Weekly review: Back to a modicum of normalcy in stock markets?
Halfords managed to get better traction this week after its poor yearly figures and dividend cut announcement, out on May 23rd, sent its shares ‘fish-tailing’ lower. That came on top of a very negative market backdrop. From a technical point of view support at 300p has held, as has its 200 day moving average. Fundamentally, some analysts seem to believe that shareholders fell asleep at the wheel, ignorant as they were of the scale of investment which the company will have to carry out. The loss of that support – at 300p - could see the stock move rapidly towards the 260p area at least.
A bull market led by defensives is a bit of an oddity yet this is what has been happening of late. Then again, in stock-market terms the world ceased to be a normal place a long-time ago, although there are those who say we are headed back towards a modicum of that in the long-term. In any case, shares of National Grid are a good of example of how some defensive issues, such as utilities, were dealt harsh punishment this week due to the volatility in global interest rate markets. Coincidentally, that may be due to the beginning of a reversion towards a more normal pattern of higher economic growth resulting in higher long-term yields. For some the recent fall in National Grid’s share price is just an instance of profit-taking; perhaps for now
Calling a ‘top’ in the price of any financial security is probably one of the hardest – and dangerous – things that an investor can attempt, save perhaps for trying to determine a ’bottom.’ Yet that is exactly what some observers seem to be hinting at in the case of speciality ingredients manufacturer Tate&Lyle.