Inchcape shares: here’s why this analyst feels bearish
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Like many industries, the car dealership industry is struggling. Our chartist shares his views.
Inchcape Plc (LSE:INCH)
The household menagerie sometimes gives surprising inspiration. Living in the country, it's been easy to become immune to the dogs chasing (and never catching) deer, pheasant, squirrel, fish and frogs, and the black cat.
But what happens, when one of the dogs finds an animal which doesn't run away? For 90 minutes, from 2 am, a Golden Retriever panic barked in the forest behind the house, evading all forms of bribery as we attempted to capture her.
A hedgehog had curled into a ball, opting to ignore everything going on. That hedgehog gave pause for thought. A beast which didn't run away, just weathered the storm? Quite a few shares have been exhibiting such behaviour since the pandemic price drop in March.
Inchcape (LSE:INCH) doubtlessly will be experiencing a year not worth remembering, yet its share price movements in the last seven months have not proved noteworthy, instead the price emulating the hedgehog.
Their UK operations will doubtlessly be experiencing identical trauma to the rest of the industry and, unfortunately, it's likely their operations in the other 31 countries in which they've a presence will be experiencing similar vile market conditions. We're inclined to anticipate the worst for Inchcape.
Visually, there's a strong implication of weakness next below 400p forcing reversal to an initial 265p with secondary, if (when) broken at a bottom of 62p in the longer-term.
To be blunt, the price is already trading in such frigid territory and we wonder if their results this November shall provoke a swift reversal.
Already, we've two quite distinct arguments favouring 265p as some sort of bounce level but we'd warn, should the price manage below such a level, there's an enhanced risk of future reversals until the lows of 2009 are again challenged at an ultimate bottom at the 62p level.
Only in the event of Inchcape exceeding 570p shall we feel any recovery may be genuine as this allows for surprise moves to an initial 677p with secondary, if exceeded, at 784p. We lack optimism.
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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