The AIM Market

Thursday, 27th February 2014 08:44 - by Osakisushi

Before I take a glance at a share (RED ROCK), I’ve opted to preview the AIM (FTSE:AXX) as there’s no point in hoping for positive action amongst shares, if the market overall stinks.

I’m fairly happy with the markets positioning as it looks primed to head toward the 1,000 point level. That’s a rise of 12.5% from its current level, so hopefully the movement is fairly spread amongst the encompassed shares.

As the RED line shows, the index would require fall below 726 to remove any optimism and, in fairness, even if this were a share, we’d be pretty confident of being able to write ‘Target Met’ sometime in the future at the 1,000 point level.

I’ve shown a secondary target above the 1000 level and it’s at 1280 points. What we tend to expect is our initial target level should provoke some degree of stuttering, perhaps even  fairly significant reversal in times to come. But, on condition the initial touch of the target level exceeded it, common sense suggests a further movement above target one will continue toward a longer term secondary.

Oddly enough, against the AIM, the initial target level even makes some sense given it pretty closely matches the highs of 2011. It creates one of these self fulfilling prophecies as everyone capable of drawing a horizontal line will be prophesising trouble when the market reaches a previous high.

For this week, I’ve taken a look at the train wreck which has been Red Rock (LSE:RRR). For some time, we’ve had a logic pointing at this finding a bottom of 0.35, perhaps even 0.17 if it goes completely wrong. However, the last week has seen the share price manage to execute an almost miracle movement, finally breaking the share above the immediate downtrend.

As a result, I’ll be interested in the event of it CLOSING above 0.43 as it would tend to signal coming movements to 0.58p initially. Rather more usefully, the price will enter a position where positive news can easily provoke growth to 1.4p as a major point of interest.