Cineworld: do the shares have a future?
The share price has taken a battering, so our chartist has gone looking for signs of optimism.
4th August 2020 10:06
by Alistair Strang from Trends and Targets
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The share price has taken a battering, so our chartist has gone looking for signs of optimism.
Cineworld (LSE:CINE)
We were surprised to receive some email questions regarding Cineworld (LSE:CINE) share price, essentially harbouring private suspicions that cinemas are about to become a thing of the past.
With Covid-19 refusing to go away, will sufficient numbers be willing to gather to watch a movie or a play?
Just think, the sound of coughs in the moments before a film starts has always been part of the experience!
Cineworld are certainly heavily invested in the entertainment industry with 790 venues across 11 countries, claiming to be the second-largest chain in the world.
Since the initial pandemic drop, the share price has failed recover above 100p, a level we'd regard as absolutely crucial to be exceeded if there's to be sensible warning for proper price recovery.
At time of writing, the share is at 38p and miles away from challenging this crucial trigger level.
Another, slightly pedantic, detail is the lowest the big picture allowed us to calculate against this share was a price level of 165p.
In theory, every drop target below such a level was prefaced with impossible minus signs.
All this gloom doubtlessly hints we're not feeling terribly optimistic for the chain’s future but, as an experiment, we opted to review what the share price requires to give early warning "something" positive may be happening.
It looks like there's a trigger level at 43p with movement above such a point calculating with recovery to an initial 48p with secondary, if exceeded, working out at 56p.
The chart visuals suggest attaining 56p shall prove important, challenging the immediate downtrend since March 2020.
With closure above 56p, things start to become slightly more interesting as acceleration to 81p is expected.
If we forget "big picture" potentials and simply work with price movements just for this year, the share now has an ultimate bottom of 9p. It needs to be above blue on the chart to rubbish the prospect.
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.
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