Given the way that I am largely sidelined by the journalism establishment, writing about any subject, even my specialist area of the stock market is kept to a minimum. However, with indices tumbling it seems fair to look for the few situations which may be defensive.
This is partly due to the way that historically the third week of November tends to mark a low for shares, ahead of the more benign immediate run up to Christmas. Such an observation is not based merely on seasonal optimism, but more than 30 years in and around the stock market.
To this end it seems fair to highlight William Morrison (MRW) as a situation where the shares have maintained most of the M&A rumour originated gains, widely reported in other places over the course of this year. In addition, this stock seems to be one of those which to paraphrase Warren Buffett’s analogy, is still sporting a robust bathing suit as the market tide goes out.
What is interesting apart from merely the 4% dividend and the price action outperformance of late, is the way that having broken above 230p in April, this level has proved to be support on a consistent basis. It is also noticeable that the gap higher for the stock in March at 210p remains unfilled, and there is support at the floor of a rising March trend channel at 242p, as well as the 200 day moving average at 244p.
The implication is that provided there is no break back below the 230p support zone, we could see a technical target as high as 285p over the next 2-3 months – at the top of this year’s trend channel.. Only cautious traders would wait on an end of day close above the 50 day moving average at 252p before regarding this as a momentum play.
Otherwise, it may be best to focus on perennial bid rumours in the market regarding both Morrison, and any combination of its peers. In addition, it may presumably be better for these stocks to make a move on Morrison in the wake of the all important Christmas period. But in the meantime, it is highly likely that this company will continue to outperform in very tough stock market conditions.