Manchester United Stock Surges With Anticipation Of Sale, Revenue Beat: The Bull, Bear Case

Manchester United PLC MANU was surging over 7% higher Tuesday despite printing an EPS miss for the third quarter.

The English football club reported a loss of 9 cents per share compared to the consensus estimate of a loss of 5 cents. The company printed a top-line beat, however, reporting revenues of $206.539 million, which came in above the $173.69-billion estimate.

Fans and investors are anticipating Manchester will announce that it’s been sold, possibly to Qatar's Sheikh Jassim, who is rumored to be the preferred buyer over British billionaire Jim Ratcliffe.

The move higher caused Manchester to negate its downtrend pattern, which the stock entered on June 15 when it topped out at $26.64. A downtrend occurs when a stock consistently makes a series of lower lows and lower highs on the chart.

The lower lows indicate the bears are in control while the intermittent lower highs indicate consolidation periods.

Traders can use moving averages to help identify a downtrend, with descending lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term downtrend.

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The Manchester Chart: Manchester printed a high of $24.13 Tuesday, which was above the most recent lower high formed on June 22 at $23.73. Although the higher high caused the stock to negate its downtrend, a new uptrend won’t be confirmed until the stock falls to print a higher low above $21.43.

• The stock was working to print a big bullish hammer candlestick on Tuesday, which indicates higher prices may be in the cards for Wednesday. The next most likely scenario is that Manchester forms an inside bar pattern, which will lean bullish for continuation later in the week.
• A gap exists between $20.23 and $21.60, which is about 90% likely to fill in the future. It could be some time before that occurs, however, because the upward momentum on Tuesday suggests the empty trading range is a breakaway gap, which is less likely to fill over the shorter term.
• Manchester has resistance above at $25.25 and $26.60 and support below at $23.58 and $22.09.

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