How taking a long position on Lloyds might prove rewarding

Before getting into the boring stuff relating to Drax's share price, we've a wheelie bin panic going on. You know, that horrible awakening at 5am when you remember the Wheelie Bin Gestapo are visiting in an hour and you've forgotten to place their recycled blue suspect on the pavement?

Rushing outside – invariably in early morning rain – you wheel the thing down, taking a glance left and right to see anyone else in boxers, t-shirt and trainers. Then see rows of green bins.

That's how we feel about the markets presently. We "know" there are important indicators flying that are certain to foul up the price of many shares.

Brent crude, for instance, is trading in a region with an ultimate bottom of around $31 (£24), whereas gold is trading in the $1,120 bottom region.

But the trio of clowns - the banks - actually "want" to go up in price. So the big question is: Will growth in the retail banks balance weakness from the oilies and miners?

It's important to mention neither gold nor Brent have triggered their final drop cycles yet, but we're watching in apprehension.

On the plus side, Lloyds Banking Group managed to better the 68.84p mentioned last month and, thus, is supposed to be going up. We'd suggest, should it experience intraday traffic above 70.7p, a long position should prove rewarding, whereas a short position is liable to leave you walking funny.

Drax Group (LSE:DRX)

As for Drax, we last covered this in August 2016 and the price has performed in a fairly interesting fashion. It indeed dropped to our 270p target, actually bouncing pretty convincingly 2p above the ambition.

Better still, it managed to better our initial 390p ambition (just) and has been floundering around since.

We've little doubt next time it betters the dashed blue line on the chart – currently 356p – it will probably stutter again at the 390p level before heading up to 450p as the next major point of interest.

And so, for now, we need to examine recent price movements to find if anything near-term will indicate a bonk against the dashed blue line. There's certainly ample reason to believe anything near-term now above 334p should attempt an initial 341p with secondary 352p.

The indication, therefore, is this should prove worth watching in the weeks ahead as 352p is liable to better the downtrend, if achieved, just before the month-end.

Oh, anything capable of drifting the price below 270p entirely spoils future potentials and would require us to again run the numbers against this.

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.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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.