Shares digital

With the volatility in the market at present a deal of courage is needed to consider committing new funds. There are two things to consider though. Firstly, many stocks have already taken a severe pounding and indeed will most likely appear to have been in the ‘bargain basement’ category when we come to look back at this period. Secondly, the market will inevitably look at its most worst just before it decides to turn upward. For the brave there are individual shares that might just be worth considering not least because they are bucking the general trend and moving up in a generally weak market. Bear markets are inevitably vicious and significantly shorter in duration than their bull counterparts. They are also prone to sharp upward corrections during their lives. It cannot be yet argued that the UK market is even basing let alone ready to recover. However, here a three stocks for whom further gains do seem to be signalled.

AstraZeneca (AZN)

Apologies are in order, our suggestion that the pharmaceutical giant was worth picking up in mid-January was somewhat premature. As is the case with most giant caps, the market’s overall stance has borne down on the share and as can be seen on the chart, the shares have continued their 17-month decline with a further drift lower to a test of key support close to £18.00. This level marks the low point in the shares for some ten years, indeed it can be argued that the shares have traded a massive sideways channel for all of that time with the upper return line set around £36.50. We are seeing some signs that the market might be about to wake up to the oversold nature of the stock with momentum diverging positively. From a trading standpoint the shares offer any buyers the opportunity for a close protective stop, as if the channel base breaks conclusively with a move below £17.35, the bounce is not then going to happen. In the absence of such a move look for a recovery.

BUY - £17.89

STOP LOSS - £17.35

TARGET - £24.00

British Energy (BGY)

Now with a glowing future, the nuclear generator seems to be the focus of possible acquisition. From a technical perspective the share contrast nicely with AstaZeneca. They too have a large sideways channel dominant on the chart, however, in this case the return line that had been resisting for the last year and half, has finally given way. These formations,when they are broken, provide two possible targets, the width of the channel placed above the channel in this case suggests a move close to 800p, while using the point and figure chart and analysing the width of the channel on that chart gives a target of 920p. Of course the high of 2006 at 760p will be the first level to be dealt with and when channel breakouts occur there is also the possibility of a test of support from the previous channel top level. Only if the shares break back into the channel does the bullish scenario break down.

BUY - 652p

STOP LOSS - 590p

TARGET - 800p

Standard Life (SL.)

Though we were stopped out of our bear call made at the end of last September, the idea was right and the shares subsequently dropped from their then 282p to a low of 186p. A clear bear trend line developed on the chart as gains in the share price were constrained by resistance from the declining 50-day moving average. However, more recently a rising trend line became evident, joining up a rising set of lows. This formation can be interpreted as creating a triangle pattern with the falling line. It gives a potential move of 68p on its breakout which has now happened with a gapped upside break of the bear line. Gapped upside breakouts are always highly positive chart moves while they remain open and the triangle suggests a target of 296p should be set. Initially we will need to see the 38.2% Fibonacci retracement of the sell off at 251p, taken out, with the 50% level at 271p also likely to offer potential resistance being as it is close to the influential 200-day average at present.

BUY - 223p

STOP LOSS - 223p

TARGET - 295p