Chart of the Day: Kraft Heinz Holding Above $30 $KHC

While there may not have quite been 57 varieties of disaster as far as 3G and Warren Buffett’s experience with Kraft Heinz, the actual number may not be that far off. Clearly, schadenfreude  plays a part for some observers of this situation. But perhaps the key issue here is how is this situation going to play out?

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The answer may be that given the way that fundamental investors simply regard a cheaper share price as offering more value than an expensive one, doubling down here at $30 (or lower) may take away the pain of having overpaid by a significant amount. Given the shadow of the SEC, and the possibility of even more write downs, this situation appears fluid to put it politely. The final issue for Buffett / 3G is that Kraft Heinz’s woes are so substantial, being “back seat driver” shareholders may simply not be enough to stem the spiral of decline.

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But in one way, it is not the fundamental position currently which is of most interest. The daily chart showed what appeared to be a gap down overshoot move below $30 in May, and then gapped back up in June. This set up is called an Island Reversal and is ironically one of the strongest technical formations. A break of the February resistance line at $31.50 would back the idea that a technical rally is on its way. But at least while Kraft Heinz remains above the June $28.95 gap floor, we can regard this stock as an unlikely recovery situation for a move back towards the 200 day moving average now near $40 on a 3-4 months timeframe.

Norwegian Air: Doomed To Fly Solo? #NAS #IAG

There has been a welcome recovery in shares of ailing carrier Norwegian, from near 30 NOK to over 45 NOK. The bulk of the rally was based on a “too big to fail” / M&A routine, for the debt ridden group.

Indeed, it wax surprising that the stock price hardly blinked when IAG walked away from the table last week. Clearly, there have been hopes that another party might step up to the plate.

However, the stock is currently priced with a takeover premium. If, as seems likely, Norwegian has to fly solo with no other bidders visible from the flight deck, there would appear to be an over valuation at current levels.

A return to the recent chart gap sub 40 NOK may be anticipated at the very least. It would be surprising if the old February floor at 47.73 NOK is cleared near term.

Chart of the Day: Imperial Brands (IMB) #IMB

Of course, these days “Sin” Stocks are part of the thought crime / PC  straightjacket nightmare we are living in, of which George Orwell’s dystopian offering “1984” highlighted so well.

On this basis it is almost worth having the stocks in one’s portfolio as a protest vote, even if you do not smoke. Clearly, Imperial Brands has realised the pressure it is under, even though as we know now, sugar has killed many more people than tobacco.

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Following on the theme, the tobacco giant has move to sugar coat its fundamentals with a revamped dividend policy / £200m share buyback. This comes hot on the heels of a buy note from Liberum on July 4, although strangely enough the shares gapped up the previous day. The chart gap currently leaves an Island Reversal and W shaped rebound on the daily chart, something which may encourage the bulls. While the recent torrid history of the stock may mean that it is wise to wait for the 50 day moving average at 2,059p to be broken before calling a sustained rally, the shares look to be in the mood for a retest of May resistance towards 2,200p even if the recovery fades after that. The floor of the gap at 1,943p will be key in coming days as likely support.

July 5 Bulletin Board Heroes: #BIDS #CERP #CPX #DEV #FARN #LWB #RPT

A technical analysis look at some of the more outstanding UK Small Cap charts of the moment.

Disclaimer
Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to any content here.

Chart of the Day: Plus500 (PLUS)

It has not been a great 12 months for the Spreadbetting / CFD shifting community. This has largely been because of the new ESMA rules regarding retail investor trading / gambling, which they dutifully accepted without a bleat last August. The long and short of the directive is that gambling on the financial markets is now regarded as worse than smoking, Class A drugs, or even eating a Krispy Kreme doughnut. One notes new moves to ban trading in Crytocurrencies reported in the media.

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This point is witnessed by the way that under every advertisement we are told how many people lose money with the provider, for instance, 70%. The Battle of the Somme probably had better statistics. Strangely enough, there has not been the equivalent financial warning on Marriage “you will lose 50% of your money.” Presumably, that will arrive eventually.

But getting back to the Spreadbet brigade, they waved on the ESMA rules like turkeys for Christmas, and most saw their share prices halve. Surprisingly, the lockdown on dissent was so tight that this only happened after the rules came in, so there was plenty of time to go short. It is now easier for a camel to pass through the eye of a needle, than for a professional investor to open an account and get access to the kind of leverage available before last year.

However, with every disaster there is an opportunity. In the case of Plus500 the stock is less than a third of what it was before the crash, and a sustained break of a February resistance line at 605p could be all that is required to deliver a rally towards 800p resistance. The technical stoploss need be no lower than 550p July support.

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More interesting than this, given the pain in the sector one would expect to see consolidation, with plenty of rich pickings to be had. Perhaps a US counterpart such as Gain Capital (GCAP) (owner of CityIndex) might fit the bill, given that its market cap is only around a fifth of Plus500’s?

July 4 Bulletin Board Heroes: #ARCM #COPL #EVRH #OKYO #TOM #VGAS #ZIOC

A technical analysis look at some of the more outstanding UK Small Cap charts of the moment.

Disclaimer
Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything cotent here.

Nielsen (NLSN): Heightened Options Activity Could Signal An Elliott Move

There are a couple of points to note as far as information services group Nielsen Holdings are concerned currently. The first is a spike in August Call Options activity, and the second the recent mainstream media comments, the FT, WSJ and others, that Activitist Investor Elliott Partners is likely to be looking to go for the full blown private equity strategy, rather than its current approach which usually amounts to being either enemy within or a backseat driver.

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While both the MSM comments and options activity are not always the most reliable of signals, the fact that they have combined currently is helpful. Also helpful is the third rebound for the stock since December in the $22 zone, the latest a narrow bear trap. Very often we see temporary new lows for a stock before M&A action – something specifically designed to ensure that no accidental longs get a windfall.

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While the proof of the Elliott move theory (it currently holds around 13%) might be a break of the 50 day moving average at $23, there seems to be little downside to this situation, as we know from last August that it was pushing Nielsen to put itself up for sale.