THE TIPSTER
TESCO has pulled back from its high of 454.9p at the end of April but has also bounced back from its decline to the 38.2 per cent Fibonacci retracement level. Look to purchase below £4 with a stop at £3.85. WorldSpreads offers a rolling spread on Tesco of 397.2p–398p.
There’s been no shortage of volatility in equity markets and the FTSE 100 has seen some significant swings as a result over the last few weeks. With many considering a bear market to be characterised by a 20 per cent fall from a market’s high, the level to watch on the FTSE 100 is around 4,675. Although a degree of support seems to have been found during recent trading, risks remain that another shock for markets could re-start the selling. IG Index is currently offering a FTSE 4,650 put option to expire on 16 July of 89-93.
Gold’s pullback from its recent all time high of $1,249 was as spectacular as its rally, dropping $80 in just six days. The slide was halted by the 50-day exponential moving average around $1,166, and gold has since rebounded back above $1,200. Geopolitical risk, inflation fears in a recovering stock market and weak physical demand will make gold hard to trade in the short term. Support at $1,170 and resistance at $1,250 are opportunities to trade. Spread Co offers a spread on spot gold at $1,213.4-$1,213.9.
S&P Equity Research has upgraded its recommendation on Nokia from buy to strong buy in light of good dividend yields of around 5 per cent and a cash flow yield close to 10 per cent. Worries over the company’s ability to maintain market share appear to have already been factored into investors’ expectations and shares are trading below both their three and five-year averages of £12 and £14. Spreadex offers a spread on Nokia at €8.189-€8.241.
Despite recent pressures, sterling has historically stayed above $1.40 against the US dollar, except for a brief drop in October 2009. A consistent dip below this level would be a sign that support has broken, but while it holds up above $1.43, look to buy sterling-US dollar. There remains a real possibility that it could retrace to the $1.55 level in the coming weeks, putting cable back up to $1.49. Spreadex offers a sterling-US dollar spread of $1.4434-$1.4438.
Like Nokia, Cable & Wireless Worldwide (CWW) has also been upgraded by S&P Equity Research to strong buy from buy. Fears that the telco will be forced to cut its dividends following its de-merger from its UK business, Cable & Wireless UK, look overblown and recent acquisitions by CWW are already having a positive impact on its bottom line. Spreadex offers a spread on CWW of 79p-79.6p.
With 60 per cent of its revenues based in Spain, Indra Sistemas has been caught up in the Eurozone panic, with investors worried that its 22 per cent return on equity (more than double the industry average) won’t last. But while the group’s revenues might be cyclical due to their heavy reliance on R&D, its non-Spanish revenue growth (18 per cent in Europe and 11 per cent in Latin America) gives reason to think its stock is significantly undervalued at €14. Spreadex offers a rolling spread on Indra Sistemas of €13.899-€13.966.
Reckitt Benckiser, the global producer of consumer goods including Nurofen pain relief, Strepsils and Vanish stain remover, is expected to go through some tough challenges in the coming year as its pharmaceutical business in the US faces growing competitive pressure. However analysts at Evolution Securities believe that its base consumer business remains strong and has upgraded the stock to a buy with a target price of 3,800p. Its share price has been under pressure along with the general market but it could be quick to recover. Spreadex has a spread of 3,221.7p-3,229.3p.