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Zak Mir's Bear Call Of The Day: Mitchells & Butlers: Tightly Defined Negative Setup

By Zak Mir | Friday 10 July 2015


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.


Mitchells & Butlers (MAB): Tightly Defined Negative Setup



Judging by the recovery in the share price since the autumn, and of course the generally happy faces of its All Bar One customers, it is apparent that the Mitchells & Butlers seems to have delivered the right formula for contentment amongst both the shareholders and its clientele, at least in the near term. However, from a price action perspective it would appear that having lifted from below 325p to well above 450p in recent months, there may be the need for at least an intermediate setback for the shares.

This is said on the basis of the latest loss of the 50 day moving average at 450p after a bull trap double top with early 2015 resistance above 465p. Indeed, the message is that provided there is no end of day close back above the 50 day moving average we could see a decline to the floor of last year's rising trend channel from May and a notional 410p support line target. This would be just below the current position of the 200 day moving average of 414p. Nevertheless, it should be acknowledged that provided there is no weekly close back below the 200 day line one would still back in the idea of recovery for Mitchells & Butler's shares later in the summer, once the initial retracement is complete.

 

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