LESSONS FROM THE FINANCIAL MARKETS FOR 2013

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CONTENTS

Book information

Author information

Technical details

Contact information

Sample chapters

LESSONS FROM THE FINANCIAL MARKETS FOR 2013

Electronic Press Kit

BOOK INFORMATION

ADVFN Books’ latest digital release Lessons From the Financial Markets for 2013 is the must-have guide for investors and anyone with an interest in how the world really works.

By renowned investment author and legendary chartist Zak Mir, Lessons provides an essential summary of all the best market action seen over the last 12 months, while also helping you — the private investor — in making the best investment choices possible, now and in the future.

Read all about the excitement, suspense and gloom that characterised the torrid financial markets in 2012.

Banks, major indices, commodities, and companies including Facebook, Apple and Google are all examined by Mir’s expert analysis.

Zak Mir was the first to bring charting to the UK market in the 1990s. In this, his second book, he aims to inform and help the ordinary private investor as they navigate the complex world of financial markets.

The lessons contained are more psychological, emotional lessons in life, as much as an illustration of how the markets work, and how general trading ideas can be derived — exactly what is needed as we enter the unknown world of 2013.

LESSONS FROM THE FINANCIAL MARKETS FOR 2013

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AUTHOR INFORMATION

Zak Mir is one of the UK’s best-known chartists, having appeared on both CNBC and Bloomberg TV. He runs Zaks-TA.com, the UK’s only serious pure technical analysis website.

Saqib “Zak” Mir was born in Glasgow, Scotland to Pakistani immigrant Doctor parents in 1966. The family moved to London in the early 1970s.

Attending the LSE for only a few weeks before deciding to enter the City, from the early 1990s Zak was a derivatives broker at various companies such as Sucden, Union Cal (later part of Man Group) and Berkeley Futures.

From 2000 the opportunities afforded by the internet and the growth of Technical Analysis led to Zak being Shares Magazine’s first Technical Editor, whilst providing content for TheStreet.co.uk and UKInvest.com. In 2001 he teamed up with Tom Winnifrith and T1PS.com to found Zaks-TA.com.

Zak is now a Senior Analyst at the Institute of Trading and Portfolio Management (zakmir@instutrade.com).

He is the author of several books for ADVFN, and writes for their online newspaper. He also writes for a premium blog service on ADVFN, Zak Mir’s AIM Stock Charting (www.advfn.com/newsletter/zakmir/).

Zak is married with three children and lives in Pamplona, Spain.

LESSONS FROM THE FINANCIAL MARKETS FOR 2013

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TECHNICAL DETAILS

- Price: £4.11

- Format: Kindle Edition

- File Size: 10,078 KB

- Publisher: ADVFN Books

- Sold by:  Amazon Kindle Store

- Language English

- ISBN: 978-1-908756-11-4

LESSONS FROM THE FINANCIAL MARKETS FOR 2013

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CONTACT INFORMATION

Press Department
ADVFN Books
3rd Floor, 26 Throgmorton Street,
London EC2N 2AN

Email: bookspress@advfn.com

Phone: +44 (0) 207 070 0932

ADVFN Books website: http://www.advfnbooks.com

Contact us and ask for a review copy of Lessons From The Financial Markets For 2013

LESSONS FROM THE FINANCIAL MARKETS FOR 2013

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SAMPLE CHAPTERS

Contents

Sample 1: Introduction

Sample 2: The Winner’s Podium: Apple

Sample 3: The Winner’s Podium: Facebook

Sample 4: Charting Hero: ARM Holdings

Sample 5: Charting Nightmare: Ruspetro

LESSONS FROM THE FINANCIAL MARKETS FOR 2013

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SAMPLE CHAPTER:

CONTENTS

Introduction

2012 Perspectives: The Overview

Perspectives 2012: A More Personal View

The Winner’s Podium 2012

1. Apple: The First Year After Steve Jobs

2. Facebook: Faking It

3. Google (GOOG): Fat Finger

4. The Euro: Mission Irreversible

UK Banks

Barclays: The Ultimate Diamond Geezer

RBS: Direct Line To An IPO

Standard Chartered: From Here To Tehran

HSBC (HSBA): A Little Local Difficulty

Lloyds: Culture Of Optimism

2012 Black Swans/White Swans: Key Stories

Bumi (BUMI): 100% Wrong

Burberry (BRBY): China Proxy

Mulberry (MUL): Poor Man’s Burberry

G4S (GFS): Don’t Mention The Olympics

Lonmin (LMI): South African Woes

Ocado (OCDO): Still Off Its Trolley

Supergroup (SGP): New Challenges

Tesco (TSCO): Averaging Down

Glencore (GLEN): GlenStrata Is Formed

Xstrata (XTA): A Merger of Equals

BAE Systems (BA.): In Need of EADS

Britvic (BVIC): Going Soft

Heroes of the FTSE 100

ARM Holdings (ARM): Ever The Hero

Imperial Tobacco (IMT): Fire Without Smoke

M&S (MKS): Bid Rumours Remain

Sage (SGE): A Wise Tech Play

Sainsbury (SBRY): The Qataris Are Coming

The Majors

Sterling/Dollar: Still Made In Chelsea

Commodities:

Gold: Still Waiting

Brent Crude: Positive Consolidation

Wheat: Double Trouble

Financials:

T Bond

Indices:

FTSE 100

Dow

S&P

Nasdaq 100

DAX

IBEX

Nikkei 225

Shanghai Composite

Dollar Index

“U.S.A. Today”

Berkshire Hathaway (BRK.B): Buffett’s Brilliance

Hewlett-Packard (HPQ): Too Much Autonomy

Research In Motion (RIMM): Death Rattle Postponed

JPMorgan (JPM): Saving The Whale

Sprint Nextel (S): Debt On Debt

Personal Favourites: The Zak Mir 2012 Charting Gifts Collection

1. Leni Gas & Oil (LGO)

2. Caza Oil & Gas (CAZA)

3. Sound Oil (SOU)

4. Ophir Energy (OPHR)

5. Genel Energy (GENL)

6. Plexus Holdings (POS)

7. Trinity Mirror (TNI)

8. TalkTalk (TALK)

9. Dixons (DXNS)

10. Thomas Cook (TCG)

11. Perform Group (PER)

12. Cairn Energy (CNE)

13. Bwin Party Digital Entertainment (BPTY)

14. BT Group (BT.A)

15. Scancell (SCLP)

16. GB Group (GBG)

17. Pace Micro (PIC)

18. Magnolia Petroleum (MAGP)

19. Barratt Developments (BDEV)

20. Debenhams (DEB)

2012 Charting Nightmares Collection:

1. Ruspetro (RPO)

2. Aquarius Platinum (AQP)

3. Talvivaara Mining (TALV)

4. JJB Sports (JJB)

5. UK Coal (UKC)

6. Falkland Oil & Gas (FOGL)

7. CPP Group (CPP)

8. Chariot Oil & Gas (CHAR)

9. Lamprell (LAM)

10. First Group (FGP)

11. New World Resources (NWR)

12. Rockhopper Exploration (RKH)

13. BG Group (BG.)

14. Man Group (EMG)

15. Exillon Energy (EXI)

16. Evraz (EVR)

17. Centamin (CEY)

18. Cape (CIU)

19. French Connection (FCCN)

20. Kenmare Resources (KMR)

LESSONS FROM THE FINANCIAL MARKETS FOR 2013

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SAMPLE CHAPTER:

INTRODUCTION

My first book 101 Charts for Trading Success was inspired by my former boss and “mentor” Tom Winnifrith, just after he cut my pay in the autumn of 2010. The book was completed by the end of December 2010 in terms of the writing although it took another couple months to tidy up and translate into a recognisable human language. I looked around for a publisher but was dismayed that I would not be able to get it published in paper form but as an ebook, something which I regarded as a rather inferior type of medium. This state of affairs has of course changed over the past couple of years and ebooks are now all the rage, although I would guess that most of us who are 40 and above still do not regard a book as being the real deal unless a tree has been involved.

It also seemed that ebooks have the problem of being rather cheaper than their paper equivalent and therefore it would seem to require millions of copies to be sold in order for there to be big money extracted from this particular activity. However, by the Christmas of 2011 when it appeared that the 42,000 words of the book may go to waste, I asked the opinion of Dominick Picarda at the Investors Chronicle. He rather helpfully reassured me that ebooks are in fact the way to go and also having read the draft of what I sent him, was of the opinion that the book could be a decent prospect. The story was completed when I saw an advert on the ADVFN.com looking for potential authors. They were not only happy to publish but also to sort the book out into a professional looking tome. They were also keen to entertain the prospect of publishing more books in future, which brings the story up to date.

Writing books seems to me about as easy as pulling teeth, especially when you have four young children under six, and even if you don’t care about the financial aspect – where I am now. But as a compensation, the reality still seems to be that writing a book/being an author is an occupation that still punches well above its weight in terms of kudos, credibility and a general feel good factor when it goes well, far more than many other more difficult endeavours. That said, I would prefer being a rock star, even at the age of 46.

Therefore with this in mind I offer you Lessons From The Financial Markets For 2013. As much as anything else, I would suggest that the catalyst behind Lessons, was not the aforementioned Mr Winnifrith’s fiscal frugality, but childhood memories of reading the Guinness Book of World Records. This book was and is of course a great inspiration to everyone in terms of humanity stretching themselves to the limit in all fields, and for a kid in the 70s when I was still hoping to be the next Winston Churchill, picking up the latest edition was always something of a treat. While Lessons From The Markets may not carry quite the same sense of wonder for all of its readers, I would hope that in future years its publication could be an annual event in terms of summing up the financial markets – one of the greatest melodramas the world has ever known – on an annual basis. In particular I would hope that it might spark interest in the younger generations to get involved in the financial markets, which – whatever the frequent scandals might imply – have been a pathway to successful non-rip-off careers for many, even those from the most humble of backgrounds.

Perhaps what should be noted as well is that while I am best known as a chartist, many of the lessons are non-charting lessons and more of psychological, emotional, lessons in life, as much as an illustration of how the markets work, and how general trading ideas can be derived.

A final point, and something which is of course worth bearing in mind, is that while we have a December publication date, obviously I have not been writing everything right at the end of 2012. Also I have not been able to include perhaps every single worthy stock or event in the financial area. The preparation and the writing of this book started from the beginning of October and therefore some guesses, and some predictions have been made in terms of what may be relevant by the end of the year and also where certain stocks and markets may go over that final part of 2012. Clearly, given that I am in the prediction game as a chartist, you would not expect this to be too much of a challenge, even though in some cases it may be slightly foolhardy to attempt to make a call on these particular situations. The fate of the Direct Line insurance float, or even whether Facebook might head for $0 by 31 December 2012, are a couple of challenges that come to mind.

This book is by its very nature a subjective exercise, and of course the contents are also skewed towards what may be most interesting after the event, even more so than while it is actually going on. For instance, while Hurricane Sandy was important enough and painful enough an event to close the New York Stock Exchange for the first time since 9/11, the price action/trading implications were relatively limited, and to put it bluntly, did not provide much to learn from in my opinion.

The financial markets are of course a massive area to look at, even in terms of the highlights over the past year. But I would be proud if I could convey at least some of the excitement, suspense, emotional swings, manias and gloom over past twelve months even while acknowledging that the best that can be done here is only to skim the surface. I suppose it is the way that they are skimmed which provides the interest.

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The Winner’s Podium 2012

Apple: The First Year After Steve Jobs

The Set Up

Perhaps like most people I would like to pride myself on being an original. This means that all things being equal I occasionally think of the original perspective that nobody else has on a topical debate, spot a flaw in an argument which has been taken for granted as a winning one, or find an angle on an issue which is unique – and hopefully better than anything else on the table at that point. Unfortunately, this is increasingly a more and more difficult thing to do in the age of the Internet. Now there are billions of bloggers with attendant opinions and ideas, and you would have thought that on every issue including Apple, one of the most talked about phenomena of the past ten years, not one stone would remain unturned in terms of the views on the world’s largest company.

Therefore I also apologise if what I am going to say is not an original point and is something which every blogger in town has already pointed out. Nevertheless, I believe the following unusual form of analysis still stands. It was interesting that on 5 October 2012, which was a year after the death of Steve Jobs, we actually saw a technical signal combining with the anniversary of his death. What is even more curious is the way that this break of 12 September support at $656 in the first week of October tied in almost exactly with the end of the average length of grief which is said to be one year. If you look up the Banned Blogger’s article on ADVFN.com “Apple: Rotten To The Core” you will see the call I made at the time on the shares being a sell.

Indeed, if you believe in the comments on www.caring.com, that it takes about a year for someone to feel better (return to normal) after the death of a loved one, then you may agree that this concept could be one that would affect not only sentiment towards Apple, but also the share price. Of course, turning the argument around in terms of how Apple would do in terms of the price action, this would mean that for the first year after Steve Jobs’ passing the stock was in something of period of grace where nobody would really feel like knocking it down in a serious way. This is even after a fiasco such as the mapping app and the general situation where the company is involved in ugly vanity legal battles with Samsung. That said, the most pertinent factor of all may be that new CEO could never live up to the legend that his predecessor had built up. On this basis I would suggest that Apple mania had an extra year more than it deserved courtesy of the late Mr Jobs passing. It is now five years since the iPhone was launched in June 2007, and for any mania – including that of the Beatles 1963-1966 (until the Beatles said they were greater than Jesus), Tulips in Holland (1634-7) and the Dotcom Bubble of 1995-2001, this has to be regarded as a long time. To paraphrase Winston Churchill’s speech of 10 November 1942, we may have reached the end of the beginning of Apple’s great bull run. Are Apple products so good looking you want to eat them? Yes. Are they the perfect affordable luxury for straightened times? Yes. Should Apple be the world’s most valuable company? Maybe, but probably not.

2012 Price Action

The daily chart of Apple overlaps into the end of 2011 on the basis that the end of November witnessed a rebound for the stock of the then rising black 200 day moving average at $363. This is important as it is usually the case that some of the strongest rallies in stocks and markets are derived from a successful pullback to the 200 day line, and to a lesser extent the shorter timeframe 10, 20 and 50 day lines. In fact the big action for 2012 started almost at the open in the form of a gap in the first training session of the year through towards $410, with a larger feature the gap through $440 towards the end of the month, both of which remained unfilled. It is normally the case of when you see two unfilled gaps in relatively quick succession the correct assumption is that we are heading for a significant move to the upside.

Indeed, if we needed any further proof of the resilience of the Apple price action it was the February gap through $480. From this moment on one would be merely choosing which moving average to use as a trailing stop loss, in this case the grey 20 day moving average and only reversing or taking profits on long positions if there was a sustained push below the 20 day line. The best trigger in such instances is normally to use an end of day close below the moving average which is being used as the dynamic stop loss. As can be seen there was no end of day close below the 20 day line until 13 April and a $603 close. On the basis of the break of a December RSI trendline the end of the first phase of Apple’s 2012 rally came on 30 March, $599, a little early as far as the 10 April peak of $644. After that traders were left in the lurch for just a few weeks in terms of waiting on a big signal from Apple shares. 23 April $556 intraday low resentfully as after a break at the level down to $528 we were waiting on any end of day close back above the former April low to suggest a bear trap and a new potential led to the upside. This was delivered on 21 May in the form of end of day close at $561. Those who kept their nerve could have stayed in the stock from there until the $700 plus all-time high, although the final buy signal of note in terms of people argument came on 31 July. Here we would have bought in on the basis of a three-day island bottom being formed, with its $603 open price of that day the notional entry-level.

Then for August/September/October we have a clear head and shoulders reversal pattern, one that is backed by a beautiful island top sell formation just above the $700 mark. The presence of this island top, as well as the head and shoulders reversal, reminds us that so-called double or combination signals have to be taken as a compelling event in terms of trading action. Indeed, on this occasion we had a break of a May RSI support line around the 46 level coinciding with the aforementioned one-year death anniversary for Steve Jobs, and the reversal signals in the price window. From that point on a fill of the $585 late July gap up floor became the objective for the iPhone maker’s stock. In fact, this objective was easily beaten by the beginning of November, arguably causing the biggest private investor upset of the year as their beloved Apple tanked despite iPhone 5 and the Mini iPad launches.

Payoff

Of course, there could easily be a whole book describing Apple’s year every year, and particularly the one after the death of Steve Jobs. Standouts have been the record high as far as the stock is concerned, the most expensive company in the world tag, the maps app fiasco, and on-going legal warfare with Samsung. The suspicion here at the beginning of October when I first started writing about Apple’s year was that we may have seen at least a pause in the progress for the iPhone maker was partly psychological – the one year after Jobs, partly to do with the daily chart, where there was a clear double reversal/triple reversal. This proved to be correct and was more than just yet another attempt to be a contrarian who managed to pin the correct price target tail on the world’s largest donkey (company). Before the fall one could only imagine how much money has been lost by speculators in previous months attempting to short this stock and of course from October it was the longs who took a massive hit. Clearly it would always be best to miss out on such money-losing opportunities in both directions, and from my perspective following technical signals is one of a few robust methods of doing this if you decouple your personal psychology from what your eyes are telling you on the screen. Incidentally, by the end of November for Apple the unfilled gap to the upside on 19 November completed that month’s island bottom reversal, with the entry point the open of 20 November at just under $572. That said, we really need to witness an end of day close back above the November gap at $580 to suggest that it is not merely a dead cat bounce the stock is offering.

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Facebook: Faking It

The Set Up

IPOs are one of the most serious/pivotal business days as far as any company is concerned, very often the all-time highlight. To my mind the IPO day is on a par with the wedding day as far as a marriage is concerned. That is to say in the near-term and possibly even on a longer timeframe almost whatever happens the day of the IPO will be a high point. In other more cynical terms it could be said that it is downhill from there. Perhaps the timing of Zuckerberg’s wedding was an acknowledgement of this? This means that even if the company in question does go on to create massive profits and does fantastically well, the chance of making money from the share price directly from the IPO price initially is very rare.

There is also another lesson in terms of the run-up to IPOs, especially the major ones such as Facebook or the UK Direct Line (DLG) this year. It is that in general whatever the state of the market is at the time the grey market is being formulated, there is stone, cold silence regarding the pitfalls and uncertainties surrounding the prospects of the company in question. Instead, you get emails from stockbrokers and their introducers urging you to take part in this wonderful opportunity as if it was for a Christmas raffle in which every ticket is a winner.

Magically, no one takes notice of killjoys like myself until all the money is in the kitty. I disagreed with Direct Line being floated on the basis that we the public already own 82% of it, as it belongs to part-nationalised RBS. This 82% of course is not a killer blow, but there is a principle at stake!

My general rule is therefore unless there is an obvious buy signal for a stock soon after it comes to market, you should normally wait a few months until a couple of trading updates have come through and the puff and bluster of the prospectus has been blown away. This is because of the problem of relatively few siren voices getting an airing before the IPO, and then normally too many cynics being unleashed after the float date.

But at least out of the wreckage of the first few days of Facebook, my friend and financial markets guru Alpesh Patel did manage to get recorded on the BBC in May saying that the shares would half, and they promptly did by September. The question of course was what to do after they had halved in value? According to conventional valuations – and I would take the word of my “mentor” Tom Winnifrith on this subject – on the basis of conventional earnings per share or the price earnings ratio and a general back of the envelope assessment, the real value of Facebook should probably be no more than five dollars a share.

I have to admit that although Facebook may be a little too friendly for my personality style, I am a fan and feel rather bruised at such a low valuation. Indeed, during the year I did write about my personal way of valuing new economy stocks. This is based on the experience of the dot-com bubble and what it taught us, as well as a knowledge that the Internet of the early 2000s is very similar to the railroads of the 19th century and companies that formed around that, as well as of course the first oil companies and the first car manufacturers in the last century.

It can be said quite simply on the basis of railroad, oil/cars, dot-com, that being first in any field should command a premium. If there is a bubble once again in the new economy it is because we are realising that many of the big names that have now become household names such as eBay (EBAY), Amazon (AMZN), and Facebook are companies that have a massive and probably permanent advantage. It is well known that in the old economy larger companies will take over their smaller rivals just in order to knock out the competition and thereby increase their growth and earnings prospects. In the case of the new economy, Facebook was the first major social media player and should be valued not in terms of how much its revenues or turnover is, but how much it would cost another company to create a new entity with similar market share. The best example of my argument comes from the Microsoft takeover of Skype in 2011 for $8.5 billion, a valuation that represented 32 times earnings. Commentators scoffed at the takeover, but my view is that it was a fair deal. If Microsoft wanted to replicate the Skype business and have as many users while Skype was still in business, it would not have been able to do this for $8.5bn or even $80bn. Coincidentally, 32 p/e is what Facebook’s will fall to in 2013 according to Business Insider. I have a feeling that the fate of Skype is what the fate of Facebook will be, if it gets cheap enough – $10-$15 – and perhaps even if it does not.

2012 Price Action

I suppose given how grossly overvalued Facebook shares are supposed to be according to the fundamental experts, who were curiously silent before the shares hit the stock market on 18 May, we should be grateful that even as much as one day was spent by the stock above its issue price. In fact the gap down the day after the IPO remains unfilled as do those of 16 and 27 July 16. Indeed, here we are in the inverse position to that of Apple described above pre-October, in that Facebook is showing us how consecutive gaps to the downside can deliver ultra-painful selloffs.

Bullish divergence in the RSI window gave us a rally from the start of September, with the gap higher through the grey 20 day moving average on 12 September particularly encouraging as it was forming an island bottom. Unfortunately the only thing which trumps an island bottom is an island top, one which came through on 24 September by a gap to the downside whose top is at $20.60. In fact the whole problem of the price action for Facebook between September and November 2012 is that it was essentially just a collection of alternating island tops and bottoms with an overall $19-$24 range.

Going into the final quarter of 2012 Facebook needed to deliver at least an end of day close back above the July gap down at $26.73 in order to begin to be a serious contender as a bottom fishing opportunity. As things stand it would appear to be something of a thankless task in trying to find the suitable entry point for the long-term unless, or until, this is achieved. But even though the task was thankless I did start to attempt in October to look for the conditions which might lead to the shares staging a turnaround. For some reason I had it in my mind that the decline from the opening day will eventually be reversed in the form of a U-shaped turnaround. In fact, the suspicion was that the 14 November end of day close back above the top of an October gap at $21.88 may have been the beginning of the end of the bear run for Facebook. By the end of November we were looking for sustained price action above the floor of the July gap at $24.54 to cement the nascent recovery idea. While of course the sensible thing would probably be to wait for $26.73 as described above, at least just before the time of publication the social media stock was making very interesting technical noises indeed. It really would not be surprising if that little three-day dip of the start of September below $18.50 was the selling climax point here. Put it this way, during the early autumn I did predict that Facebook could hit $45 during early 2013, and so far there is nothing which has happened which makes this appear less likely.

Payoff

Following on from the rather grandiose technical prediction, it will be intriguing to see whether the doomsters are really proved to be correct regarding the overvaluation of the social media group, and of course how foolish so many people were in buying at the IPO. While they may be correct in theory, and even in practice, on this occasion I would prefer to take the bull tack just so that the I told you so brigade are left reeling.

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Charting Heroes

ARM Holdings (ARM): Ever The Hero

The Set Up

To my mind there was really only one hero stock as far as the FTSE 100 that really fitted the bill in a relatively lacklustre year, and it was chip designer ARM Holdings. In fact I was quite gushing about the company a couple of years back in 101 Charts, and given the way that the gadget/mobile/smartphone revolution has continued to balloon ever since, you can imagine that my enthusiasm remains. Indeed, this view remains stronger than ever even after the recent carnage as far as Apple shares are concerned, on the old adage that those who make the most out of a Gold Rush are not the miners, but those who make the shovels and pick axes. On this basis ARM’s fundamental future appears to be very much a rosy one. The highlight of the year, the best day, came on 23 October with the announcement that third quarter profits more than doubled to £43m.

2012 Price Action

The gap higher for ARM shares in the wake of the Q3 update left a third unfilled gap on the daily chart since 15 October, and less than a month later there were four unfilled gaps. Given that two unfilled gaps in close proximity are usually only seen in the most bullish of situations, it is not surprising that at the time I described ARM as being the proud owner of the strongest blue chip chart of the year. What can be said going into the last month of 2012 is that even though ARM shares have come up a long way already, and appear overstretched as much on a fundamental financial ratios basis, as on the technicals, while above the floor of gap number three this autumn at 695p the upside here should be as great as the 750p level, equating to the top of a rising trend channel from July, by the end of January.

Payoff

Although there is a little ARM in almost every smartphone on the planet, it would not be wise to do an “Apple” and calculate that 2+2=5. Instead, we have a decent breakout for ARM shares, and while this should continue well into 2013, we should not assume that it will not be a rocky ride.

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Charting Nightmares

1. Ruspetro (RPO)

Ruspetro really has been a nightmare in the sense that it represents one of the most difficult charting phenomena there are. I’m not quite sure whether this type of price action has an official name, but I’d like to call it the “back and the back”. The reason for the label is because it perfectly describes what happens to traders and how they can suffer so badly in such situations. Essentially shares in Ruspetro delivered a consistent pullback from the early April peak. From a trading perspective there were many times along the way when you would have said this is it, this is the end of the retracement and we shall see the initial January to April bull run resume. Indeed, perhaps the most obvious time for recovery here was during the June-July period when the shares temporarily managed to bear trap back above the initial January support of £1.21. Indeed, there was some mileage here in the sense that late July delivered a gap through the 50 day moving average, and the shares peaked over £1.50. But the reality of this intermediate recovery was actually worse for traders in the sense that it gave them the false notion Ruspetro was back for good. Indeed, that 30p rebound may actually have been good enough to convince some in the market to ignore the gap down through the 50 day moving average – a first-rate sell signal – and then line themselves up to catch the type of falling knife move that ended up probing well below the 90p level. In fact it could be even worse in the sense that unless Ruspetro manages to recover the top of the descending April price channel/blue 50 day moving average of £1.02, there is a risk of a new leg down towards the 2012 price channel floor at 50p. What makes us fear this scenario even more is the way that post-September resistance towards £1.10 was well below the former January and June support zones near the £1.20 mark. What can be said at this stage is that for Ruspetro to be a convincing dive we would like to see not only a break of the 100p zone, we would actually like to be treated to a fresh support point above this level and even really a recovery of the initial £1.20 floor - that is how negative the set up here currently looks.

Press Department
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3rd Floor, 26 Throgmorton Street,
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Phone: +44 (0) 207 070 0932

ADVFN Books website: http://www.advfnbooks.com

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