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Don’t get me wrong. I have nothing bad to say about either Zak or Azeez. They are both my colleagues and I respect them. I just needed a headline that would grab your attention. But I am not being entirely self-serving. I am also blatantly trying to get you to read Azeez’ article entitled “Annual Trading Forecast on Lloyd’s Banking Group (2014)” and inquire into the ADVFN Forums where Zak rates Lloyds a BUY. Are they right? Or are they nuts?
Yesterday’s News
To be honest with you, I am have not yet fully ascertained Zak’s reasoning and, the fact is, that I may agree with him. I haven’t decided. Azeez wrote his article back on 18 February. He noted then that Lloyds’ shares have, “a stubborn hurdle at the support level of 75.0. Meanwhile, the price could reach the resistance level at 100.00 this year.” He drew the conclusion that, “Lloyd’s shares would recover the loss it has sustained this year and they would go further higher.”
Well, my friends, on 18 February, Lloyds’ share price was at 82.50 and it hasn’t been that high since, although it did push a just a tad above 80.00 at 80.15 once, on 06 June. Azeez was right about one thing: “that stubborn hurdle at 75.00.” It has been at or above the 75.00 pence mark only three days out of the last 30.
Today’s News
Lloyds’ share price (LSE:LLOY) gained 0.60% to 73.68 on the LSE today in fairly light trading, with the bulk of the trading occurring in the afternoon hours. It was a 0.44 pence gain, modest by any measure. The last time it hit the “resistance level at 100.00” was on 30 September 2009. If I had purchased shares at the initial tranche of privatization at 75.00, I might be a wee bit concerned. The government obviously is. Chancellor Osbourne announced today that the Treasury would be postponing the sale of additional Lloyds shares until after the 2015 parliamentary elections.
What that means is:
- If we sell now, the best we can do is break even. The bailout price was 73.60 per share.
- If break-even is the best we can expect by selling now, we will lose the election.
- If we sell now, Lloyds will remind our constituents of the Royal Mail.
- If we remind our constituents about the Royal Mail, we will lose the election.
Just a couple of weeks ago Lloyds cleverly reported an increase in underlying profits in an effort to help investors – and the public – swallow the actual drop from £2,134 million in 1H 2013 to £863 million in 1H 2014. By the way, that is a 60% decline year on year.
It is generally accepted that Antonio Horta-Osoria is leading Lloyds in the right direction, albeit somewhat slowly. That would also be considered a good thing overall. However, I don’t see any indications that this is the right time to buy, or buy and hold, Lloyds. Its price is so calm right now that, if you were holding Lloyds shares, you could easily drift off to sleep.
I end with a special “Thank You” to Zak and Azeez for being good sports. Read all their articles. You’ll be glad you did.
