MKS
Marks and sparks undervalued M&S have had an unfortunate ride with the sudden exit of their CEO followed by Covid-19. Nonetheless, we are trading far below its intrinsic value.
As seen we are reaching the final quarter of our descending channel as well as nearing a return to normality from the Corona virus. We can reasonably predict that a break of the channel resistance will take us to our consolidation zone, followed by further upside to the 2000 low of 155.00.
Sell Marks & SpencerMarks has rallied into multiple levels of resistance on the daily chart. This is the top of the range where previous highs have stalled. It is also the 200 day moving average. There is divergence on both the relative ratio(vs UKX) and the RSI, which suggests the momentum is stalling. Sell with a stop at 364p, targeting a move towards the lower end of the range at 308p
POTENTIAL MARKS & SPENCER (MKS.L) SHORT SELL @564, 558, 551The brilliant thing about good news in stock trading is that it opens up opportunities for both bulls and bears.
Bulls want to jump in on the hype (along with the herd) hoping that some other bulls jump in right after they do so that they make money. They expect to buy and hold because the company is seen to be in good shape.
Bears, on the other hand, look for areas where supply overwhelms demand. They want to short sell to these bulls. In other words, borrow from a broker to sell to those who want to buy. Then buy at a lower price to return to the broker.
Usually, there is good news just as price reaches an area where institutional supply overwhelms demand. Therefore, the bears wait on the bullish run to pounce.
Here we see MKS.L rising quite well over the past few weeks. Business must be good. The FTSE100 is beginning a rally back to 7000 and so everything is rosy. Marks and Spencer also happen to have broken their 14 quarter run of declining earnings this quarter. This is fantastic news.
Investors buy stock based on this "news". Excessive demand causes prices to open 4% higher on April 2 (Late April Fools' prank). This rally, which presumably profited some in the short-term, drove straight into an area where willing sellers were in their numbers. We know this because price fell dramatically from here the last time (in 2008).
If there is still plentiful supply, price should now fall to at least 530.00. Entry was missed at 555.70 on this one but hopefully there is a retest of that area before prices fall. Orders were placed on the M5 chart to allow risk of 2-3 base points.
