Purplebricks (PURP): Springer As Saviour #PURP

It would appear that at least as far as ailing online estate agent, Purplebricks is concerned, German media group Axel Springer having built up a 26.6% stake to date is akin to the backing Mike Ashley has served up for the High Street.

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The situation has been complicated by the presence of kiss of death fund manager Neil Woodford also being on the shareholder register. What is interesting about the latest surge in the Purplebricks share price is whether it is off the back of Axel Springer topping up its shareholding from 26.6% towards the 29.9% level at which it would be obliged to make a full offer for the company. In some ways it would be better if Woodford has offloaded some of his stock to the German group, given his ongoing need to raise cash.

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At least as far as the daily chart perspective is concerned, the price action today is significant in that there has been a clean break of the 200 day moving average at 133p. Also important is the way that since July the stock has found support at and above its 50 day moving average now at 116p – even on dips. Both these features suggest rare technical strength, something which seems at odds with the company’s fundamentals, but in line with the idea that Axel Springer may pounce on the UK group, or at least be topping up its holding. The charting implication is that while there is no end of day close back below the 200 day line the upside here for the stock over the next 4-6 weeks could be as great as 180p at the top of a rising trend channel from February.

Chart of the Day: William Hill (WMH) #WMH

Although when the mainstream press gets on the back of a company as being a potential M&A situation it is the kiss of death, in the case of William Hill, it may be the case that at least following technical rules we have a stock which is genuinely in play. The reason for the relative enthusiasm stems from this week’s flourish through the 200-day moving average, on the daily chart at 160p.

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It also helps that the shares have made a clean clearance of the former April resistance at 169p. At least while above this on an end of day close basis we have the makings of an interim rally for the shares. The favoured destination currently is for a push towards the top of a rising trend channel from November, with its resistance line projection pointing towards 210p. This makes for a 1-2 months timeframe target at least while 169p is held.

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From a fundamental perspective there are a couple of things to hang your hat on should there be no corporate moves on William Hill. For instance, we are being told of an “aggressive” expansion into the U.S. and at least the pain associated with FOBT’s as reported in this month’s H1 results was no worse than expected. Indeed, it could very well be that it is the Stateside action here that means this perennial dog finally has its M&A day, as is being suggested by some.

Akorn Pharmaceuticals (AKRX): Sharp Bear Trap From Below $2.50 Expected To Continue

It can be said without fear of contradiction, that whereas this really has been the year of the drugs sector, Akorn has not joined the party. This observation is derived at least in terms of its share price, if not its valuation, which at current levels appears to be in the bargain basement area. Indeed, looking at the assets of the firm, the sum of parts really does hint at something well north of where we are now.

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However, going purely by the near term price action, there is plenty for technicians to chew on currently. We have been treated to a sharp bear trap rebound from below the former 2019 intraday low of $2.64 and the $2.50. This is the type of final flush out / exhaustion move that one sees ahead of corporate action – although normally there is a delay before such events happen.

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In the case of Akorn though, one would expect to see a stock price reaction back towards the area of the 50 day and 200 day moving averages near $4, similar to the spike towards the 50 day line at the beginning of August. Only a fresh probe back below $2.50 would really hint that the breakdown in the stock is set to continue and this is not expected for now.

 

Sainsbury (SBRY): Anticipating “Good” News

There are certain stock market adages that are useful and reliable, in an area which is traditionally a minefield even at the best of times. For instance, “profits warning come in threes”, following significant director share buying, and in the case of Burford, avoiding companies where related parties are on the board.

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In the case of Sainsbury, we are reminded of how the share price tends to rally after a CEO steps down / is sacked. The only twist on this occasion is that while the stock appears to be jumping the gun as far as Mike Coupe’s departure. While it has been reported that the grocer is scouting around for a replacement – something it is alleged is always the responsible thing to do – so far market speculation has been denied.

Clearly, once the CMA blocked the merger with Asda – and did its habitual business prevention role, it was always going to be difficult for Coupe to stay in his job. Without such a deal Sainsbury was doomed to continue the slow death experience that it and many of its non discount grocers have experienced in recent years.

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What is interesting from a price action perspective is the way that the shares have bounced reasonably well off the floor of a bullish falling wedge pattern on the daily chart, and that as little as a clearance of the 50 day moving average at 195p could unleash a sizeable intermediate rally.  A return to the 210p – 220p area does not seem unreasonable to expect.

This may or may not coincide with the departure of Mr Coupe. But it may be triggered on a fundamental basis on hopes that a new approach at the struggling supermarket could be on its way.

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 written here.

Plus500 (PLUS): Is the buyback enough? #PLUS

Although in most areas there is a fierce battle over whether the EU is a good thing or not, in at least one particular space, the ESMA rules regarding spreadbetting and retail “gamblers” has to be regarded as something the City of London really did not need. Not that anyone would dare say this openly. As far as today’s update from Plus500 is concerned, the obvious effect of halved profits would appear to be an obvious knock on effect of last August’s new trading rules. But what is interesting is the way the group appears to have bounced back, adding 19% more customers during 2019. This is clearly impressive and suggests that the company is able to offer more than some of its competitors.

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Nevertheless, unless volatility in the markets rises – which going into Brexit / Trade War escalation it could, Plus500 remains a tricky trade share price wise. The jump we have seen today may have been as much to do with the promised share buyback of up to $50m, something which should scare off all but the most ardent of its shorters. What we have seen so far today is a fill of the April gap to the downside at 695p, with the high of the day at 697p. This zone is still technically the area to short the stock up to. However, a break of 700p could target the area up to the 200 day moving average currently at 941p. Therefore, in Plus500 we have a trading opportunity as intriguing as the company itself.

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 written here.

Chart of the Day: Kier Group (KIE)

Kier Group at 116p:

It is already quite clear that some in the market had thought, and perhaps still do, that construction and services company could be in the same groove as say, Carillion, or currently – Thomas Cook in the travel sector.

However, some more savvy players believe that Kier Group has enough family silver to sell to stay afloat and / or could be about to unveil a descent rescue package. Whatever this kind of vague speculation may lead to, for the purposes of Chart of the Day we have a stock which has become increasingly interestingly in recent days and weeks.

For instance, the final low in July to 58p was accompanied by bullish divergence in the RSI window suggesting that a turnaround could be afoot.

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But the latest breakthrough for the stock is through the 50 day moving average now at 105p – the same level as the mid June support on the way down.

What we can now look forward to is to say that while there is no end of day close back below 105p the potential upside here may be as great as the top of the rising trend channel drawn from June on the daily chart. The timeframe on such a move is regarded as the next 1-2 months.

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 written here.

Chart of the Day: Burford Capital (BUR)

Of course, one would not want to dignify the rumours going on around Twitter and other stock market gossip forums on Tuesday. But it would appear that it may finally be time for the bears to give Burford Capital something of a kicking, and perhaps even more than many investors who have been happy to buy on dips have become used to.

One of the rules of the stock market is that the stronger the trend, the rougher the ride, something that Fevertree (FEVR) shareholders have had to get used to of late. However, another rule suggests that the most resilient bull runs tend to end in the most dramatic of ways. The latter is what we may be seeing at Burford. Perhaps the best case scenario at this stage is that there will be a minimum test of support from the beginning of last year at 1,000p and then the stock will rebound back to at least 1,300p former neckline support. After that we could be back in a 1,300p – 1,800p range of the type which has dominated over the past year.

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Unfortunately, the worst case scenario would suggest that there could be a 700p decline from the 1,300p neckline break. This implies a target as low as 600p.

That said, an end of day close for Wednesday below 1,000p would risk 600p if only because the stock is trading in the aftermath of a May dead cross between the 50 day and 200 day moving averages. The longer we stay below 1,300p the greater the 600p risk becomes.

Del Taco: The #BeyondMeat Effect $TACO $BYND

There is little doubt that one of the stocks that has really captured the imagination so far this year is Beyond Meat (BYND). At the same time there has been something of a Beyond Meat effect, with a read across / proxies to the phenomenon scattered through the food space. A company which felt the influence of meat alternative giant is Del Taco Restaurants (TACO), given the way that it added vegan and vegetarian options to its menu, with commentators noting the way that even die hard meat eaters get a “flexitarian” urge now and again when new alternatives are presented to them.

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What has been disappointing though so far, is that even with the Beyond Meat inspired boost, same store sales at Del Taco’s restaurants were only up 2.2% as opposed to the 2.7% expected. This caused the stock to fall earlier this week. But it may be that the market has been too harsh on Del Taco. It could very much be argued that it is still relatively early for the alternative meat space, and Del Taco’s offering as well. It is also the case that shares of Del Taco are still appreciably up on the start of 2019.

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The shares gapped higher in June and on this week’s pullback have found support in the $11.50 region. There is also a rising trend channel which can be drawn from March off whose floor the stock has bounced twice this week. The likelihood is that at least while above the 200 day moving average still rising at $10.89 the stock will be able to revisit the best levels of the year towards $14 over the next 1-2 months.

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 written here.

Alexion: More Imminent Than Intereconomia Have Suggested? $ALXN

Earlier this week Spanish business publication Intereconomia suggested that either Roche or Amgen could be interested in Alexion, which has just unveiled its results. However, some sources have suggested that the timeframe on anything happening here could be rather more immediate than the few months initially implied – perhaps even as soon as in days.

That said, so far shares of Alexion appear to be content to test for support, even though, firstly its rare diseases space is one of strong growth, and after offering an impressive update on its Soliris treatment today. Presumably, now that the results are out of the way any would be bidder has the road clear to act if they so wish.

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 written here.