Saga: Here's how we'll know the share price has bottomed

Saga's share price is recovering with some integrity, and our chartist has found a positive catalyst.

Saga PLC (LSE:SAGA) 

Our previous review against Saga (LSE:SAGA) had a pretty grim drop target, especially as it was trading around 120p at the time of report.

Time, the mortal enemy took hold, Saga indeed withered to our 67p this year. Which is a bit funny, given Saga's mission is to exploit folk battling the ravages of time. It's always easy to treat the old and decrepit, those above 50, with some disdain.

But our software, developed entirely in-house, was created by someone who's been dying his hair for 30 years already! In fairness, a family trait ensured he cultivated a badger's white streak from his 20's.

The scary thing about our 67p "bottom" was not the calculation but rather, the method employed by the market to take the price down.

On April 4th, the price of Saga was manipulated (gapped) from 107p directly to 67p. This was a disaster, the harsh movement tending to imply the market wanted the share price below our target level.

As time hacked away at the share, it was to eventually reach 31p, a price level we simply cannot understand.

When we look at it, about the only thing it represents is one of these moments when you go into a room and immediately forget why you're there.

• Are Saga shares a bargain yet?

We cannot emphasise sufficiently, we've no idea why 31p appeared. Anything below 67p took the price into a region where we could calculate no lower.

For now, it's probable the best thing we should do is look for signals.

Saga's share price is recovering with some integrity. Moves now above 50.1p are supposed to generate recovery to an initial 56.75p. If exceeded, the very first box is ticked to suggest bottom is "in".

Secondary, if bettered, calculates at a longer-term 86.75p and takes the price into the region of the April gap (circled). Generally, this can be regarded as a good thing, giving considerable hope for the future.

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.

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.