Technical Analysis Snap: Morgan Sindall sinks on lower profits

10th Aug 2009 13:29

The construction sector has taken quite a hit in the last 18 months, falling from peaks of 6,500 in late 2007 to hit a low of 2,344 in October last year. It has enjoyed better fortunes since then, at one point pulling back 38% of those declines in January. Since then it has drifted sideways albeit with a slightly downward bias.The 28% drop in profits announced Monday morning, though expected and in line with expectations, has prompted a softening of the share price towards support at the July lows around 600p. Since late October 2008 the share price has made a rather slow and laboured recovery off its lows at 380.25p, but in contrast to the rest of the sector has underperformed it barely re-tracing 23% of its decline from the 2007 highs at 1,793p.The momentum should remain positive in the medium term as long as support around 543p remains intact, however short term momentum appears to be waning, and a break of 600p could well target the longer term support line. On the up side the market needs to overcome the trend line from the January highs around 700p, and the June highs at 748p, for the longer term upward momentum to be maintained. For periodic TA updates follow me on TwitterAlso read my Investors Guide to Technical Analysis and Level 2