This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
As my trading colleague mentioned last week, the fact that the UK 100 Index is trading within a tight range has generated mixed response. On the one hand it is a ‘range-traders’ dream with its repeated bounces around 6100 and fall-backs from 6200. And it’s been a month now. On the other hand it is seeing some investors shy away – unnecessarily so in our view – from decision-making and adding to their portfolios on account of the index supposedly doing nothing. I have two very important points to make this week about why this could prove a bad decision as we move into Q2…..
Firstly, from a technical perspective. Having rebounded from lows of 5500 in February the index could well be in a bullish holding pattern preparing itself for a breakout to the upside and another round of 10% gains. If anything the current range could even be considered a protected entry point with limited downside in the case of failure (9-month falling highs do represent a hurdle). However getting in now could allow you to profit from all of the potential upside if we do indeed get that long-awaited breakout and rally back towards 7000.
Secondly, for those who insist on humming and hawing about what to do, pointing to the UK index essentially flat over the last month I offer you this. Were you aware that 20% of that same index has posted fresh all-time highs this year? And that a whopping 30% have done so since October? These stocks may not be the raciest and there mightn’t be a Miner or Bank among them but what does that matter? You are out to identify trading opportunities, right? And of course you prefer the ones that go up. Well, what are you waiting for? The stocks in this 20%/30% list may comprise a host of defensives and aren’t the type that fly around much. However, maybe that’s the beauty? Maybe their share price strength is also a message about what the clever money is focusing on right now.
By now I’m sure you want to know more about the stocks I’ve been talking about. So in order to stop teasing you and prove that I’m not talking cobblers, have a look at the long-term charts on Bunzl (BNZL), Compass Group (CPG) and Smith & Nephew (SN). If you want to know the rest of the list, well, you’ll just have to sign up for our free research to sample the quality information that I send our clients’ way each day.
Mike van Dulken, Head of Research, 8 April
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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