Will Babcock sturn, or will it continue to rise beyond 732p?

• The chart shows the last 2 months’ price action for Babcock.
• The shares have broken out of a falling channel since the beginning of October to trade 615p (at time of writing).
• The ‘trend is your friend’. Will it continue?
• Will the shares rise back 734p September highs?
• 19 Sept: Company said it was still on track to meet FY guidance after selling an umber of smaller businesses over the summer.
• Shares -32.7% from 2018 highs; +2.2% from 2018 lows; -12.6% year-to-date.
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Babcock – An Example

Let’s say the Babcock breakout appeals to you, you think it’s likely to continue. You decide to buy exposure to £10,000 worth of Babcock using a CFD, at the current price of 615p. To do this, you need £2,000.

Let’s assume the Babcock trend continues upwards to 732p (+19%). Your profit would be £1900, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 9% from the current price. Babcock breaks lower, falling 9% and it hits your stop-loss. Your loss would be £900.

This is provided for information purposes only. It should not be taken as a recommendation.