This share should bounce 'anytime now'

Johnston Press (LSE:JPR) & The Dow Jones (DOWi:DJI)

A bouncing bomb was recently retrieved from local waters here in Argyll and offloaded at the pier outside, to take its place in a museum. It transpires the iconic scene from The Dambusters where the bomb was first filmed working came from military footage, literally just along the coast. And of course, bouncing bombs are effectively our theme for this week which is where Johnston Press comes into view.

Over the last few years, JPR has experienced some pretty tough times - at least where the share price is concerned - and currently resides in a zone where the share needs to bounce above 18.98p currently (blue line on the chart below) to convince us that some recovery is happening.

Therefore, 'blue' gives us a reasonable price target should it actually conform to our rules and bounce from bottom.

Where is bottom?

A bit of a nuisance factor rears its head. From a big picture perspective, we're to accept 9p as 'ultimate bottom' but, due to a plethora of manipulation gaps, this might actually be 7.5p.

We cannot calculate any sane drop target below 7.5p which isn't prefaced with minus signs. Therefore, the proposal (aka hope) is for a bounce from somewhere between 7.5 and 9 which could reach the blue line.

At time of writing, the share is already trading at 10.5p, so if any latent strength is present, anytime now for a bounce would be good.

Perhaps, like the movie, it's worth watching. But should it close below 7.5p, we're stuffed for numbers!

The Dow Jones (DOWi:DJI)

There comes a point in every young man's life where he visits the privacy of the bathroom, accompanied by a measuring tape. And often, no matter how often he measures, he will find despite the onset of puberty his height remains stubbornly at 91 inches. Classmates are now towering above him and, in a personal instance, he becomes the dwarf of a family of six-footers.

Sometimes, things can only get so high and no higher.

Forty years later, during a routine medical, a nurse casually writes 92 inches in the record, mentioning it's unusual for someone to grow upward in their 50's. But it can happen. She had to wait while I frantically text messaged family some good news.

We're starting to suspect the Dow Jones shall prove the index equivalent of 91 inches and with 22,000 points proving a barrier, it will become completely obvious the market can grow no higher. Aside from the fact, it can go higher. It's just that from our mathematical models, we're currently tending run out of targets above the 22,000 level.

When this sort of thing happens with shares, we start looking for early warning the market desires a stock to grow above calculated levels. When we see a share price being manipulated at the open of trade, the "Gap Up" method, it gives a clear signal of human intervention to over-rule software intention.

In the case of the Dow Jones, during July the index experienced five instances of manipulation at the open - on the 11-12th, the 24-25th, the 25-26th, the 30-31st, and the 31-1st Aug. Collectively this bunch of gaps add a theoretical 363 points to the mathematical high of 22,033.

The conclusion is painful. Many of the internet discussion forum crowd have come to regard 22,000 on the Dow as a sacred barrier, something the market shall prove incapable of bettering.

Our worry comes when we add the manipulation values as it generates a maximum computed high of 22,396 on the immediate movement cycle. In fact, were we to trawl the value of each and every manipulation gap for 2017, this number risks being substantially higher as February, April, and May all show signs of tampering.

We've mentioned a few times recently our tendency to ignore gaps. But when "the computer starts to run out of numbers" we've also learned these missing building blocks invariably prove important, if only to confirm a price can go higher.

Another thing to remember, the worldwide betting markets. Once punters become utterly convinced the Dow Jones cannot better the 22,000 level (it's actually 22,033 points), a raft of bets will be placed, speculating on the guaranteed and certain reversal of the index.

Even spread betting companies will be rubbing their hands in glee as they look forward to paying out a shedload of money. Perhaps to spread bet companies - or rather the companies who insure them - will endeavour to resist a tsunami of reversals, at least until such time there's sufficient cause for a market reversal.

We're not inclined to look at any reversal as being potentially serious unless the index slips below 21,650 points - the level of the immediate uptrend.

While producing this report, the Dow actually bettered our 22,033 briefly and again, was gapped upward at the open of trading.

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.