Dear all,

After studying market trends I have come to the conclusion, rightly or wrongly, that last years worst losers are often the winners of this year and the next.

Some of you may realise this is why I went into mining sector from October 1999 after the BRE-X sell off from March 1997, I am hoping I can repeat this in TMT stocks, as indeed 2001/2002 has been for me in Insurance Stocks at Lloyd's post WTC and September 11th 2001 (average ILV rise 55.54% per yesterday's close 12 ILVs 01.10.2001-14.12.2002).

My conclusion is based on a typical bull or bear phase lasting up to 34 trading months to 68 trading months (actually trading periods of 21 days, actual periods of 28 days or moon cycles IMHO).

Although bearish on equities generally, ie expecting a double dip recession, with bottoms in place at around 31.80 months on FTSE (close on 34 moon cycles) on 24th September 2002, from high on FTSE of 6950.60 on 30th December 1999, plus further low I expect either at 55 moon cycles or at 68 moon cycles, I am still bullish short term, say to March 2003, then again to June 2003 on Telecoms.

The reason is simple, I really do not think certain stocks can go down any further indeed the sector has been rising dramatically on the least sniff of a bull market, and when telecoms rise they rise fast (refer TWT 1.10p to 4.75p in three days recently)IMHO.

I therefore had a look at the sector to try and find the stock which to me seemed the most undervalued, most bombed out with the strongest fundamentals on cash asset backing, lowest gearing, and lowest cost per pound of revenue, plus a market capitalisation below my US$50m (&pound31.25m-&pound33.33m)threshold with the greatest upside potential risk/reward ratio IMHO.

The latest interims to 30th September 2002 released on 21st November 2002 stated certain elements I very much liked including:-

Cash &pound10,155,000 per 30.09.2002 I calculated 0.364p per share over 2,789,070,648 shares in issue at reference date.

Gross profit up 40.3% on same period last year to &pound9,389,000, I assumed this continued full year implied x 2 =&pound18,778,000

Debt seemed to have been reduced from &pound22m per ADVFN data, implying net gearing 55.59% to just &pound436,000.

My maths said can this be right is RED really only costing at 0.60p offer say &pound16,734,000, ie &pound7,015,000 net cash &pound10,155,000 plus debt &pound436,000 for a business with a &pound76m to &pound86m estimated annual turnover?

Less than 10p in the pound?

Press release data included as follows:-

"INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2002

Redstone, the national communications services provider, announces its financial
results for the six months ended 30 September 2002.


FINANCIAL HIGHLIGHTS


Further progress on margins and cash from continuing operations:

O Gross profit up 40.3% on same period last year to &pound9.389 million. Gross
profit now represents 25.5% of revenues, up from 16.6%, and also up from
23.0% in the 6 months to 31 March 2002.

O Operating loss before goodwill amortisation and impairments reduced by
77.5% to &pound1.998 million from &pound8.876 million.

O EBITDA loss reduced by 81.7% to &pound0.990 million from &pound5.418 million.

O Revenue increased marginally compared with the 6 month period to 31 March
2002, which, as set out in the Annual Report, was down from the period to
30 September 2001 reflecting management's focus on margin enhancement.

O Operating costs excluding goodwill amortisation and impairments reduced
by 27.0% to &pound11.567 million from &pound15.849 million at 30 September 2001.

O Cash balances at 30 September of &pound10.155 million.

O Borrowings at 30 September of &pound0.436 million.


OPERATIONAL HIGHLIGHTS

O Increased sales and marketing headcount, during the period, to 102 as at
30 September 2002.
O Order intake improved during the period, with key contract wins notably
in IP telephony systems.
O Awarded Cisco "GOLD" accreditation status.
O Continued reorganisation to improve customer service and efficiency
whilst reducing cost.
O BT Wholesale partnership completed."

The all important charts, after a somewhat over enthusiastic rise last week when RED went up 79.78% day 1 0.445p to 0.80p (high 0.835p), and a further 38.75% day 2 high to 1.11p, before not unsurprisingly profit taking or short selling, RED has today completed a hammer bottom intraday reversal from 0.49p mid to 0.56p mid, which I count as a bullish signal:-



Longer term charts show I think March 2000 high per ADVFN at around &pound10.10/&pound10.20, somewhat irrelevant I understand only approx 86m shares out then even so market cap was &pound868.60m to &pound877.20m, now there are around 2,789,070,648 shares out per 30.09.2002 RNS 21.11.2002 I calculate this market cap would represent 31.14p to 31.45p over no in issue above.

Still a fair risk reward ratio IMHO at 0.60p

I am not sure of a fair short term target, but 1.12p is US$50m, after which I would expect institutional attention. My gut feeling is telecoms can trade to 2.50 to 3.00 times annual turnover, if so 2.50x &pound76m to &pound86m equates to &pound190m to &pound215m to 3 x equates to &pound228m to &pound258m.

Whichever way I looked at it I thought RED was worth 6.80p to 9.25p over the above number of shares in issue.This still represented in excess of a 10 to 1 to 15 to 1 risk reward play to me, although doubtless I will trade the volatility on the way.

All IMHO, NAG, DYOR etc, etc

Comments bull bear welcome, I am long.

Best regards

Ash

Haystack,

Yep flight already booked (;-o

Pinball,

I assumed they just wanted to demerge all their interests in various investments to take them off their books and separate one from another by passing out directly to their shareholders direct holdings in RED and BIONEX.

Cheers

Ash

Ash

Well that's exactly what they did - just seems to me that if they thought RED were (still) such a great investment they'd have held on to them....

Of course Abingdon's credibility counts for very little these days as they presided over a share fall in their own investment company from over 10 to under 10p.

Pinball,

Pretty convinced FTSE is turning here confirmed by Long Legged Doji followed by Hammer Bottom, so IMHO time to go long in market if ever!



Cheers

Ash

El-e-va-tor going up!

Oh well RED is still lagging UB67 up 3.20%

Time for RED to start moving up tomorrow IMHO after 3.70% leap in Telecoms Index today:-

Well at last some news from Redstone, they have changed brokers.

Evolution Capital Beeson Gregory might, you never know, with a new client start promoting the stock.

Redstone PLC
06 February 2003

For immediate release

6 February 2003

Redstone plc (the 'Company'')

Appointment of Financial Adviser and Broker


The Company is pleased to announce the appointment of Evolution Beeson Gregory
Limited as its financial adviser and broker with immediate effect.


-ENDS-


This information is provided by RNS
The company news service from the London Stock Exchange

Telecoms up strongly today plus 2.10% UB67

RED Closed on better volume of towards 5m yesterday with a few brtrt sized trades around 1m.

Quiet so far but here is to hoping.

UB67 sparking up:-

RED Closed on better volume of towards 5m yesterday with a few better sized trades around 1m.

Quiet so far but here is to hoping.

UB67 sparking up:-

Pinball Crazy,

I think RED has just triggered a trading buy with Moving Average Convergence of 5,8,13 MA's plus 50% RSI Break.




Cheers

Ash

Ash

You said "I think RED has just triggered a trading buy with Moving Average Convergence of 5,8,13 MA's plus 50% RSI Break."

Could you explain this buy signal, please. I don't understand.

dcb

DCB,

I can not see the point in trying to explain something that you have reasonably little faith or interest in, more so posting for effect let me just say I trade on Moving Average Convergence Divergence with a difference as a primary indicator, ie basing my triggers on Fibonacci number sequence EMAs/SMAs based on the Eliott Wave count at a specific time, if you are an Eliott Wave Sceptic or a Fibonacci time and distance sceptic you will likely not want to follow the pattern, nor want to see the time triggers for moves in any shareprice, you will say Moving Averages are trying to drive a car by looking in the rear mirror and switch off, I will basically agree to disagree.

The basis of MACD:-

Calculation

The MACD is calculated by subtracting the value of a 26-day exponential moving average from a 12-day exponential moving average. A 9-day dotted exponential moving average of the MACD (the "signal" line) is then plotted on top of the MACD.

IE It signifies where the 8 day EMA is exceeded (9 days)and rises over the 26 day EMA support, ie the first time the end of cycle 21 days, 5 day 12345 Wave sell off reaches bottom and the next reversal up starts.

8, 16, 26 are lows
5, 13, 21 are highs

Now see whether you can answer your own question about the importance of an EMA convergence of 5, 8 and 13 days, with a price moving upwards on this intersection.

I will not bother to deal with a 50% upwards RSI break, surely even if you had only recently started trading buying incorporating this signal is pretty basic.

It would do yourself a favour, and myself a favour if you would post on other people's threads on this BB, rather than purely post on my threads and follow me around like a person obsessed with some deep rooted wish to attack the views and in order to undermine the standing of another poster.

Appreciate everyone has a different trading style, my faith is in the indicators given under Fibonacci dimensions of time and distance in all things, the convergence or divergence from the moving average, and crossovers of these dimensions at specific times is therefore of considerable interest to me when charting price moves.

I look at all things associated with a wave count of 144 waves in a preset wave sequence, at all things on the basis of 13 sets of 21 trading days pcm, per year, per in each annual cycle of 3,5,8,13,21,26,34,55,68, etc year cycles.

You either believe it or you do not. You either understand building and destroying pyramids or you do not and the number of blocks involved, plus the dimensions of time itself. All a chart is in effect IMHO is a picture of this in a form a human can relate to, peaks representing small parts of a company bought/sold at increasing prices, troughs illustrating large parts of a company traded at declining prices.

A specific pointer is try to see how WD Gann managed to predict forward equity and commodity price moves with such precision.

Remember it is not a coincidence that the bottom of the Wall Street Crash in 1932 was approximately 68 years from the top in 2000.
Remember it is not a coincidence that the duration of the Wall Street Crash was 34 trading periods of 21 trading days approx in duration ie 31.25 months approx.

It is not a coincidence that the retracement period is typically 61.80% of the up or down move, I can therefore say this crash is far from over, with a bull surge lasting 13 years from November 1987 bottom post Black Wednesday to December 2000 on major stocks, or delayed on lesser markets, I can IMHO safely predict at least a 5 year down from 2000, probably 8 years to 2008, as a very likely summary of the necessary correction from a 13 year bull market.

Luckily there are savage bear market rallies on route, which is what I am trading on extremely oversold IMHO plays like RED,which over the last three years has seen it's shareprice decline from 1010p to less than 0.50p, and seemingly turned, no longer a 868.60m market cap, purely now 15.59m, a reduction of 98.82% from it's peak.

RED gives me a margin of safety in that I know the 15.59m price was backed by 10.155m cash per 30.09.2002, I also think it unlikely to fall any further, especially in view descending wedge formation, indicating declining volatility to trade between support/resistance so similar to Telewest's before major price moves.

All IMHO, NAG, DYOR etc, etc

Cheers

Ash

Wow !! Ash you type all that
Fair play to ya..

Bon

Hi Ash,

Long time no see.

Your posts are as short as ever I see. LOL

Stocktrader,

Yes brief as ever-LOL!

Interesting play on RED today, TWT marked up 3.30%, market up and it seems we had a minor seller, which has altered the spread between mms to 0.50p/0.58p, mid 0.54p.

Markets are up so I can only assume the improved sentiment will drift down to smaller caps, especially looking to see what Beeson Gregory do now they are brokers to RED.

A reversal intraday to follow the sector could be seen on reasonably low volumes I would hope, noticing trade at mid 0.54p 500,000.

News flow from RED with the new broker taking a more active role, and we are now approaching RED year end 31.03.2003, noting Interims took market by surprise, I hope full year confirms a stronger upwards trend now RED seem to have their business turned around.

Anyway good to see you on MoneyAM.

Level 2 released I see.

Cheers

Ash

Ashley, I see that the MAs are now DIVERGING and the RSI has failed to break past 50% and has in fact bounced back down from that level. Would you take these as sell signals?

Ash, thanks, just freeloading I'm afraid. Came to see what it's all about.
Seems we still have something holding this one back. Looks like a waitng game.

ST

Stocktrader,

You need to look at the uncontended unlimited MoneyAM Level 2 just got my week's free trial!

Robber,

No not really L2 showing WINS bid 0.50p, supported by EVO at 0.48p, Offer EVO 0.58p.

Bluntly it appears EVO have taken an active role on NMS 500,000 both sides, but really would prefer they reduced their spread from 0.10p, noting trades well inside spread I feel liquidity of reducing to 0.025p or below either side would aid liquidity.

Gut feeling it would be possible to buy at 0.565p and sell at 0.515p, possibly within these thresholds, interested to see whether bids of 0.53p/offers of 0.55p work in fact.

It is the fundamentals of RED that will drive the shareprice IMHO.

Cheers

Ash

Ash, that not really gone anywhere near answering the question. Surely if the convergence and the RSI level were signals to buy a few days ago logic would suggest that the opposite indicators would be signals to SELL.