By Zak Mir | Monday 7 December 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.
If you want me to analyse a stock for you just drop me a line at [email protected] - Today I look at shares in Avanti Communications (AVN), Outsourcery (OUT) and Summit Therapeutics (SUMM)
Avanti Communications (AVN): Dead Cross Threat
As has been suggested on previous visits to the Avanti Communications daily chart, this has been a situation where for much of 2015 we have seen quite an aggressive dance either side of the 200 day moving average currently at 223p. The problem is that the shares are now trading in the wake of quite a sharp bull trap through 260p for October, with the current configuration consisting of a dead cross sell signal between the 50 day and 200 day moving averages underlining the way that after the consolidation we could be seeing a fresh leg to the downside.
Indeed, it can be said that at least while there is no end of the close back above the 10 day moving average at 197p we could see a retest of August 2014 support at 162p over the next 2 to 4 weeks even though the shares with a RSI at 23 are extremely oversold. At this stage only sustained price action back above 200p would even begin to suggest the latest break to the downside is yet another false move.
Outsourcery (OUT): Signs Of Recovery
What is clearly evident on the daily chart of Outsourcery over the past year and a half is the way this has been a generally disappointing situation from the perspective of the bulls. Ironically what has made the position here all the more difficult are the occasional false dawn spikes of recovery which have been quickly whittled away by the sellers especially in the post November 2014 period. The situation now is that we look to be undergoing at least an intermediate recovery here, something which is set on the basis of the post October higher lows above 10p, and the recovery of the 50 day moving average at 15.55p.
This would suggest that we are at least looking at a return to the 200 day moving average level of 20.71p, although the big prize here would be the top of broadening one year triangle as high as 45p, should we be treated to a weekly close above the 200 day line. Nevertheless, 45p is a target which is unlikely to be hit less than 2 to 3 months after any weekly close through the 200 day moving average. The stop loss on the recovery argument is back below the 10p level.
Summit Therapeutics (SUMM): Bull Flag At 50 Day Line
Perhaps the best thing about the Summit Therapeutics on the daily chart over the past 18 months of the way that firstly support came in above the 100p level around the turn of this year, and then once again above the 110p so over the past few months. This suggests a gradual improvement in the technical picture, with the vehicle for such a possibility being a broadening triangle which can be drawn from as long ago as April this year. What can be expected to be seen here over the next 2 to 3 months is that the shares will continue to consolidate above the 120p level with ideally no sustained price action back below the 50 day moving average at 130.94p.
Indeed, any quick weekly close above the 20 day moving average 145p could be the momentum trigger for a push towards the top of the triangle as high as 175p early in the New Year, possibly even before the end of January. In the meantime any weakness towards the 50 day line can be regarded as a buy opportunity.
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