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Halfords revisited

Published: 17:00 21 Mar 2014 GMT

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Back in August 2012 I wrote a column about Halfords (LON:HFD) and speculated about the potential of it getting to 392p.  

It represented a 25% rise from the point at which I was writing. And, as the chart below shows, it achieved my target level in the first half of 2013.

I’m honestly not showing off, I’m just rather chuffed at what happened with my target levels.

 

 

Firstly, to deal with the 392p level: we can see the share achieved this ambition in May of 2013 and rather graphically explained why I don’t bother too much with what happens once a target level is achieved. 

All that matters is whether a share price manages to actually close above a target level.

While the price will probably fall, my software has absorbed sufficient arguments in favour of longer term growth.

In the case of Halfords, someone perhaps cursed me when they sold at 392p as the share managed to continue, briefly, to 405p. 

But it sure as heck back tested the initial target at 301p thereafter. This is perhaps the biggest possible deal from my perspective as it indicates the share price is playing by the rules.

In the case of Halfords, the rules now suggest closure above the 500p level will allow the price to continue onward to 622p next. 

But in the event of their share price closing below 436p, I would start to worry about the potential of the upward cycle failing. 

In this instance, I’d tend to expect weakness to 406p initially which would suggest a touch of the red trend on the chart. 

But movement below such a point allows for a move to 370p, utterly scrubbing the longer term growth arguments and requiring me to revisit my software.

We’re having an Access All Areas event next weekend at Trends and Targets. Visit us at this link to register for a free password.

 As usual, please get in touch with nominations for this column.

 Alistair

 www.trendsandtargets.com

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