Reasons why Superdry shares are worth keeping an eye on
Still grabbing headlines as the founder returns, our chartist reveals clues as to share price direction.
4th April 2019 08:46
by Alistair Strang from Trends and Targets
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Still grabbing headlines as the founder returns, our chartist reveals clues as to share price direction.
Superdry (LSE:SDRY)
Following Superdry's (LSE:SDRY) somewhat funny shareholders meeting, we'd prepared a detailed analysis of the company potentials. But something (experience?) made us delay for a day, just to see what happened next as there was a single alarm bell making us doubt our optimistic stance. [Warning; teacher mode follows]
When a downtrend is as neatly defined as SDRY's, a trend break which fails to perform flamboyantly is always a worry. Worse, and perhaps more importantly, if the share price closes below the point of a trend break, we've learned caution is often a worthwhile stance.
SDRY broke the trend at 541p back on March 25th.
It failed to gain any real upward momentum, instead closing the session of April 2nd at 500p. Despite the blue trend line being at 499.375p and thus, the share remaining in positive territory, it was now substantially below the point of a trend break. As a result, we dared not trust it.
Price moves on the 3rd April tended to justify our caution and instead of an article devoted entirely to future positives, the share deserved something which reviewed both sides of the argument. Which is a pity, 'cos seeing a BoD resign en-masse at the prospect of the company founder returning with the intention of saving the company was quite refreshing.
The situation now is slightly alarming. Weakness continuing below 433p looks capable of reaching 386p, hopefully able to generate a bounce at such a level. If broken, we can calculate bottom at 265p eventually.
The share price needs a miracle above 576p before anyone dare relax for the longer-term, this level apparently being a trigger for recovery to an initial 750p with secondary, if beaten, a longer-term 1,079p.
For now, while a bounce at 386p looks pretty possible, we have a sneaking suspicion the price shall eventually bottom down at 265p. Perhaps it's one worth keeping an eye on for the longer-term.
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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