Today on ShareCrazy.com top chartist Zak Mir of Zaks-TA.com brings us a blue-chip tip which he describes as offering the best of both worlds; outstanding fundamentals backed by a strong chart...to catch Zak's top 5 tips for 2008 out in 2 days time click HERE
The Fundamental Argument:
The recent excitement regarding Standard Chartered (STAN) stems from a report in November that three of China's top banks were trying to buy a significant stake. Indeed, it was reported in the Financial Times that Temasek, the Singapore state investment agency, has turned down an offer for its 17% stake in Standard Chartered from three parties. They were the Industrial and Commercial Bank of China, Bank of China and China Construction Bank.
This has to be a case of there being more than just a little reason for regarding Standard as being the subject of M&A activity. Those concerned about any effects of the Credit Crunch need look no further than Standard’s December trading update when it said that the second half of the year had developed "very strongly" and that full-year pretax operating profit would likely rise to near $4 billion with its exposure to markets in South Asia and the Middle East helping counteract the turmoil seen in the U.S. and Europe.
The Technical Argument:
The charting angle as far as Standard Chartered has been concerned in recent week has been as simple and strong. The point to note during December is that time and again the shares have found support intraday at the 1,800p level. This implies any dips towards this number should be bought into, especially as 1,800p was previously resistance in mid November.
The normal rule is that old resistance becomes new support only in the strongest of technical situations.
The upside is regarded as being at least as high as the top of a November ascending price channel at 2,050p.
Conclusion:
Standard Chartered’s footprint in the Far East should be able to avoid the worst effects of any further Credit Crunch, despite the way that most banks have seen their share price fall just through belonging in the sector. Chinese stake speculation should help underpin the stock over and above trading fundamentals, as I expect a 2,050p target.
Key Data
EPIC: STAN
Market: FULL
Spread: 1833p - 1835p (0.1%)
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