Interactive Investor

Top charts: FTSE 250 and Gulf Keystone

28th July 2016 09:50

Alistair Strang from Trends and Targets

FTSE 250

Numerous media pundits talked about the damage to the FTSE 250 post the Brexit vote and continue to spout doom and gloom for this indicator of "real" British business. They are, of course, talking rubbish. Similar to the FTSE 100, the FTSE 250 is up over 16% since the vote and, better still, has now broken the downtrend since June 2015.

From our perspective, this implies continued growth. The market is currently trading at 17,300 (ish) and is seen as on a path toward 17,990 as the next major point of interest. Our longer-term secondary is an impressive 20,150 points.

A couple of things should be borne in mind before rushing out to invest in "any old" FTSE 250. Despite our optimism, the all-time high for the index was last year in June when the market peaked at 18,390 points. Common sense alone suggests taking our secondary with a large pinch of salt until this index starts trading above this prior high. We've a good reason for worshiping at the altar of "higher highs" - common sense tends to work!

If the FTSE 250 intends to revisit the sewers, the market would require dripping below 17,060 currently to slither below 'blue' on the chart, but we're edging toward optimism, especially as most politicians will visit Butlins for the next couple of months, safely away from TV cameras.

Additionally, there is another surprise and it comes from the AIM market.

AIM

The AIM is currently trading around 750 points and need only close a day above 753 to signal coming growth toward 780 next, with secondary a very probable 813 points. This marketplace had already broken above its long-term downtrend prior to "the vote" and was very deliberately trashed on 24 June when the markets sought to prove Brexit was a bad thing.

In the five weeks since, the AIM has shown strong recovery, once again regaining the long-term downtrend and now looks poised for some decent upward travel. Experience has taught this should bode well for many sector constituents, one of which is Gulf Keystone.

Gulf Keystone Petroleum

Gulf Keystone looks like it has once again shot itself in the foot. With the recoil also smashing it in the face. Recent share price movements have not been pretty and, from our perspective, we have a major concern.

The recent rise to 8p looked impressive, but actually provoked raised eyebrows here at Trends and Targets. Our problem was that the cycle easily met our initial target level of 5.75p, even bettering it quite substantially. This made our secondary of 8.5p look extremely valid but the rise fizzled at 8p.

To us, the implication is of weakness and now, we have some very real justification to anticipate travel to 2.6p on this cycle, where we would "hope" for a bounce. If 2.6p breaks, bottom looks like 1.9p, but there remains an important detail which must be remembered.

Some time ago, GKP share price moved into a region where the "big picture" can only calculate a bottom prefaced with a minus sign. This is never a comforting signal and the harsh reality against Gulf Keystone is that it needs better than 33p before would could even start taking any rise seriously.

About the only thing giving slight hope has been an unwillingness to let the share price close below the immediate downtrend. It would need to close a session below 3.12p (currently 3.66p) for us to assume "game over" and start a countdown prior to removing the share from the list of reports we produce daily.

Who knows, perhaps a miracle will occur.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.