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Evraz: Russian roulette?

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By Alistair Strang,  Trends and Targets

 

Last week, I took a glance at Persimmon (LON:PSN), which is moving up to the FTSE 100. So this week I thought I would look at the prospects for Evraz (LON:EVR), which will be relegated. 

Through the 80’s and 90’s, I think most of us recognised the constituents of Britain’s premier stocks index.  

But nowadays, when I look at its components, I scratch my head. Evraz, the Russian steelmaker, is a case in point. 

It does, however, come with a plethora of data which gives us a clue to the market’s intentions for this share price.

And one thing is clear: the market did not approve of the share trading in excess of 400p and it most certainly wants the price down. 

What makes matters worse is the price is closing fast on a level where my software says, very politely, “dunno”.  

Oddly, this is not necessarily a problem. During 2013, we’ve seen rather a few shares experience miracle recoveries when their price has hit such a point. For Evraz, the magic number is 105.4p. 

I’d really hate to see the price close below such a point currently. 

We recommend clients avoid Russian Roulette with shares in this sort of position as it can go horribly wrong. 

Our computer currently suggests if Evraz closes below 105.4p, the next target is zero! 

At time of writing, the share price is at 110.3p. However need only exceed 120p to enter ‘safe’ territory where we’d regard the share as creating a trend for the future. 

In such an event, I can calculate a target of 152p with further, if exceeded, at 185p. Amazingly, these numbers are not longer term but probably within the next few weeks or months.

However as I said, if Evraz closes below 105p, then all bets are off.

Next week, I'll take another look at gold.

 

 

Alistair

Catch up with Alistair and the team at www.trendsandtargets.com


Trends and Targets provides commentary and observation from a unique trend perspective. Trends and Targets  make no recommendation on specific items and do not provide financial advice. Their input should be regarded as part of the research an investor should make before coming to a decision.

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