Is now the time to buy Barclays shares?

Barclays (LSE:BARC)

The banks are proving somewhat lethargic. We opted to take a glance at the parent index for the sector, the famous NMX8350 Banks Index, as it usually gives some sort of clue as to what’s really happening. It is currently trading at 4,190 points, but some slight hope seems available.

By hope, we mean, perhaps a bottom is in sight fairly soon. There are indications the banking sector should bounce somewhere around the 4,000 points mark, making the exercise not entirely pointless.

Before continuing though, we would have severe concerns should this index manage below 3,960 as it suggests future weakness toward 3,690 initially with secondary, if broken, at 3,236 points.

This would not bode well for banking sector share prices with the current bunch of frustrated investors forced to wait longer until anything actually happens.

For Barclays (BARC), there are indications the immediate slow down has perhaps eased. Our big picture calculation now advises the share price requires to actually close a session below 202.021p currently, indicating the price has once again retreated below the downtrend since February 2007. This would not be great, indicating our blue trendline cannot be trusted.

During March, the many fits and flops of Barclays price indicate we really dare not trust it unless the share somehow makes it above 220p.

Growth such as this would be a surprise, going against the immediate trend of the sector index and therefore we should not expect it.

However, above 220p does allow for 228p next with secondary, if bettered, at 233p and hopefully a brand new future.

Alas, this appears unlikely. Unless it betters 220p, we suspect the current cycle shall find a bottom at 191p which broadly agrees with the big picture outlook on the overall banking sector.

And if 191p breaks, it almost must bounce at 188p, again agreeing with the overall sector outlook as it calculates with a vague bottoming potential between 4,030 and 3,960. When target levels start to bunch together, experience suggests we should expect a bounce.

Source: interactive investor         Past performance is not a guide to future performance

Alistair Strang has led high-profile and “top secret” software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know “how it worked” with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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