Is it curtains for Dunelm, or is the future bright?
25th August 2021 07:47
by Alistair Strang from Trends and Targets
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After reaching a record high during the pandemic, independent analyst Alistair Strang assesses the odds of a repeat in 2021.
Our report on Dunelm Group (LSE:DNLM) last year proved pretty accurate, the share managing to close 2p above our secondary target of 1,511p when making its upward surge. We’re still surprised at the company achieving an all-time high in 2020, during the pandemic and lockdown. Perhaps spending time at home made folk focus on the important things like cushions and soft furnishings…
From a personal stance, it appears a trip to hell awaits, my wife wanting to visit Dunelm for curtains.
In the hope of derailing a visit across to the mainland and Dunelm, it seemed a viable idea to glance at their share price. After all, imagine if they looked like they were in trouble, perhaps causing a wasted journey to an empty store?
Alas, this seems not to be the case. As mentioned earlier, the company share price has achieved record highs. While there are certainly threats of reversals, nothing particularly drastic appears probable.
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Currently trading at around 1,316p, the share needs to slip below 1,276p to give early warning of potential trouble. Movement such as this risks reversal to an initial 1,111p, a point at which prior lows almost promise a bounce as the market is liable to decide this shall be regarded as a floor level.
The danger comes should 1,111p break, as ongoing reversals to 945p calculate as probable eventually. As the chart shows, there are no visual cues suggesting a reasonable excuse for a bounce at such a target level.
Instead, we can now suggest a third level down at 753p as a point where a rebound becomes about as certain as it gets. Perhaps it’s worth remembering all this negative energy is due to my dislike of shopping for curtains!
A converse scenario is available, if Dunelm’s share price opts to exceed 1,355p. This looks capable of triggering movement to an initial 1,476p with secondary, if exceeded, at 1,650p and yet another all-time high.
Above this point, we shall need revisit the longer-term potentials, not least due to Dunelm ‘having form’ for experiencing reversals each time the price climbs another mountain. And, if anyone is interested, I’m going for the light grey curtains, hopefully the least offensive visual option for a room.
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.
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