If anyone says that the UK’s UK Index  doesn’t currently offer good buying prospects, or not enough volatility to make it worth their while, I’m not sure what UK Index they’re looking at.

The UK 100 is 10% from 2018 highs, and a 3.5% bounce from a recent flirt with 2018 lows means potential for a full rebound. Furthermore, this week delivered some of the biggest share price moves that I can remember since the day of the Brexit referendum result, offering some cracking trading opportunities for early birds.

M&S; daily range Weds 7 Nov

Take for example UK 100 retailer Marks & Spencer, which reported half-year results on Wednesday. While second quarter Food sales declines weren’t quite as bad as Q1, boosted by hot summer/world cup, Clothing & Home worsened and even Online growth slowed.

Group profits rose on an adjusted basis, but management warned of little improvement in sales trajectory due to challenging trading conditions and strong online/discounter headwinds. Not the brightest of messages.

The shares rose as high as 313p (+4.1%) not long after the open, thanks to better group sales growth. At this point, however, the bears took control, focusing on a negative outlook, pushing the shares down to 288p (-8.1% from highs) only for bargain-hunting bulls to rush in at 288p, buying back up to 295p (+2.6%).

“What a day” you say? Actually, all that happened within the first 25 minutes of the trading day (8am-8.25am). Between then and 9.30am, as the mixed set of results were digested, we saw another 2.2% fall, followed by a 3% rally and another 2.5% decline.

Sophos; daily range Weds 7 Nov

Things may well have “calmed” (I use the term loosely) mid-morning, but the shares still moved up and down by between 1.5% and 2% until 11am when they began a steady 4% rise though 2pm. Thereafter, they traded within a 1.5% range into the 4.30pm close. Phew! Exhausting just thinking about it. A cumulative 35% round trip. For a UK 100 household name! Since Wednesday, the shares have rallied 6%, all the way back to their results-day highs and ceiling of a 6-month range.

Another example mid-week was a profits-warning for cyber security group Sophos resulting in its shares plunging by 38.5% before bouncing 29.5%, Again, within the first 25 minutes. The rest of the day comprised a 9% fall by mid-morning, a 6.6% rebound by lunch, a 6.4% decline and 4% jump by mid-afternoon and then a 6% slide into the close. A 99% round trip!

Wetherspoon; daily range Weds 7 Nov

My last illustration is pub group JD Wetherspoons whose shares were -11% by 9.20am (disappointing outlook for profits growth), before bouncing 2.3% by mid-morning, falling 4.4% into lunch, rebounding 4.3% by mid-afternoon and then falling 5.4% into the close for a 27% round trip. Since Wednesday the shares have bounced a whopping 11%, within their 2018 range.

It’s a lot of numbers, I know. However it’s only by reading the scale and frequency of the moves within the space of a day that we can appreciate the value of the trading moves and opportunities on offer. And this was from just a small selection of shares (albeit carefully picked for illustration), within a few hours, on the same morning, of the same trading day, as traders reacted to financial results that had the potential to move the shares both higher and lower.

The best thing is our clients were alerted to these results well ahead of time. All featured in our Week Ahead publication last Friday. Clients were also updated on the day with early morning analysis in our morning report and their dedicated traders, about whether the shares had opened higher or lower, allowing them to decide if there was a trade to be had.

It’s all part of our service; the overlap between research and trader. To get access to our trade opportunities click here. For access to our Sales Traders, so you can be alerted as to the next results-based bargain-hunting share price plunge, go ahead and open an account.

Have a nice weekend,

Mike van Dulken, Head of Research, 9 Nov 2018