Interactive Investor

Can this share avoid a crash landing?

1st November 2016 09:54

Alistair Strang from Trends and Targets

We often suspect, with some justification, the 'B' in Flybe stands for "brick". We last commented against this 18 months ago. By following a route similar to a politician chasing an expense receipt in a breeze, it finally found its way to our 39p bottom, courtesy of the day the Brexit vote was announced. Worse, the 39p thing was slightly broken, thereby opening the door for more misery.

Movements since Brexit day have tended to suggest, perhaps unfairly, there is this fabled nonsense called "support" at 34.5p. We rather suspect anything near-term below 36p will find its way to 30p, thus dashing the concept of support. Hopefully 30p proves capable of generating a bounce, 'cos if it doesn't, the new "ultimate bottom" is at 16.5p.

Unfortunately, this isn't the end of the story. In our original article, we referred to 39p as "ultimate bottom" since, from a "big picture" perspective, any targets we generate below such a point all are prefaced with minus signs.

As a result, we've little choice but to regard this as extremely dangerous, as we're only working with data since the market forced a new downtrend (circled on chart below) at the start of October this year.

As always, there's a "however" and in the case of FLYB, it's the downtrend ('blue') since 2011, which is currently around 49.783p and decreasing by 0.138p per day.

If the share can somehow soar above this trend, everything changes from our perspective, as it escapes a trading zone littered with minus signs and, instead, enters an area where some movement toward an initial 55p looks viable, with secondary 68p and perhaps beyond.

In summary, we suspect it will end up bouncing from 30p. Fingers crossed time.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

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