JD Sports Fashion shares on track to retest highs
16th May 2023 07:07
by Alistair Strang from Trends and Targets
This sports clothing chain rules the high street and the shares have been a star performer. Independent analyst Alistair Strang gives his view on where they're heading next.
Traditionally, we’re quite disparaging at the share split game played, mainly by AIM shares, to manipulate share prices. The usual, we’ll take 100 of your shares and give back one shiny new one, is employed to make a share sound more respectable. Generally, this manoeuvre ends in tears at worst or, more commonly, utter boredom for the future share price.
JD Sports Fashion (LSE:JD.) are the opposite.
The last nine years have seen JD take a converse approach, saying we’ll take 1 of your shares and give 4 back, an effort to ensure the company share price remains respectable. Then they did a 1:5 split in 2016 and, finally, another 1:5 split in 2021.
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This sort of behaviour is the kind of thing we’ve noticed with Apple Inc (NASDAQ:AAPL) over the years, a constant effort being made to make their share price reside in the realms of the believable. Apple, of course, the US company now deemed worth more than all the US Russell 2000 constituents combined!
This being the case, perhaps it shall prove being wise to take an “Apple” approach, aka using an optimistic bias.
For JD Sports, presently trading around 174p, above just 179p should now promote the concept of ongoing growth to an initial 196p. If exceeded, our longer term secondary works out at 232p along with almost certain hesitation, due to prior highs.
In this instance, closure above our 232p is liable to prove important for the more distant future, nudging the share price into a zone where a future 294p becomes believable.
If everything intends to go wrong for JD Sports, their share price needs to wither below 156p to ring alarm bells, risking triggering reversal to an initial 135p with secondary, if broken, a probable bottom of 116p.
For now, we suspect this intends to head to the 232p level.
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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