Halfords - would you short it?

[troyresearch]

Thought I'd sanity check my reading of the chart for HFD as a large part of me thinks it looks like a great - if a little slow - a shorting opportunity.

1. Upward channel since Q3 2004 (270 support to 320 resistance from Q1 2005)
2. Each upward / downward move takes an avg 2-3 months, avg 15% move each way
3. Just completed fourth leg of an Elliott Wave move
4. Gapped up last week, following results announcement, also a disclosure that a Japanese investor has taken a 5% stake

So I' counting on a downward move from Friday's close of 329 down to around 280 by, say Feb 2006.

However, MACD (10,20) has just crossed upwards with RSI (21) still sitting a good 15 points above the midline, suggesting that buying sentiment remains healthy.

Would appreciate some other perspectives on this...

 

[wasp]

Any chance of a couple of charts troyresearch?

 

[troyresearch]

Any chance of a couple of charts troyresearch?

First try at posting a grab here, so hope it works...

 

[Trader333]

Here you go 3 month and 6 month charts attached. I am not a position trader but based on these charts it appears (at the moment), that there is buying support. Prices collapse not necessarily because everyone is selling but often when there is a lack of buying support with sufficient volume. In this case volume has been high with closes above their open which would indicate that support is being given. However, it is a bit too early to say and I would watch carefully over the next few days before making a decision.


Paul

 

[SOCRATES]

Here is another view :~

Actually it looks as if it is going to go higher, as the second gap in the action has occured, and additionally the last close is just above the previous high.

The current volumetric infererence in this chart is misleading.

The correct time to have shorted it was in September, not now.

 

[wasp]

I'd go with Soc there.... The close above the previous high does indicate a further upward move to me.

I won't bother pointing out the obvious 'short in September!'....

 

[SOCRATES]

I'd go with Soc there.... The close above the previous high does indicate a further upward move to me.

I won't bother pointing out the obvious 'short in September!'....

That is correct, because this chart has to be correctly read in terms of price development as a priority over volumentric consideration. It is one of those charts in which. by the nature and development of price action, the volume is relegated to secondary emphasis.

 

[wasp]

As I am a forex trader, volume never really enters into the equation for me so the price is the only thing to go by.

 

[SOCRATES]

I understand...I will take this further if you like, just say so and I will expand more.

 

[wasp]

Please feel free to expand Socrates... The more depth into the reasoning why will help in the future decision in HFD.

 

[SOCRATES]

OK........

The second last bar closes on the low, and the last bar closes on the high.

This is after a gap, you see.

This could mean two things, one unlikely and one likely.

Let me deal with the unlikely one first.

it is unlikely that this is the end of the move. The CLUE exists in the formation of the last bar. If the last bar had closed near or at the low, this would imply weakness, and could precipitate a sharp sell off causing the price to gap down again and slide.

The following is more likely.

If you look carefully, you will see that there are THREE gaps, not one.

The first gap takes the price into a new schedule of prices, from 300 t0 330 approx.

The second gap occurs just below this and takes the price reluctantly or tentatively to just below 320, and then suddenly to 310 or thereabouts and the fall stops abruptly and recoils upward again.

At around 320 ( ! ) which is a signifiacant level, it is gapped up AGAIN !. The price rises in the first bar, and collapses to end up closing near the low. It does not RETRACE the gap, however. This is significant.

In the last bar, the price goes up and closes near the high. And what is more significant still, is that this closing occurs in line with the top of the previous bar.

Now, observe all the previous tops.

You will see that this last close has just marginally cleared all the previous tops.

This implies a willingness for the price to go UP.

The following scenario is likely to unfold :~

1. The price will go straight up from here in the next bar.

OR

2. The price will go sideways in a very narrow range for not very long and then go up sharply.

In all of this I anticipate another gap to form. The end of the move can be expected AFTER the unformed gap is formed, and not before.

This last gap will signify exhaustion, and then, and only then can the price be expected to retrace, if at all. I say this because it may continue higher providing the intent remains intact and in harmony with the response to higher prices.

Got it ?

 

[nobrainer]

''There is a very fine line dividing sense from nonsense.''

Very apt.
I'm so happy I don't use charts.Such a load of drivel but I suppose I should not be so cynical if it works for you.
Trading greed and fear is so much more fun.

 

[Bigbusiness]

I am not that keen on this chart, as it looks like there is only 18 months of trading and that doesn't give me as much information as I would like. The recent move up does look like an enlargement of a previous move, as I have illustrated in the chart.

Perhaps the cold winter will bring in record sales of anti-freeze and push the price up

 

[ukhero]

Soc, you should be a lecturer. Excellent analysis.

As it stands HFD: 355.00p up 5p, which ironically is its highest price for the year.

We all need to remember that Halfords [HFD.L] is retail, and retail according to analysts, are predicted to under perform in the coming year. Add to this, its market place is being eroded by the likes of on-line shopping and supermarkets who continue to under price Halfords with cheap bikes, camping gear and vehicle accessories, to name but a few, and what we have is an overpriced company ready to drop 15 -30pts in the early part of the first quarter.

Take a trip to your local Halfords store, do a cost analysis of a few major items, compare; can you recall/remember the last Halfords commercial on TV?

I've yet to check my spread betting companies to see if any list Halfords, but even if they do, I doubt if I'll go short as there's plenty of other FTSE companies with larger profit making potential in a shorter time frame.

But yes, it's worth shorting.

yours

UK

 

[Bono]

Read a piece in shares mag quoting that some one has been buying up lots of Halfords shares (12.3 million) could there be some M&A activity going on?
Not a chart man but would hold for now!

 

[stormygolds]

Hi , all

yeah it looks good for short trade .