Sainsbury’s shares still ailing despite end of abysmal 2014
Ken Odeluga May 6, 2015 1:38 PM
<p>Sainsbury’s has managed to round off its most abysmal year for a decade with no additional nasty surprises. Britain’s No.2 supermarket still went significantly into the red—reporting […]</p>
Sainsbury’s has managed to round off its most abysmal year for a decade with no additional nasty surprises.
Britain’s No.2 supermarket still went significantly into the red—reporting its first annual loss since 2005—even using the less demanding ‘underlying’ reporting basis UK supermarkets have opted for in these straitened times.
And including a net total effect from written-off store property, and new stores that were in development before last year’s perfect storm hit, Sainsbury’s would have booked an actual loss of £825m, not the fairly contained £72m.
An additional plus, for Sainsbury’s versus its peers, is that it has kept to plan by keeping up some sort of dividend growth together with a clearly communicated policy.
This is why the stock received a fillip at the open.
However, both the underlying stock and the Daily Funded Trade (DFT) in Sainsbury’s offered by City Index are showing visible signs of exhaustion.
The stock gained about 26% since December.
That’s no mean feat if you consider Sainsbury’s shares are the last among shares of the UK’s Big 3 supermarket chains to retake and sustainably trade above its 200-day moving average—an important test of strength for traders.
Sainsbury’s shares definitively fell below the boundary in December 2013 and have scarcely managed to get and stay above it since.
Should the stock slip below the MA, which is currently around 274p, again, in the near term, it risks a fall back to support around 260-255p.
It looks like a sell signal from the Slow Stochastic Reversal System attached to the DFT chart is imminent.
We see the 274p is highlighted here too, with more forgiving important supports in this time frame (half-hourly) than in the underlying.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.