Lloyds shares: can we expect this long-term target?
Our analyst sees if the retail bank is finally out of the woods.
16th November 2020 09:53
by Alistair Strang from Trends and Targets
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Our analyst sees if the retail bank is finally out of the woods.
Lloyds Bank (LSE:LLOY)
Midway through November, America almost has a new president, Covid-19 is nearly cured, the UK prime minister is being locked away for a few weeks, and 'I'm A Celebrity' is back on TV! Could we be approaching the end of 2020 with a plethora of positive vibes forcing itself upon us?
Our previous glance at Lloyds Banking Group (LSE:LLOY) certainly proved correct, with our secondary target level being exceeded.
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As a result, we're using this week’s visit to a retail bank as a "what if" scenario, as in "what if" the good news keeps coming?
Lloyds Banking Group are very nearly at the point of justifying some real optimism for the longer term.
The immediate situation suggests ongoing travel beyond 35.09p should head up to 38p. At this level, life starts to become very interesting.
The share price will require closure above 38p to confirm 2020's visual glass ceiling has broken, allowing further recovery in the direction of a future 50p with secondary, if bettered, being the subject of considerable debate in-house.
If we go by software criteria alone, the secondary should be presented as 92p. This is due to the share price finally closing above blue on the chart, a downtrend dating back to 2007.
In normal times, we tend to expect rates of recovery acceleration to be influenced by the levels at which such a downtrend commenced.
In the case of Lloyds, the implication is quite suspect above six quid.
Obviously, times are not normal and if we opt to balance expectations with share price behaviour during 2020, our secondary target level calculates at a sane-looking 61p.
The surprising visual detail from such a secondary ambition is 61p is virtually a pivot level, a share price above and below which the bank has been cavorting for the last ten years.
As a result, an ambition of 61p makes a lot of sense. Should such miracle recovery appear, common sense alone demands we revisit our numbers to project where a proper long-term target may reside.
For the sake of providing a 'clickbait' teaser, it's already possible to calculate some amazing potentials, with 156p allegedly viable in the distance, perhaps along with proof Santa Claus is real.
A word of warning. Lloyds needs only to sink below 30p to turn this big picture scenario into mush, as a future retreat below the blue trend line would be a really bad thing.
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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