CHG – Chemring – a gappy share

Now that I’ve got some of my programs working (in Fortran, SQL turned out to be too complicated and slow), I decided to take a look at CHG – Chemring.

Over the last decade, CHG seems to have experienced more than its fair share of gap downs (of 10%) or more. Here is a table of the dates, share price after the gap, and percentage gap down:

 2011-11-18 369.30 -12.89 GAP-T
 2012-01-24 338.55 -13.92 GAP-T
 2012-08-28 283.81 -12.55 GAP-T
 2012-11-01 228.27 -16.93 GAP-T
 2013-10-11 192.71 -22.64 GAP-T
 2015-10-27 153.51 -22.63 GAP-T
 2016-06-21 115.25 -17.53 GAP-T

At no point has a 52w high alert been triggered after that first gap-down. On the whole, this has been a good thing for over-eager investors, because there have been subsequent slides. If you had been following the rules, you would have stayed on the sidelines, safely out of harms way.

The shares rose to approximately 722p (split adj) in Feb 2011. There was a share split in Mar 2011. Unfortunately, this coincided with the peak levels. You can see its first gap down later that year. The shares are down around 77% since the high.

Anyone who abandoned ship after the first gap down did themselves a favour. Momentum was never properly re-established, and it has been a slippery slope since then.

The share price is currently 167p. This is above the last two gap downs. So the strategy does not guarantee the perfect entry point. It’s not trying to pick bottoms, it’s trying to pick fairly safe entries.

Interestingly, CHG is getting close to triggering a 52w high. Maybe one to keep an eye on.

I have no position at the moment. That might change shortly. We will have to see.

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About mcturra2000

Computer programmer living in Scotland.
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