It is supposed to be the case that profits warnings come in threes – like London buses used to do, so this would mean we are still awaiting another such hit for Low & Bonar. However, for those who can ignore this rule, and take masochistic pleasure in attempting to catch a falling knife, this could be a situation to investigate from a technical analysis perspective.
The reason being that we are looking at a potential (bullish) falling wedge breakout, one which is backed by a triple bounce off a RSI support line from April. One could say that while the chances of a sustained rebound here may be slim, we are looking at a situation where a proverbial dead cat bounce could be forthcoming. Those who wish to have fresh technical buying trigger would only be looking for an end of day close above the wedge’s resistance line at 8.5p in order to then target a rally to the 50 day moving average zone at 12.66p. Given that this is a falling knife – a stop loss just below today’s 6.56p current floor seems wise.
On a fundamental note perhaps a new CEO and the recent disposal announcement will at least temporarily stabilise sentiment towards this battered company.