Have Royal Mail shares really bottomed after recent crash?
25th October 2018 09:04
by Alistair Strang from Trends and Targets
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This blue-chip yo-yo firm's share price has unravelled spectacularly after reaching an all-time high in May. Chartist Alistair Strang goes looking for value.
Royal Mail (LSE:RMG)
Something quite distasteful is happening with the markets. Essentially, uncomfortable numbers of shares keep teasing their "big drop" triggers, the FTSE 100 obviously joining in the game. If things intend to get really grotty, we're inclined to take the London market closing below 6,955 as the final trigger for a rotten run up to Christmas.
Royal Mail, presently trading around 363p, keeps flirting with a first class stomping. Closure below 329p calculates as the last straw breaking, capable of driving the share price down to an initial 276p and a new all-time low for the price.
While not sounding terribly alarming, our secondary comes along at a second class 110p.
An obvious suspicion the share price is becoming a political plaything shall doubtless be justified. Royal Mail achieved some pretty impressive all-time highs back in May of this year. Then something odd happened with the price being gapped (manipulated) downward a couple of days later. Perhaps it was negative news, perhaps it was a politician mumbling about returning the company to public control.
Either way, the market clearly decided the share was going no higher with price movements since taking the share to the edge of an abyss.
At present, the share requires a bit of a miracle to get out of trouble. The bigger picture demands the share exceed 460p at present simply to arrest the rate of decline.
When we zoom in, examining movements since the share price was again trashed at the start of October, we hope an initial trigger at 370p shall prove capable of lifting the share up to an initial 404p.
In the event 404p is bettered, it ticks the first box to suggest the price has bottomed. Secondary calculates at 431p. along with a challenge of the 'blue' downtrend in a month or so.
For now, we're not happy nor confident as to its prospects. As can be guessed, similar sentiment is held about the FTSE!
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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