Marks & Spencer approaching ‘bounce or break’ moment
Investors are waiting nervously for Christmas trading updates from major British retailers.
Given the backdrop of employment, income and tax uncertainties, consumers are clearly not in a keen mood to splash out.
Hence, I flagged the chart precarity of Marks & Spencer (MKS).
During 2023-2024, Marks was one of the biggest rises among the large-cap retailers. Prices advanced a spectacular 300 percent from 100p, one of the largest rallies in MKS’s share history.
Under the leadership of chairman Archie Norman, Marks & Spencer experienced a steady corporate revival. Products and stores were refreshed, sales upgrades and strong profit margins followed. These factors underpinned MKS’s bull trend.
There were, however, some mishaps along the way. The most damaging was the unexpected cyber attack mid-year that cost the retailer a staggering £136 million. Now, UK’s shrinking consumer sentiment is weighing on the retail sector.
Unsurprisingly, the stock is slumping along the major support level at 320p. Any less-than-positive catalyst in the near term may send the stock tumbling into 300p.
But the broader question is whether MKS’s bull run is over.
MKS’s upside momentum here has definitely tempered off, while it is about to complete a ‘top formation’.
For fundamental-based investors, the case for buying MKS remains decent. Just that the market perception of the company has deteriorated over the medium term.
Should prices decline further into the 200s, watch for tentative support to emerge starting at 280p. Long-term investors may re-accumulate around here.
