Recent days have seen a spectacular recovery in the shares of Barratt Developments.
The price hit 34.75p on the 2 July and then rose 254 per cent in 16 trading days to a peak of 123p. Background factors have not changed. The housing market is as weak as ever and the number of mortgages being granted remains way down on pre-credit crunch levels so we have to look to other factors triggering the rebound.
One way to explain what is going on is in terms of a phenomenon called scenario-contingent analysis. The shares had previously had an incredible fall, losing 97.3 per cent of their value between the 2007 peak of 1310p and the 2008 low of 34.75p.
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Large borrowings started the rut
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