Karelian, Ringing the Changes?

Thursday, 20th February 2014 10:50 - by Osakisushi

Unusually for me, I glanced at Regular Chat to read how folk had taken my numeric analysis on BMN. It seems I will be first against the wall come the revolution in some posters minds.

Apparently you cannot comment on a shares price potentials without extensively researching the company!

And I don’t even know what BMN do, nor am I interested.

Of course, a shares price moves because other people have researched it, finding positives and negatives. These historic price movements  are manna from heaven for my algorithms, allowing me to project what the future doubtless holds. Oddly enough, I tend to get it right rather more often than not, regardless whether it’s a FTSE (or THE FTSE), a commodity, or an AIM share.

As can be guessed by now, I’m not a big fan of charts or technical indicators. But I must use charts to present my results – and to ensure they make sense. In this way, I was able to propose that should BMN follow the numeric scenario, the share will indeed present a visual double bottom some time in the future.

Job done.  Hit Publish. Face the wrath of the discussion forums. (Never again, I’m staying in Premium Chat from now on!)

For this week, I’ve taken a look at Karelian (LSE:KDR) and in an effort to avoid being pilloried, I can announce it’s obviously going to 20 quid so you don’t need to read any further.
Simple.

Oh that it were so easy…

This share is a bit funny, due to movements since 2010. Essentially, the price should have found a bottom around 0.27p but instead, during 2013 it managed a convincing bounce from around 0.45p. I’m inclined to view this as a good thing as the implication is of residual strength. Currently, the price is doing something I absolutely love – reacting to a trend from afar. It would be reasonable to assume BLUE on the chart below is important for this price but in the last few weeks, the highs have failed to challenge such a long term scribble.

Clients are painfully aware I tend to become over-excited with this sort of scenario as it implies the market is keeping clear of the trend and a break is liable to cut through BLUE like a knife through a cliché.  Unfortunately, the answer to this burning question is confirms the reason I display results on a chart. The answer looks silly. In the event of this share either CLOSING above 4.9p or trading above 5.08p, I’m computing a leap to 9.35p.

 And yes, it looks a bit silly and the longer term secondary in the event such a level is exceeded almost does not fit on the page at 11p.

In a sane world, assuming growth is driven by market conditions rather than positive news flow, I’m calculating an initial breakout target above BLUE at 5.75p. Which looks nice and Mr Sensible.

So, there’s some real idiocy in this report as I’ve extrapolated some targets worthy of a ramping brigade, simply because a share price has actually avoided a trend. I do need to emphasise there’s no foundation in the numbers for my enthusiasm, just that I’ve seen this happen rather often over the years.

A ‘classic’ was Lloyds Bank, back when it was in the doledrums at 38p. It also exhibited a healthy avoidance of the trend, right until the period it seemed move from the 30’s to the 50’s within just a few weeks. I’d guess no-one claimed market movements need adhere to mental health rules!.

Finally, on KDR, the RED line would spell trouble. Any break below it now at 1.5p would effectively be a game over move, killing all upper targets and making the potential of 0.27p a ‘best guess’.

Good luck with this lot. A final caveat though… I don’t do timeframes, something I doubt possible. Only the market knows what is meant by near / mid / long term and the markets meaning changes daily.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.