Quindell plc - The Week's Technical Analysis

Good morning,


Over the past couple of weeks we've seen some more decent signs of recovery from Quindell:


1. Roble's short interest has fallen from 4.46% to 4.28%.

2. The 130p support line has so far held on the daily chart (excluding the slight dip below on the close of October 15th), with the next major support line being at around 105p - a support line that originated from around 2012 and that was 

3. On 31st October we saw a 100,000 share buy from the non-execturive director Robert Bright.


Technical Analysis:


There are some pretty decent arguments for why technical analysis is irrelevant in the case of Quindell and many of these I agree strongly with - algorithmic share price suppression with structured intra-daily buy backs, etc.


I think that the promising sign here is what looks to be a slightly lopsided inverse head and shoulders pattern forming (September 26th being the left shoulder, October 15th and 16th being the head and with the right shoulder looking to be formed at around 130p), which is a bullish reversal pattern. 

For this to be confirmed, we would really need to see a rise from around 130p to 180 or above.


Using my Slow Stochastic Oscillator, it looks like we need to see K and D settle at around 11 before we can make a good much up, but comfortingly there does seem to be a gradual, rising stochastic trend-line in the lows of the indicator since late September, which is a promising sign that we're due a leg up soon. It's notable that since the Gotham City attack all technical indicators work better if you take them outside of their usual extreme zones (i.e. your usual stochastic range from 20-80 changes to 10-90). 


I've found that the RSI, CCI and MACD that I would usually use for extra input to have been significantly delayed in the case of Quindell, thus making them somewhat redundant.


The only other indicator that has been any real use since the Gotham City attack has been that of my fibonacci moving averages (not something normal people use, because they don't carry the same emotional responses in the market that say a 200 day moving average does). 


They're pretty good at calling reversals, and to pick some recent examples you could have used them to call reversals in early August, late September/early October and in mid October:


Currently, if we assume that the 130p daily support line will hold, then it makes logical sense that these should begin to turn soon for another leg up. In the event that this line doesn't hold, then we could be waiting a little while longer for another leg to the upside.


All the best,

The Masked Stock Trader

Quindell plc Post Consolidation

Good afternoon.


Today I want to briefly discuss a stock on AIM that's become very well known to investors in the AIM.


Quindell plc is a company that specialises in insurance outsourcing and the delivery of telematic insurance products. As many of you will know, the company was hit by a very defamatory article known as the "Gotham City Report", which caused a drop in the share price from 40p to 17p.


Regardless of the company having released a full counter report with proof of the company's prospects and earnings, the market has still been wary of Quindell recently. This will in no doubt be in part as a result of the poor press Quindell has received from journalists, who apparently do very little to actually research the truth before putting it in the next day's paper and the shorting parties themselves who will have certainly have put downwards pressure on the share price to satisfy their needs for profit.


Although this seems like a pretty dreary picture, everything looks set to turn around now that a 1:15 share consolidation has taken place and that the market has been made more aware of the improving cash and revenue position of the company.


The share consolidation will bring with it several advantages (after a few days to allow the price to settle down), not limited to the following:


- Smaller spreads.

- Reduced price volatility.

- Quindell becomes purchasable for more funds (many funds have rules against investing in penny shares).


Add to this the lasted figures the company have released and you get not only a very undervalued stock, but a company that looks set to regain momentum quickly and steadily:


- Run-rate revenue forecasts from the legal services team have jumped up to £900m per year in the second half of 2014 (an increase from £650m in the first half of 2014).

- Cash generation (something that bugged investors) is now at £500,000 per day, with forward predictions of £750,000 per day by the third quarter of 2014 and £1m per day by the year end.


For a company that's currently running on a PE ratio of 8 (as of today) and a forward PE ratio 4, it's no wonder that large funds like Fidelity have been buying up stock since the fall in the share price.


Good luck readers,


The Masked AIM Trader.