A bumpy ride for Thomas Cook shares

by Alistair Strang from Trends and Targets |

After turbulence for Thomas Cook shares on Tuesday, our chartist attempts to make sense of the movements.

Thomas Cook (LSE:TCG)

Sometimes, passengers in an aircraft experience an awful moment on the ground, waiting to disembark.

An announcement says there will be a delay "of just a few minutes" and seasoned travellers know what that really means.

Yesterday, passengers in Thomas Cook (LSE:TCG) share price disaster must have felt a similar emotion, the price looking like it was about to recover, then a "gotcha suckers" drop!

 Over the years, we've warned repeatedly about the dangers of opening second spikes in a share.

These price movements can run in either direction but our rule of thumb is of a spike down signalling a coming upward movement.

Obviously, the converse is true for a spike up. TCG was spiked to 15p, curiously not in the opening second but rather, twelve minutes after the market opened.

While perhaps this indicates a change in market strategy (as we've seen this a few times in the last month) but regardless, the effect was pretty dire and allows Thomas Cook to experience a trading range of 65.08%  for Tuesday.

It was virtually impossible to allocate a sensible stop loss, regardless of which direction you thought it was going and perhaps this was the market's idea.

We've a bit of in-house mumbo jumbo now warning of danger, if Thomas Cook somehow makes it below 7.65p.

Apparently, this will be a bad thing and calculates with the potential of travel down to an initial 5.3p. If broken, secondary is at 2p and hopefully bottom. Ultimate bottom is minus 18p (not possible).

However, for now I suspect holders of TCG are simply stuck on board, awaiting something positive happening.

Price movements on the 6th August did suggest a holding pattern was being employed. If this is indeed the case, anything now exceeding 13.6p is liable to prove useful, bettering the blue downtrend and calculating with the potential of 19p next. If bettered, our secondary is at 23.3p and an almost certain hesitation in the recovery cycle.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation, and is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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