Interactive Investor

M&S shares: the odds of a surprise recovery

A crash to record lows was perhaps inevitable in a pandemic, but could there be a rebound?

10th September 2020 08:27

Alistair Strang from Trends and Targets

A crash to record lows was perhaps inevitable in a pandemic, but could there be a rebound?

Since the Covid-19 drop in mid-March, Marks & Spencer Group's (LSE:MKS) share price has been essentially hopping on the spot. From a high this year of 224p, the share was plunged to 74p and in the period since, has ‘recovered’ to oscillate between 90p and the 120p level. Technically, we’re inclined to call this behaviour boring, as exciting as their range of cardigans.

To be fair, some hope can be taken from the March visit to 74p, thanks to the Big Picture proving an ultimate drop target level of 24p.

The fact the market opted to restrain the collapse in M&S’s value does give some slight hope as we cannot reliably calculate anything below 24p. Perhaps this failure indicates a belief in underlying strength for the retailer, one which shall perhaps provide some surprise recovery as market conditions change.

For safety’s sake, our inclination is to suggest 120p being exceeded as a strong potential trigger level as this should encourage some price recovery. Initially, we’re calculating the potential of a visit to 148p with secondary, if bettered, a slightly more encouraging 159p.

Unfortunately, none of these ambitions come close to challenging the downtrend (the thick blue line on the chart) since 2015 as this presently demands the price exceed 188p to give real hope of recovery.

As always, there’s a flip side to the scenario, and it comes should Marks & Spencer manage below 96p. Such a level breaking currently allows for reversal to an initial 82p with secondary, if broken, hopefully a bottom of 65p. We hope M&S does not decide to go S&M with its share price!

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.