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Trade Idea : Remote Monitoring Systems [stock_market_widget type="inline" template="generic" assets="RMS.L" markup="{name} ({symbol}) {price} ({change_pct}){last_update}" style="font-size:x-small" api="yf"]
RMS broke out on a Covid 19 update to its surgical mask nano coating on Fri 23 Oct : rallying from around 0.8.p to touch 6p on Nov 3: it currently tops the league in the Gaps Up History Page.
Parabolic moves like this can blow-off their tops and pullback rapidly, so it was with RMS : from an almost 6p touch to a 2.05 check of its 21 EMA: it gapped down today on news of more inside selling with one of its NEDs converting a loan in into shares and exercising options to sell some of these: no doubt spooking sentiment as well as adding to the order flow over the past few days. This follows multiple directors reducing holdings in recent days to book profits (click the link in the Gaps Up Historical to view all RNS' over the recent past)
These types of tiny cap , sentiment-driven story stocks can be fun to trade: it does set-up a high risk/high reward trade for those with the risk appetite but is best kept to low stakes and a bit of vigilance on execution
A good metric on prevailing sentiment is price action around the 21 EMA: if this level holds and is bought then price tends to rally: if it is sold and RMS closes below its 21EMA on more than 2 occasions, that is typically a sell signal.
Very strong mo-mo stories normally only check their 8 EMAs and then bounce to rally higher so huge caution with this. Any entry would want volume confirmation of a move off the 21EMA with a stop below the 21 EMA (or after two closes below the 21 EMA). Its pretty liquid with a tight spread so does lend itself to a scale-in nibbling approach and a quick take-profit.
Trade Type: Pullback Long
Entry: 2.2
Stop: Below 21 EMA
Target: 8 EMA at 2.9 then previous high at 5.8p
Buy Price at time of article 2.19 (Fri 05 Nov @ 11:50) [stock_market_widget type="inline" template="generic" assets="RMS.L" markup="{name} ({symbol}) {price} ({change_pct}){last_update}" style="font-size:x-small" api="yf"]
click on the + to the right to expand the charts in the below tabs
Pre Market 07:15 Update: FTSE 100 and 250 at Key Decision Levels
Another day in green yesterday as all UK indices finished positively: and are now above their 8,21 and 50 moving averages for the first time since start October: though both the large and mid caps remain below their 200 MAs. UK shares rising were double those falling yesterday (see market dashboard)
VIX has dropped to 27.6 but remain elevated while the Fear & Greed index has turned to Neutral from Fear. As highlighted in yesterday's pre-market analysis , both gold and silver did breakout and made major moves to the upside while bitcoin moved 7% higher in a massive breakout to multi year highs: I highlighted ARB, a UK crypto miner as beneficiary which closed 14.5% up and looks set to continue north as BTC remains bullish (see yesterday's RPG)
UK futures point to a softer open by -20 points at the 5885 level.
I have been highlighting the FTSE 100 and 250 channels in operation where we bounced off the lower channel last Friday (see RPG here) after multiple tested to the downside: yesterday we are now at the other extreme of the channel in both FTSE 100 and 250 and should find out in the next few days where to next? - breakout north to take the 200 in both indices and a bullish run or about face and return to take a new low at the other end of the channel ( a 450 drop in the FTSE or 10% - see chart below)? There are credible narratives for both directions: upward on a wave of stimulus, QE and government interventions to bail out economies and workers buoyed by improved Covid treatments, mass Test and Trace and the promise of vaccines and (finally) a positive outcome to the US elections: the "worst is behind us narrative". with the wall of worry scaled. The countervailing more bearish narrative is supported by worsening Covid cases across the globe, uncertainty about the end of lockdowns, double -dip recessions and major structural changes to economies with mass unemployment while Brexit looms and the US elections may resolve into bitter wranglings and civil unrest.
Currently the markets appear to be supporting the former narrative and it looks like we'll only have to wait a few days to find out. A decisive break and close for the FTSE 100 above 6000 would set direction and be bullish to the upside: rejection and close below 5900 may signal the return to check 5500
US markets closed strongly in green with the NASDAQ gapping up another 2.6% making almost 8% gains in a couple of days though still below its 2020 ATH.
Companies Reporting
A light day for news so far with just 74 RNS' , 19 companies reporting with MGAM, RNK, BEZ and HSX in the 250 potentially market moving
