Sirius Minerals shares at critical point

Sirius Minerals and BMR Group

Last month we managed to provide a couple of grotty outlooks against these companies, not really expecting our dose of misery to unfold. After all, both had been frantically ticking boxes for the future, but it seems the market had other ideas.

Sirius Minerals (LSE:SXX)

To deal with Sirius first, our prior outlook speculated on the dangers of closure below the immediate uptrend. Essentially, closure below 19.5p risked opening a shaft with an initial target at 12.7p and secondary, if broken, at a bouncy bottom of 8p.

Painfully, the share price indeed has taken steps with thus far, weakness reaching 17.25p. It's now been a month and our grotty prediction of 12.7p making a guest appearance hasn't happened.

The situation now feels like anything below 17.25p should provoke 15.25p and, hopefully, a bounce if the share is exhibiting symptoms of inherent strength.

A movement such as this would not endanger the uptrend since 2015 as, at time of writing, it's at roughly 13.889p.

However, with a break of the red line on the chart, it becomes highly probable the share price intends to explore the chasm with 8p at the bottom.

On the bright side, we've given the price a month and it has made no real effort to get to our prior 12.7p. If strength is indeed lurking just below the surface, what's needed to inject of dose of optimism?

On Tuesday, the share was "trading" around the 18.5p mark and need only better 19.5p to suggest a change in direction. A triggering movement like this should prove capable of bringing up a cycle toward 20.5p, maybe even 22.75p.

Achieving such a level would be especially interesting as, if bettered, further oomph toward 26p and a future challenge of the blue downtrend can be expected. Only with closure above 'blue' will we be impressed as it shall require another stir of the tea leaves to figure out the next phase of its future.

BMR GROUP (LSE:BMR)

Similar to SXX, we'd previously an outpouring of potential misery against this as BMR Group's price needed only break 6.1p to indulge a slippery slope down to 4.35p.

Again, similar to SXX, it failed to reach the drop target, the share price bouncing from 4.625p rather than our proposed 4.35p. Our hope, again, is this signifies some inherent strength and thus we're looking for trigger points in the days/weeks ahead.

The most obvious trend is shown in the blue line on the chart and it's currently at 6.612p. This line dates back to 2011 when the share price was trading at an 'adjusted' 83p.

Despite recent movements not entirely indicating the market is reacting to this trend, when we view the Big Picture chart below, it's really looking possible BMR faces a change in movement strength if the price would only close above 'blue' - currently 6.612p.

Initially we'd be looking for growth to an initial 7.875p with secondary 8.875p. But the secondary brings a whole new range of potentials, given it describes an official Higher High. The price of BMR shares would find itself in a region where positive news could easily drive 12.25p and beyond.

For now, we're not going to dwell on dangers other than to mention 'red' on the chart.

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.