How Zoo Digital shares can quickly escape this bear trap
This once popular share is now in deep danger. Our chartist examines how it can make a full recovery.
21st February 2019 09:15
by Alistair Strang from Trends and Targets
Share on
This once popular share is now in deep danger. Our chartist examines how it can make a full recovery.
Zoo Digital (LSE:ZOO)
This once popular share, Zoo Digital (LSE:ZOO) is at risk of becoming really messy. We have a big problem with the drop last month down to 57p as, theoretically, any drop should have bounced at 70p. Instead, the market opted to take the share substantially lower before some sort of miracle recovery.
The immediate situation has become quite dangerous with the price once again flirting with the 70p level, tending confirm our drop calculation was indeed correct.
For some reason, share prices will often gravitate around target levels and, to us, the key issue is whether a price actually breaks below the target on the initial drop. In the case of ZOO, it did and thus, we are concerned.
The problem now comes if the share price manages below 60p as travel down to an initial 34p makes awful sense. Worse, if broken, our ultimate bottom calculates at 9p.
Projecting such savagery against a price really is quite dire but unfortunately, when viewing these potentials in conjunction with the chart for the last couple of years, we're effectively calculating "the dream is over" and the share has returned to its lair.
Thankfully, the price should not require great effort to escape this bear trap. At time of writing, it need only better 83p to enter a cycle to an initial 90p. Secondary, if exceeded, is at 109p and achieving such a point would remove the share price from its current big cat enclosure, where it risks being torn apart.
From our viewpoint, we'd regard it as worth a punt should 9p make an appearance. Or more likely, should it better 83p anytime soon as we've noticed, when the market realises the danger some prices become exposed to, the market will recover a price extremely fast.
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 to buy or sell any financial instrument or product, or to adopt any investment strategy as it 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.