Bellway must meet the hype

HOUSE-builder Bellway is a popular stock, with a loyal following of holders eager to see some signs of success.

So the results released tomorrow will be watched eagerly. Especially following the positive comments made at the company's summer trading statement.

However, recently Bellway investors must feel as though the shares are suffering from subsidence rather than profiting from a property boom. So what can they look forward to following Bellway's trading statement?

Looking at the charts, shares started this year at precisely 700p. And this followed a strong bull-trend that bolstered values substantially in the preceding 12 months. Investor optimism and a strong sector then propelled values to an impressive 825p in the first quarter, and it seemed the house-builder could do no wrong.

But this is precisely when things took a turn for the worse. Always chasing its sector leaders, Bellway has undergone choppy trading ever since. May and June saw values plummet back to the 700p starting point before bargain hunters stepped in, pushing prices back towards 800p. Then back down to 700p again, before the summer trading statement.

Directors could barely restrain their excitement with headline comments such as 'the Company is on course for another 'record' set of full year results'. Traders were quick to mark prices higher, and shares once again squeezed up to nearly 800p. And that takes the chart action up to about three weeks ago.

But just as investors started to look forward to this week's results, shares started to shake. And quickly crumbled back down to their well-tested support level at 700p. And crucially, this is where things started to look really bad.

Instead of being underpinned by solid foundations at 700p, Bellway fell victim to structural damage, or at the very least a case of dry rot! Plummeting straight through 700p, shares dropped to 660p last week, unnerving investors ahead of tomorrow.

So what next? Shares must retake 700p for any positive momentum to be re-established. Below this level Bellway look vulnerable.

And the trouble with the really positive summer trading statement is that everyone is already expecting good news. So, only outstanding news can prevent more losses.

On a more positive note, I‘m often wrong!