Market Analysis

Sainsbury’s leads the FTSE100 – will the bear market last?

Sainsbury has been in a bear market since the end of August 2018 in terms of the share price. With a few exceptions, the price knew only one direction, and that was south. Yesterday, when Europe’s stock exchanges closed and the UK market was one of the few to open, Sainsbury took the lead on the FTSE100.

This was due to the quarterly figures published on May 1st. The supermarket chain’s sales were much weaker than expected, but there may be signs of margins stabilisation, the Financial Times reported.

Sainsbury is under pressure, following the merger with Asda, which has been halted by the UK Competition and Markets Authority. The planned strategy, to overtake market leader Tesco by merging the two companies, failed. As a result, Sainsbury is forced to reposition itself in the market.

A look at the chart shows a gap upwards. As a result, the share was able to undertake a first, timid attempt to return to the old realms. From a chart technical point of view, a jump above the 231.70 marks would be essential to secure the market’s progress. A first, crucial structural level could be in the 242.55 range. Further resistance zones could be found in the 247.55, 253.48 and 261.45 areas.

If the market does not make a sustainable jump at 231.70, then there could be support in the 224.35 area. Further support could be found at 221.60, 216.37 and 211.82.

If the market breaks below the threshold at 211.82, the picture could completely fade away.

The MACD oscillator is currently still bearish. However, the MACD line is approaching its trigger line. The histogram could move into positive territory. This could support a bullish movement.

SBRY.UK - daily chart. Source: ActivTrader

SBRY.UK Daily Chart | Source: ActivTrader


Written by Daniel Schuetz, External Analyst

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