Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
If you want me to analyse a stock for you just drop me a line at [email protected] - I start this daily feature with a look at Optibiotix (OPTI) , Plethora (PLE) and Tungsten (TUNG).
Optibiotix Health: Price Channel Target Towards 50p
The 200 day moving average is typically one of the most important features on a technical analysis trading basis, and this has proved to be the case as far as Optibiotix Health is concerned. The general rule is that below the 200 day line one would regard a stock or market as being in bear mode, while above it, we are bullish and would be looking to buy on weakness.
On the daily chart here we can see how the near vertical push through the 200 day line in November kick started an extended rally for the shares, one whose existence was confirmed by the December rebound off the 50 day moving average which came in the aftermath of the previous month’s golden cross buy signal between the 50 day 200 day moving averages.
Since then we have seen progress within the rising November price channel from the sub 10p area. The current position is that we have likely support towards the late 2014 support line/50 day moving average at 32p. The implication is that while there is no end of day close back below the 50 day line, one would be looking for a target as high as 50p over the next 1 to 2 months, even though the shares have already delivered extended gains.
Plethora Solutions : Below 50 Day Moving Average Risks Down To 2p
The topping out process at Plethora Solutions started as long ago as November 2013 in terms of the share price spikes/bull trap through the 20p area. Since then we have seen the law of diminishing returns apply for the bulls, with the latest most significant negative action being the loss of the 200 day moving average in June last year. I
Indeed, we have seen the 50 day moving average now down to 4.92p cap the price action on any belated rally attempts for the shares, and with the near-term moving averages all still falling, it is difficult to make an argument for any sustained near-term recovery.
This is even though we have seen extended losses. Therefore, It would still appear that with new resistance coming in at or below former support, the down trend here is still very much in force. The likely scenario over the next 1 to 2 months is that we will see further declines within a falling trend channel from March last year and a 2p target hit while the 50 day line remains in place as a resistance on a weekly close basis. Any initially rallies towards the 50 day moving average are currently regarded as shorting opportunities, or a cue for bulls to head for the exit.
Tungsten Corporation: Below February Support Could Lead To 80p
The autumn witnessed two major stages to the breakdown as far as shares of Tungsten Corporation were concerned, with the loss of the 50 day moving average in October just below £3.50 followed by the loss of the 200 day line in the £2.80 area for November and December.
The misery was compounded by the way that December delivered a dead cross sell signal between the 50 day and 200 day moving averages around the £2.50 level, and even though there was a double bull trap through 300p soon after, since then the bears have had the price action almost totally in their favour.
What has to be admitted now is that the current share price around £1.20 seems overstretched on the downside. For instance, even though the extreme oversold RSI below 20/100 does suggest that there could be a dead cat bounce, the overall flow here is extremely negative. Indeed, the suggestion at the moment is that we should be looking to sell into strength towards the former February support at £1.41, with only a weekly close back above this level suggesting that shares of Tungsten Corporation are able or even likely to serve up an intermediate recovery.
The destination on the downside could be as low as the September 2014 price channel floor which has its resistance line projection drawn as heading down to 80p. The time frame on such a moment is regarded as being as soon as the next 4-6 weeks.
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