Time to pull the plug on Dixons?

ELECTRICAL retailer

Overall market weakness combined with a downgrade by broker Dresdner Kleinwort Wasserstein, has forced Dixons share price down from 164p to below 150p in the last week of trading.

But taking a look from the technical analysis viewpoint, the outlook is far from gloomy. Dixons has been in a solid up-trend for the last year of trading, carrying values from 78p to today‘s trading price of 152p.

Zooming in on more recent trading patterns reveals that for the last five months the stock has been supported by a well-proven up-trend. And this is where the technical and fundamental outlook differs.

Technically, as long as the shares remain above the current trend-line, there is no reason to sell just yet. In fact, the last few days of trading tested the line on several occasions but, critically, support held and the shares now look ready for a recovery.

So in summary, if you are tempted to take profits and sell shares now, consider waiting for confirmation that the bull-trend is over by a close below 145p.

Otherwise values should rebound upwards towards 170p.