I wrote about the downside risk in Dr Martens share price in a blog posted on 30 January 2023 (Charting Disappointment in a Share). Simple bear extension risk to 80p was pointed out, and a bunch of reversal criteria that needed to be seen to confirm a trend reversal (and improve sentiment). The share price pushed lower into the summer and then bounced a bit, before sliding sharply on Monday 13th November to new all-time lows (daily chart below).
Why the slide? News wires carried the story of a UK bank cutting their outlook on the share from ‘overweight’ to ‘equal-weight’ on Monday, with their price target cut from 175p to 140p. Which begs the question – which fund manager or any other investor would take this news as cause to sell the share? Were they hanging onto the share as the price fell away over the years thinking ‘we will hold on until this bank reduces their allocation to equal-weight. If that happens we dump it all and take our lumps…’? Probably not, but the reaction in the share price does seem to suggest that some long-suffering shareholders saw the news and reduced or cut their position in the share.
The weekly chart below shows the bear trend over the last few years. Currently, a line drawn off the key lows this year comes in near 100p. Resistance is layered at the 13 and 50-week moving averages ahead of the falling line drawn off some 2023 peaks that comes in just above 150p. A break of this line would set up the flat horizontal purple line near 175p for testing. A push above this level would be seen as demand really building in the share and open up the door for a rally to the late November 2022 peak near 295p. Regaining the latter still seems like it would be a big signal that sentiment has really reversed in the share. Time to buy now? Technically, still not a lot to suggest that sentiment in the share has reversed. Interesting times ahead, but right now bear sentiment seems to be lurching along. See if the falling line support holds up? Or not….
Gerry Celaya
Chief Strategist
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