned as the .618 wasn’t quite touched at point B and only a 1.436 BC projection was achieved, however the pattern completed to the penny. Once a gartley pattern completes look for a following AB=CD. Let’s zoom out to a longer time frame. 

5a83f0fc5043fEZJ_Bearish_Bat.JPG

What we’re looking at now is that AB=CD pattern, point D completes another harmonic pattern, this time the Bearish Bat. PRZ is 17.29 to 1890; the bearish bat completes @1806. Also present between the B-C wave is another small AB=CD pattern and again it’s an almost perfect 1:1 structure (ideal for adding to positions). Look how small the original gartley pattern is! So why is this pattern bearish? It might not be bearish the AB=CD out of the gartley may be just the AB leg of a bigger AB=CD, the .886 would be the B point of a potential Deep crab, however Elliot wave enthusiasts will have noticed 5 clear waves down at the bottom of the XA leg, they will also see a clear A-B-C pattern to the .886 retracement of XA at point D, easy to see the resistance levels there also. I’m bullish on easyJet (LON:EZJ) and expect the deep crab to prevail! Point D is also a TIME projection I’ve calculated and can be used to gauge the strength of £EZJ’s price movement. If price gets there before roughly 11th June, price action is bullish (accelerating) however the opposite is also true if the pattern is not completed within the timeframe. A Point may then be Elliot wave 1 down, or the AB of a larger bearish AB=CD pattern.     
Now let’s look at the FTSE 

5a83f12a132c6FTSE_Gartley.JPG

 This is the bullish gartley that completed@7196 and again one can question the vality of the pattern as the .618 is not met at point B however price reversed from the .786.(look how close the ratios are in relationship to £EZJ) when a gartley completes expect the AB=CD pattern. Let’s have a look.

5a83f167ea4cdFTSE_AB=CD.JPG

So off the Gartley we have another AB=CD this time it’s the 1:1.272.(1.272 is frequently observed that’s why it was annotated as significant on the ISAT chart) Also present at point D is the 1.618 extension of XC and the BC projection of the .786 fib retracement at point C as observed (we reached .76). So where to next? 

5a83f1b08ff5cBreadth.JPG

Currently we have 1206 shares above their 200d MA and 1437 below their 200d MA 
With the advance decline line in negative territory and 
New high/lows steaming ahead 353 to 48
Let’s take a closer look at market breadth to see if we can identify a buying opportunity. 
Over the last 5 years, there have been 32 observations where the % of UK 100 Stocks Above their 10-Day Moving Average [10MA] crossed below the level of 37, including 4 incomplete observation(s).
After 120 days, the UK 100 returned an average of 2.29%, with the return being positive in 66% of the observations.
During the 120 days:
Positive returns occurred in 97% of the observations. The highest average return of 6.40% occurred after an average of 67.16 days.
Negative returns occurred in 88% of the observations. The lowest average return of -4.77% occurred after an average of 39.88 days.
Over 5 years, the total return was 73.29%, while the passive return for the UK 100 was 16.51%.
Total cumulative negative returns would have been (-152.49%) i.e. closing the trades at their greatest loss. Total cumulative positive returns would have been (204.94%) i.e. closing the trades at their greatest gain.
So market strength is currently weak in respect of breadth, nevertheless the new highs are moving higher. The bears will be trying to push the FTSE below 6700. Conversely the % of shares below their 10 day moving average currently stands at 9.88 (it’s only been lower 1 in the last 5 years) and is deep into oversold territory with the FTSE testing support @ the 7100 level.  If the bulls can re-establish a foothold before the bears breech 6700 then expect the Bull Run to continue. Bear markets don’t usually start with new highs expanding, usually the leading shares are the first to suffer! With market breadth weak and the advance decline line falling it looks like the momentum shares (new highs) will move further ahead! (time to sell Inmarsat (LON:ISAT), unless price reverses sharply), However if 6700 fails my analysis will be invalidated. (Look for the advance decline line to start rising). We may be @the .618 of another gartley!        

regards J


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easyJet plc is a United Kingdom-based low-cost airline carrier. The Company operates as a low-cost European point-to-point short-haul airline. The Company operates through its route network segment. The Company operates on over 820 routes across more than 30 countries with its fleet of over 250 Airbus aircrafts. The Company's total fleet of aircrafts is split between 156-seat Airbus A319s, 180-seat A320s and 186-seat A320s. It is also focused on operating its fleet of A320neo aircrafts. The Company's bases include the United Kingdom, Switzerland, Italy, France (Paris, Charles de Gaulle, Lyon and Toulouse), Amsterdam, Venice, Oporto, Lisbon and Barcelona. It operates in airports, such as Gatwick, Edinburgh, Nice, Milan Malpensa, Venice Marco Polo, Naples, Basel and Geneva. The Company offers a mobile application-only proposition, targeting customers wishing to switch flights at short notice on the day of travel, and also offers pre-purchased in-flight vouchers. more »

LSE Price
1146.5p
Change
-0.4%
Mkt Cap (£m)
4,570
P/E (fwd)
9.4
Yield (fwd)
5.7

Inmarsat plc is a United Kingdom-based provider of global mobile satellite communications services. The Company's segments include Maritime, Government, Enterprise, Aviation and Central Services. The Maritime segment focuses on commercial maritime services across the world. The Maritime segment includes the provision of broadband data and safety communications for all vessel sizes. The Enterprise segment focuses on energy, industry, media, carriers and machine-to-machine (M2M) services across the world. The Maritime segment includes the provision of broadband data and safety communications for all vessel sizes. The Aviation segment focuses on commercial aviation services. The Government segment includes the provision of communications services for governmental, military and civil applications. The Central Services segment includes satellite operations, backbone infrastructure and corporate administrative costs. more »

LSE Price
507.2p
Change
1.2%
Mkt Cap (£m)
2,314
P/E (fwd)
28.6
Yield (fwd)
3.4

Debenhams plc is a United Kingdom-based company, which is engaged in multi-channel business. The Company’s brand trades through approximately 240 stores in 27 countries. The Company's segments are UK and International. The UK segment consists of stores in the United Kingdom and online sales to the United Kingdom addresses. The International segment consists of international franchise stores, the Company-owned stores in Denmark and the Republic of Ireland, and online sales to addresses outside the United Kingdom. The Company's stores trade under the name of Debenhams other than the Danish stores, which operate under the Magasin du Nord banner. Its stores offer customers a range of services, including restaurants and cafes, personal shopping assistance, hairdressing and beauty treatments, nail bars and wedding or celebration gift services. Its Debenhams Direct (www.debenhams.com) offers a range of products and services for online customers. more »

LSE Price
9.03p
Change
1.5%
Mkt Cap (£m)
109.3
P/E (fwd)
3.5
Yield (fwd)
4.6



  Is LON:EZJ fundamentally strong or weak? Find out More »


6 Posts on this Thread show/hide all

Taff6 14th Feb 1 of 6

update on Inmarsat (LON:ISAT)
The fib .707, 1.41 & 2 are the key ratios in play
critical support level @427.40 and key resistance @439
volume is hinting at a move higher

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Taff6 18th Feb 2 of 6

An update on Inmarsat (LON:ISAT)
It’s been an eventful week for Inmarsat
The Bears hinted their intent Tuesday with a large bearish engulfing Candle
However the bulls had already signalled their meaning when the week opened higher and subsequently repelled the bears engulfing. The bulls closed out strongly with a weekly hammer candle, even so the top of the bearish engulfing still remains in play. We have reached the point where the bulls or bears will resolve this conflict. This pattern truly has completed in perfect harmony. Time and Price are both at their respective pivot points. We wait for the bulls and bears to turn their hand and deal the decisive fatal blow. Be careful wolves are hidden in the darkness. No patented pattern is visible here, make sure you’re on the right side of this trade. Once ISAT launches from this platform, these levels may never again see the light of day. I’m figuring we’ll be looking into one of orbit or oblivion.

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VegPatch 20th Feb 3 of 6

so its a strong hold here?

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Taff6 22nd Jun 4 of 6

So the time has come to conclude this discussion post.

First things first apologies to vegpatch for not replying to his post at the time, somewhat impolite I know.
Starting with easyJet (LON:EZJ). We were looking for price to tag 1806 week commencing 11 June in order to complete the bearish BAT. The pattern completed this week with price touching 1808.5 Wednesday 20 June, so no cigar as this easyJet (LON:EZJ) flight came in days late. Where to next? We are now at an inflection point and I guess we’ll have to wait and see what the markets decide.

5b2ce6e3b873aISAT_1.JPG

 Next up the FTSE 100, I concluded my last article suggesting that we should be looking for buying opportunities and that we may be @the .618 of another Gartley! As it happens thats exactly where we were as the following chart demonstrates, also note that we completed the Gartley with a (1:1.272 AB=CD). The red line on the chart is the old high going back to Dec 1999. Where to next, who knows, however the reaction to the test of resistance now turned support from 1999 was pretty impressive. I suspect were currently entering the seasonal correction before moving higher, nonetheless I may well be wrong and all we can do is follow,

5b2ce7de9a8ddISAT_2.JPG

The Russell 2000 leads the way across the pond, Bull markets don’t usually end with small caps leading. The leading large cap index during this bull, the Nasdaq 100 (chart below) has also dismantled two bearish patterns (Gartley & Island top). Keep an eye on the UK Technicals on stocko’s home page. Can we make this box detachable with the pop up displaying the info along with line charts please Stocko?

5b2ce86b2ced4ISAT_4.JPG5b2ce8d791db5ISAT_3.JPG

Next Inmarsat (LON:ISAT)
When I initially looked at Inmarsat (LON:ISAT) it was just completing a Gartley pattern and anyone following the story will know that the Gartley pattern failed in the PRZ.
Beyond the Gartley 
My observations since have been interesting to say the least. In my last post I quoted that “this pattern truly has completed in perfect harmony” and that “no patented pattern is visible here”. The fib .707, 1.41 & 2 were left as clues as to the resolution of the pattern. So let’s have a look. The fib .707, 1.41 & 2 were in fact the components from the CD leg of the AB=CD pattern. The pattern itself from inception involves this sequence of numbers and ratios
.618 squared = .786 - .786 squared = .886
We can now look at the C & D point in relation to the B point. 
The first retracement from point B was .5 (Point C) 
The inverse .5 = 2 the inverse of 2 = .5 (The inverse .5 = 2 Point D)
We can know see how these numbers fit into the pattern. The pattern doesn’t quite touch the .5, AB retracement at C, and BC projection at 2 but very close and probably impossible to terminate exactly at all ratios in relation to the pattern.

5b2ce9df00884ISAT_5.JPG

Now to the CD leg. So the pattern was projected to finish with a BD extension of 2. Let’s have a look at 2 and see how it influences the CD leg  
The square root of 2 = 1.414 - the inverse of 1.414 = .707
 The 1.414 is the AB=CD pattern of the CD leg (1:1.414 and the .707 is the retracements of XA that forms the B point of the CD leg.

5b2cea489f553ISAT_6.JPG

 I guess the juries out in respect of whether this pattern did in fact complete in perfect harmony. However if you read about the discovery of a new harmonic pattern involving these ratios elsewhere, everyone following on Stockopedia will know different. 

Looking at the TR-1’s for Inmarsat (LON:ISAT) we will find some unusual activity and recording took place on the 14th and 15th December 2017 
14th December Deutsche Bank AG notified an interest of 3.57% from a position of being below notifiable threshold, this announcement was made public 19th December.   
15th December the position was reversed however the announcement was not made public until 16th February. I have read several discussions on this site regarding regulation in this country and I couldn’t agree more the FCA needs to pull its finger out. (I may be missing something here regarding the TR-1).
It could be argued that this pattern also failed however in my view it set up an AB=CD reversal pattern on support levels @400 & 360 (Pink horizontal lines on the chart) that were identified as short targets in the previous post. 

5b2cefd4c6e2cISAT_7.JPG

Where to next? The wolves will be easier to see now that the moon shines brightly again. (there was no Full Moon in February) Bid speculation should be supportive of price for the time being. 

5b2cefee91dffisat_8.jpg

More interestingly can we add a new Harmonic Pattern to ones previously discovered?

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aflash 22nd Jun 5 of 6
1

ISAT (Inmarsat) reached 1153p on Dec 30 2015 after becoming popular by pinpointing the flightpath of missing Malaysia Airlines' MH370.
Since then it has been in steep decline.
We are told the bidders bought their first stake that year. Say they bought around 800p. They are not going to pay more than that for the whole company. The previous High was 810 in June 2012.
The intersection of lines joining previous Highs gives a Support\Resistance line around 732p.

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aflash 6th Jul 6 of 6

Echostar (NSQ:SATS) made offer 4 July 532p so presumably 'Put up or Shut up' requirements met. Price movements suggest market does not believe they will increase offer. SATS up slightly yesterday, maybe more today.

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