Ocado And The "Quindell" Sell Signal

Share On Facebook

Ocado (LSE:OCDO) shares appeared in Lessons From The Financial Markets For 2013
as an unlikely sounding buy on a break of 90p. It may appear in next year’s edition as an equally surprising sell back towards 90p.  The reason is what could be called the Quindell Sell Signal.

Last week there was a lot of soul searching on my part in terms of not wishing to upset fans of Quindell Portfolio (LSE:QPP). Since the beginning of April there had been an unfilled chart gap to the upside, one that while there was no end of day close back below the floor of the gap at 10.25p backed the idea that his stock was a buy for the long haul. Indeed, the only thing that can cancel out such a signal is an end of day close below the gap – an even that occurred on May 8th at 10.25p. Since then the stock has fallen as much as 40% before bottoming out at 7p currently.


free stock charts from uk.advfn.com

As many traders will be aware, in recent days we have seen intense speculation regarding the future of online grocer Ocado where the prospect of a tie up with Morrison (LSE:MRW) has caused the shares to surge towards 250p – valuing the company which has found turning a profit quite a challenge in recent years at well over £1bn. Interestingly, the momentum to the upside was so great that the shares left an unfilled gap to the upside, with the floor of the gap at 208p. The risk is that as little as an end of day close back below this level could lead to a sharp decline for the online grocer – especially if the deal with present supplier Waitrose unravels.


free stock charts from uk.advfn.com

Therefore what could happen now in the wake of a sub 208p gap floor close- now known forever as the Quindell Sell Signal, is that Ocado shares witness a decline at least towards the next main support zone from last month around 140p. The problem is that with such “Quindell” moves, the magnitude of decline can vary from just a few per cent, to that of a very chunky proportion of market cap. All will no doubt be revealed over the next few sessions. At this stage only 215p plus – the top of the gap would delay the downside scenario.

Lessons From The Financial Markets For 2013 is now available in Paperback by clicking here

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20191119 02:29:11