Blue Index - UK Market and Share Analysis

[BlueIndex]

SELL INTERCONTINENTAL HOTELS

Technicals

Shares in Intercontinental Hotels have been in a descending price pattern since Spring last year. The likelihood now is that we shall see an acceleration to the downside within a 2007 price channel whose support line projection target is as low as 500p. The latest 20/50 day moving average dead cross should back the bear process.

Latest Significant Fundamentals

October 2nd: Marriott's profit warning has a direct negative read-across to InterContinental Hotels says Evolution. Gloomier outlook for North America and warning of possible delays and cancellations to new builds are also relevant to IHG. Reiterates reduce recommendation for IHG and 555p price target. October 3rd: Goldman Sachs cuts Intercontinental Hotels price target to 715p.

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[BlueIndex]

SELL HOME RETAIL GROUP

Technicals

Shares in Home Retail Group appear to have failed yet again at the main December 2007 resistance line / black 200 day moving average at 250p. While below this the implication is that we shall see a decline towards the floor of the channel of last year as low as 195p. Indeed, the multiple failures at the 200 day moving average in recent months underline the bear trend.

Latest Significant Fundamentals

October 7th: UBS cuts Home Retail Group price target from 250p to 235p, keeps neutral rating.
September 11th: Shares in Home Retail slumped after it warned Homebase will face “substantial” writedowns as sales at the DIY store were down along with sales at catalogue retailer Argos.

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[BlueIndex]

BUY J SAINSBURY

Technicals

Shares in Sainsbury have retreated sharply from an extended 200 day moving average failure in September. The expectation now is that former July support down to 259p will come in to back up the stock, and that while above 254p as a stop loss a return to the initial September 330p support area could be seen.

Latest Significant Fundamentals

Sainsbury's lifted underlying like-for-like sales by 4.3% in the quarter to end September, in the middle of market forecasts.
"Like-for-like sales growth, excluding fuel, of 4.3% over the summer quarter and 3.9% for the first half, demonstrates that Sainsbury's universal offer is meeting our customers' expectations for great quality and excellent value," chief executive Justin King added.

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[BlueIndex]

BUY HAYS

Technicals

Shares in recruitment group Hays have been in a mildly descending price channel since the end of last year, but the triple test of the 2007 support line now at 72p in the past month implies that we could see a rebound towards the price channel top at 90p as an initial target, with the 200 day moving average at 98p in focus after that.


Latest Significant Fundamentals

Hays said the 10% net fee growth, 4% on a like-for-like basis, for the quarter to September represents a solid start to the year despite the increasing difficult economic environment. “Whilst there is no doubt that many of our markets are getting tougher, the experience of our management team, the flexibility of our cost base, the increased diversification of the group, and the strength of our balance sheet positions us well to deal with these market conditions,” said the group.
October 9th: Possible Adecco bid speculation - Independent

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[BlueIndex]

BUY GLAXOSMITHKLINE

Technicals

Shares in GlaxoSmithkline have gapped down after breaking an intraday June support at 1,048p. From a technical perspective, while above the intraday low of Friday at 986p, (and just a penny below that of June at 987p), one would expect at least a retest of the 5 day moving average at 1,097p as a minimum

Latest significant fundamentals

Panmure Gordon upgrades GlaxoSmithKline to buy from hold and target to 1214p from 1141p saying stock is now yielding 6%, even with the overhang of a possibly expensive consumer healthcare acquisition. Added to that, every 5 cent depreciation in the dollar versus sterling equates to 2p EPS uplift

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[BlueIndex]

BUY CADBURY

Technicals

Shares in Cadbury have delivered a sharp bear trap rebound from last week’s two year low at 445p, some 50p below the previous 2006 intraday support. The current position is that while above the old 493p low (on an end of day close basis), the upside here could be as high as the former July intraday support at 572p. There is also bullish divergence as far as the stochastic indicator is concerned, between the last two lows in the stock

Latest significant fundamentals

Cadbury reported a 6 percent rise in third-quarter underlying sales after a 7.3 percent first-half rise and said it was on track to meet its annual sales and margin goals. The confectioner announced a further 250 job cuts, and added it expected commodity and input costs to rise between 6-8 percent in 2009 after an estimated rise of 5-6 percent for 2008

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[BlueIndex]

SELL TULLOW OIL

Technicals

Shares in Tullow Oil have so far managed a two day failure at their 10 day moving average now running through 544p. While below this on an end of day close basis there should be a partial or even full retest of the intraday low of last week at 410p. The bottom of Tuesday’s gap higher down to 490p is the initial target.

Latest Significant Fundamentals

RBS have cut their price target on Tullow Oil from 1,250p to 965p, and although it has kept its buy rating on the shares, the fall for Crude Oil is likely to have an additional and progressive dampening effect on the shares after the recent dead cat bounce.

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[adleer]

Wonderful article about the market character in Forex Trading

 

[BlueIndex]

BUY CENTRICA

Technicals

Shares in Centrica have so far managed a four day rebound back above the 2008 support line at 270p. The technical view is that while above 270p on an end of day close basis the upside here could be as great as the 200 day moving average at 310p. An end of day close above former June 281.75p intraday support is the initial buy trigger.

Latest Significant Fundamentals

British Gas owner Centrica has acquired Building Management System Integrators, a company that installs systems to increase energy efficiency in buildings, for £7m. Centrica said the acquisition will launch its entry into the UK's expanding business energy services market.

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[BlueIndex]

BUY BUNZL

Technicals

Shares in Bunzl have put in a second higher low versus 500p at 529.5p yesterday, with the message being that we have a possible double bottom buy opportunity while the second higher low remains in place. The expected target is former July support at 618p.

Latest Significant Fundamentals

Bunzl said revenue in the third quarter rose 15%. The group said this is due to a combination of organic growth, the positive impact of acquisitions and the weakening of sterling, principally against the euro and US dollar. Bunzl added that overall trading has been consistent with expectations at the time of the interim results announcement in August.

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[BlueIndex]

BUY BARCLAYS

Technicals

Shares in Barclays have put in three higher lows versus the main October 10th low this month. While above the lowest of them at 204p one would expect a retest of the mid September support level at 277.75p. The stop loss is just below the 200p level in order to ride out any intermediate volatility.


Latest Significant Fundamentals

Credit Suisse cuts Barclays target price to 215p from 220p, HBOS target price to 105p from 145p. Credit Suisse raises Lloyds TSB target price to 175p from 170p. Credit Suisse cuts Royal Bank of Scotland price target to 70p from 120p. These are regarded as reflecting recent share price changes rather being necessarily negative.

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[BlueIndex]

BUY BAE SYSTEMS

Technicals

Shares in BAE Systems have fallen in a nearly vertical fashion over recent weeks, but with the stock now in deeply oversold territory under 20/80 on the stochastic indicator there could be a sharp buying opportunity. In addition, there is 3 year support down to 312.75p which should deliver at least an intermediate reaction. The last 2006 support at 368.75p is the target.

Latest Significant Fundamentals

A Viennese count who owns an exclusive Scottish stately home has been arrested as part of an expanding multi-country investigation into suspected bribery by BAE Systems to win European arms deals. The Serious Fraud Office interviewed Count Alfons Mensdorff-Pouilly and another man on Sunday on suspicion of corruption, later releasing the pair on police bail to appear early next year – Financial Times

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[laurance123]

i think this is good time for short UK homebuilders. So far the Treasury is partly propping up RBS, Lloyds/HBOS, and of course NROK is fully nationalised. BARC and HSBC have not had to go
cap in hand to the government yet. So far no UK bank has gone bust, and NROK yesterday reported that it has already repaid half of the £58bn lent to it, so things are looking up there. It may well survive all of this.

As for the housebuilders, of course the government won't prop any of them up. Different situation altogether compared to the big 4 banks. None of them can afford to topple as the whole financial system would be undermined. so i think its best time to short homebuilders

 

[BlueIndex]

BUY ASTRAZENECA

Technicals

Shares in Astrazeneca continue to outperform leading stocks with the main plus point on the daily chart being the way that the shares have remained above the 200 day moving average at 2,229p. While above this zone on a weekly close basis previous October resistance at 2,600p is the target .

Latest Significant Fundamentals

October 24th: Merrill Lynch adds Astrazeneca, Sanofi Aventis to healthcare most preferred list.
23rd October: Astrazeneca, Cognizant announce a five-year deal; expand their global services partnership.

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[BlueIndex]

BUY PRUDENTIAL

Technicals

Shares in Prudential are currently retesting the earlier October 266p intraday low. Thus far we have seen a 269p low, something which offers a level to bottom fish the shares in anticipation of a dead cat bounce. The initial upside is seen as the 10 day moving average at 326p, with the stop loss well below the 266p low at 244p in order to attempt to dodge current ultra volatile positions

Latest significant fundamentals

27th October: Prudential raised from neutral to overweight at JP Morgan.20th October: Prudential moved ahead on weekend newspaper speculation that it is in talks with two strategic investors that will take a stake in the company, which will help it mount a bid for AIG’s business in Asia

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[BlueIndex]

BUY PERSIMMON

Technicals

Shares in Persimmon have managed a quadruple rebound in recent days at and above the 200p level. While this may be rendered rather fragile in just a single opening markdown, the normal scenario would be that the shares will hit the 10 day moving average area above 250p as a minimum target even if the downside reasserts itself once again after that.


Latest Significant Fundamentals

Persimmon expects underlying trading results for the full year to be in line with forecasts, but said it has encountered deteriorating trading conditions since reporting half year results in August. The group now anticipates a 10% reduction in the value of its land holdings for the second half.

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[BlueIndex]

BUY BG GROUP

Technicals

Shares in BG Group appear to have double tested the floor of the main 2007 descending price channel in at 637p. While above this on an end of day close stop loss basis the upside should be as great as the 20 day moving average in the 800p zone

Latest significant fundamentals

BG Group has agreed to buy Australian firm Queensland Gas Company (QGC), valuing the firm at around £2.2bn. BG will pay AUD$5.75 per share, an 80% premium on the closing price on Friday, for the shares it does not hold in the group. It already owns 9.9% QGC

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[BlueIndex]

BUY STANDARD LIFE

Technicals

Shares in Standard Life have bounced off the lower Bollinger Band on the daily chart as well as delivering a stochastic buy cross from a very low level. While there may be a temporary overshoot to the downside, one would expect at least a journey to the 20 day moving average at 226p

Latest significant fundamentals

We are buying Standard Life ahead of its Q3 update on the basis that it will “do an Aviva” and reassure the market about it financial position and the state of its investments, some of which have been hurt badly by the Credit Crunch bear market. The fact that the shares have already fallen some 10% from the opening highs this morning should cushion the trade against all but the worst news

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[96pills]

BUY BG GROUP

Technicals

Shares in BG Group appear to have double tested the floor of the main 2007 descending price channel in at 637p. While above this on an end of day close stop loss basis the upside should be as great as the 20 day moving average in the 800p zone

Latest significant fundamentals

BG Group has agreed to buy Australian firm Queensland Gas Company (QGC), valuing the firm at around £2.2bn. BG will pay AUD$5.75 per share, an 80% premium on the closing price on Friday, for the shares it does not hold in the group. It already owns 9.9% QGC

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Excellent Tip!!!!

 

[BlueIndex]

Thanks 96 Pills! Here's today's idea.

SELL UNILEVER

Technicals

Thus far Unilever shares have failed at the 20 day moving average level of 1,400p, with this also being the high of the day in the wake of the trading update. Below this moving average the shares risk a retest of the sub 1,300p support zone, even if a near term base comes into place after that

Latest significant fundamentals

Unilever reported third quarter underlying sales rose 8.3%, at the top end of analyst forecasts. It expects 2008 sales growth, excluding acquisitions and currency movements, to be "well in excess" of 3-5%

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