Rolls-Royce: Don’t catch a falling knife
Nicolas Suiffet May 20, 2020 8:27 AM
Rolls-Royce, the aerospace engine maker, proposed major reorganisation in response to the impact of COVID-19
Rolls-Royce, the aerospace engine maker, proposed major reorganisation in response to the impact of COVID-19. The company announced plans to cut 17% of its workforce and boost savings goals.
"It is, however, increasingly clear that activity in the commercial aerospace market will take several years to return to the levels seen just a few months ago. We expect the loss of at least 9,000 roles from our global workforce of 52,000. We will also cut expenditure across plant and property, capital and other indirect cost areas. The proposed reorganisation is expected to generate annualised savings of more than 1.3 billion pounds."
From a technical perspective, the stock price remains in a down trend capped by the declining 20WMA. The weekly Relative Strength Index (RSI, 14) is capped by a key declining trend line and remains within its oversold area (30%).
As long as 378p is resistance, readers may want to consider the potential for short positions towards next bearish target at 130p.
Only a push above 378p would negate the bearish view and would call for a recovery towards 477p.
Source: GAIN Capital, TradingView
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.