Sirius Minerals: What the analyst says

A day after the crash, our chartist's software gives an indication of what the share price will do next.

Our previous report on Sirius Minerals (LSE:SXX) lacked enthusiasm. Sometimes, share price moves leave a bad taste and Sirius was starting to remind of a poisonous AIM share called Vialogy.

Source: Trends and Targets      Past performance is not a guide to future performance

Obviously, Sirius, as a respected member of the FTSE 250, will surely be monitored more closely than Vialogy, so perhaps our cynical attitude is completely unfair.

Unfortunately, as a respected member of the "250", we fear they shall opt for the next page of the playbook. This will involve a share split, potentially at 10:1 ratio and allow the price to once again look respectable as it multiplies by 10.

Alas, folk who purchased in 2018 at 40p while they absorbed all the positive sentiment in chatrooms will be doomed to await Sirius growing to 4 quid in the future, just to get their money back.

Offhand, we cannot think of a single instance where this has actually happened…

• Sirius Minerals: A crucial price level to keep an eye on
• Sirius Minerals: How traders profited from fresh collapse
• Like AIM and small-company shares? Check out ii’s Super 60 recommended funds

Alas, Sirius price movements, despite some very strong sentiment amongst internet discussion forums, has been "feeling" similar to Vialogy, hence our lukewarm approach to its future.

Yesterday, 17th September, the market enacted a painful "gotcha", one which doubtless ensures many loyal investors (who've been living for the next positive press release) now are trapped with their funds going on a prolonged holiday in the absence of miracles.

Our "ultimate bottom", the point at which we can no longer calculate below is at 1.18p.

To arrest the rate of decline, the share price presently requires better than the blue line on the chart below, 12p at time of writing.

Unfortunately, it seems more likely we shall see weakness below 3.67 drive the price to 3.33p next, a point where some sort of bounce can be hoped. Secondary, if broken, is at 1.18p.

The share price requires to exceed 5.74p before there's an initial glimmer of hope a bounce is serious as 6.5p becomes the initial target. Above this point and we'd need stir the tea leaves again as there's a chance any bounce is liable to be fairly useful.

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.