Posted 10th January 2017
• Stay alert for my next trade idea
• Morrison’s strong Christmas trading
• PLUS: Waiting for a Dow pull-back
Nice set of results from Wm Morrison (MRW) this morning. Did you see them? We’ve been trading this one in Profit Watch Pro and it’s going well so far.
I won’t get too bogged down in the numbers, but business is going well and the company says it’s its “strongest performance for seven years” in terms of like-for-like sales.
Anyway, the market likes what it sees and has sent the shares up 4% or so to 246p. That’s a two-year high for the shares.
More importantly for Pro members in the trade, it’s up 14% from when we bought in before Christmas and heading towards our target.
From a chart perspective, Morrison’s is in a strong uptrend. I don’t see any reason to exit this ahead of the preliminary results due on 9th March. The momentum should keep this one rising.
Remember when I first wrote about this trading idea, I picked out various previous support/resistance areas on the chart which should act as potential target levels.
We didn’t get our order filled that first time. But I revisited the idea a couple of months later and slightly increased our limit order level to 215p and our target price on the trade to 281p.
Here’s an update of the chart, where you can see that price has almost hit that 249.48p resistance level. (Actually, the high bid price so far today on IG is 249.05p).
No surprises to see the stock pause a little and retrace from that level. That’s what resistance levels do. People have been taking profits off the table after this solid run since November.
But with the uptrend intact and the fundamentals in today’s trading update likely to keep momentum going, I can see this one moving – fairly slowly as it does – towards the next levels I’ve marked on the chart at 256p, 263p and 281p.
Morrison’s said this morning that it expects full year profits to beat consensus forecasts. Compare that to the high street clothes retailers like Next which warned it’d miss profit forecasts.
Well if Morrison’s is right when it releases results in March, the shares should continue to do well. And I see the uptrend in the stock continuing to support that up till that date.
But money management is important at Profit Watch Pro and I suggested to members that they consider reducing risk here.
Now that Morrison has made a clear break of an important resistance level, it should act as a strong support line. In other words, if the price came back to that level, I’d expect there to be plenty of buyers come in and snap up the shares.
Personally, I’ve moved my stop loss to my entry point for now. That removes risk, but does not lock in any profit.
I’ll look to increase the stop loss further and lock in some gains if we get a daily closing price above the next resistance level.
Looking ahead, we’ll trade again soon in Profit Watch Pro.
I have a few things I’m looking at. It’s just that they’re not quite at the right levels. And rather than just give Pro members a load of ‘maybes’, I prefer to wait until I get the high conviction set-up… and then show them how I’m trading it. That’s what this service is all about.
I was thinking about getting back into our long Dow Jones 30 (Wall Street on IG) trade. I heard from readers who made a decent gain on this one by closing out ahead of Christmas.
I still fancy the Dow reaching 20,000, or at least within points of that. It could go a lot higher if it breaks through with some gusto.
But we could have a couple more attempts and rejections of 20,000 first. So my plan is to use it as a target.
But I’m hoping for a pull-back to certain point for my entry into this trade. It’s one would give us a decent risk/reward trade – and a chance to make a very decent profit.
If you want to know the key levels and how I’m trading it, get your name down on Profit Watch Pro here.
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by Max Munroe
Posted March 14, 2013