Lloyds Bank shares may be better than we think
4th July 2022 07:20
by Alistair Strang from Trends and Targets
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Independent analyst Alistair Strang may have found a small clue which could indicate hidden strength with Lloyds Bank shares.
The UK retail banks are still driving us crackers.
We constantly run scenarios which monitor near term movements in the hope of getting a clue.
Essentially, should a share price move a bit further in a specific direction than expected, this is often a reliable clue of a coming change, telling us which direction we’re best focussing on.
A “funny” example of this nonsense came three weeks ago, where Lloyds Banking Group (LSE:LLOY) had a pretty certain criteria pointing at coming reversal to 41.4p. But when the criteria triggered, the lowest the share price fell was to 41.52p. While the miss by 0.12p may appear inconsequential, perhaps this is a small clue which suggests hidden strength with Lloyds, the share price proving mildly protected from triggering greater reversals.
It’s a theory, one which often proves itself correct.
On this basis, if by 12/100ths of a penny Lloyds is opting to conceal hidden strength, we can calculate perhaps above just 43.72p shall not provide sufficient excuse to invest in a single party popper. At time of writing, the share is trading around 42.27p, so it hasn’t got far to go.
Above 43.72p calculates with the potential of a gain in the direction of 44.7p next with secondary, if exceeded, a slightly more interesting 46.4p.
While these gains are visually fairly tame, importantly they exceed the immediate downtrend, challenge existing glass ceiling levels, and quite surprisingly, place the share price in a zone where “surprise” acceleration to a future 58p abruptly makes a degree of sense for the future.
Past performance is not a guide to future performance.
Of course, there’s an alternate scenario we need consider.
What if Lloyds' share price behaves just like a real share price in the UK stock market. We’re going to play relatively safe here, suggesting below 41.4p will not prove traumatic, breaking the Red uptrend since the pandemic low of 2020.
Movement such as this risks triggering reversal to an initial 40.2p with secondary, when broken, at 38.2p and hopefully a proper bounce, if only due to sufficient number of folk assuming the price must rebound when it matches the “Russia Drop” of earlier this year.
From a bigger picture perspective, we fear this would not be the case as a solid argument exists demanding it bounce from 32.5p eventually, should this scenario come to fruition.
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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