Why Cineworld’s recovery may not be straightforward
27th July 2021 07:57
by Alistair Strang from Trends and Targets
Share on
A recovery from the pandemic lows has unwound. Analyst Alistair Strang plots a second bounce back.
Cineworld Group's (LSE:CINE) share price successfully achieved the target levels given in our review last November. Perhaps more importantly, for a brief period, the share price closed a few sessions above 110p and enjoyed March basking in the realms of unvaccinated optimism for the future.
Invariably, the price has fallen back and presents the possibility of some near-term opportunity. The reason we were focussed on the 110p level is worth remembering. Closure above this level presented a Big Picture calculation which allowed future price recovery toward 185p. As always with Big Picture calculations, the actual path taken can never be given, just a strong possibility of a target being viable for those blessed with infinite patience.
However, near term, there’s an issue with the price. Presently trading at around 66p, it needs below 56p to confirm the threat of reversal to 44p and, hopefully, yet another bounce.
Should the share actually close a session below 44p, there’s a very real threat of ongoing reversal to 17p. We suspect the movie chain will need to screen the movie Cats for such a disaster to unfold but, visually, such a vile target makes some sense. It matches the lows of 2020 and presents an ideal spot for a proper bounce.
- UK stocks are a bargain after record slump in company revenue
- Why reading charts can help you become a better investor
Near term, we shall be more interested if the share price manages above 70p, as this allows recovery to an initial 82p. If bettered, we can calculate a secondary at 102p.
In the event the share price manages above 102p, it once again enters a realm where future promotion to an eventual 185p becomes possible.
For now, we suspect it intends to head toward 44p, hopefully failing to break such a level and giving a fairly strong level to rebound from.
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.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.