Chart of the week: 20% upside for M&S shares?

TL;DR

After a long bear trend, Mark's and Spencer's is showing signs of reversal with a classic Head and Shoulders pattern, positive momentum divergence, and positive market sentiment, leading to a potential strong rally.

Transcript

hello it's John Burford with chart of the week for Monday the 9th of December and I'm covering Mark's mark and my Marks and Spencer again which I covered in November for the first time and I at the end of my analysis I took a bullish stance on it recall that the shares have been in a very severe bear trend for quite some time sentiment had reached ... Read More

Key Insights

• 😘 Marks and Spencer's shares have been in a severe bear trend with low sentiment.
• 💁 A classic Head and Shoulders reversal pattern has formed on the 4-hour chart.
• 📈 Positive momentum divergence and impulsive recovery indicate a potential bullish trend.
• 👵 Negative press comments about older women's styles serve as an additional reason to go long.
• 💪 The recent sharp move up and gap opening suggest a strong rally may continue.
• ✋ The breach of previous highs could trigger buy stops and further fuel the rally.
• 😘 The low is not anticipated to be breached, with expectations of a continued rally phase.

Questions & Answers

Q: What led to the bullish stance on Mark's and Spencer's?

The bear trend, low sentiment, and negative media attention created a contrarian opportunity for a potential reversal. Positive momentum divergence further supported the bullish stance.

Q: What is the significance of the Head and Shoulders pattern?

The pattern indicates a potential trend reversal, with three highs forming the neckline and a left shoulder, head, and right shoulder. This pattern has a reliable track record in technical analysis.

Q: What factors influenced the decision to go long on Mark's and Spencer's?

The positive momentum divergence, a sharp impulsive recovery from the low, and a pullback based on negative press comments about older women's styles all contributed to the decision to go long.

Q: What is the expected target for the rally?

The first target for the rally is the £2.40 area, but there is potential for even higher gains based on the bullish outlook.

Summary & Key Takeaways

• Marks and Spencer's shares have been in a severe bear trend, with low sentiment and negative media attention on high street retail.

• However, there are indications of a potential reversal, including a classic Head and Shoulders pattern on the 4-hour chart and positive momentum divergence.

• The recent sharp move up and gap opening suggest a strong rally may continue, with a first target of £2.40.