Is JD Sports Fashion sell-off overdone?
A dramatic change in price direction following a recent profits warning sparked a flurry of emails to independent analyst Alistair Strang. Here's what his charts indicate about recovery potential.
23rd January 2024 07:31
by Alistair Strang from Trends and Targets
JD Sports Fashion (LSE:JD.)’s decision to deliver a late Christmas present to investors, starting 2024 with a cheery profits warning, managed to utterly trash their share price, and movements since continue to sow confusion.
What we find a little interesting are the number of emails asking where we can calculate an eventual bottom, suggesting folk are keeping a fairly close eye on the price.
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Perhaps there is already a degree of inherent strength, the share bouncing from the Red pandemic low uptrend. This bounce allows us to create a box ticking scenario, one where we can take movement above 118.75p as hopefully ticking the first box suggesting any gains may prove viable.
As the share price is currently trading around 115p, it certainly doesn’t have far to go for an attempt at our first major trigger level. Share price gains exceeding 118.75p calculate with the potential of a lift to an initial 124p with secondary, if beaten, at 136p.
It’s certainly curious how recovery such as this shall certainly tickle the forced price from the start of this year, almost hinting the drop was perhaps overcooked. Confirmation of this will be given if there’s any effort made to gap this share price upward, as we will be inclined to believe a cycle of gains can be expected to continue.
Of course, there’s an obvious risk of trouble, thanks to companies generally being pretty circumspect when throwing around profit warnings. As a result, the worst may not be over yet, and the share price now needs only slink below 105p to dial in the potential of a visit to 95p and a price level which is visually a bounce point.
In the event such a level breaks, our secondary works out at 75p and we think any recovery from such a level shall require patience and probably the right market conditions.
Source: Trends and Targets. Past performance is not a guide to future performance.
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