Leading up to yesterday’s budget speech by the South African Finance Minister, the local currency had been under significant pressure as concerns over the state-owned enterprise Eskom, GDP growth and ultimately the country’s sovereign credit rating had been reflected in the currency with the local unit sliding from an overbought level of R13.22 on 31-January to an intraday low of of R14.37 on 20-February. The sharp rebound came as market participants seemingly bought into the annual budget which was delivered in light of tough economic conditions.
Looking across the market landscape, three opportunities appear to offer an attractive risk-to-reward: Truworths International, Mediclinic International plc and Coronation Fund Managers.
#1. Truworths International
TRU has sold off from it’s recent peak of R92.89 to yesterday’s low of R70.22 and from a technical perspective is starting to trade near oversold territory with the Relative Strength Index and Stochastic reflecting such. Primary support can be seen at 7141c while a secondary (and potentially stronger) support level can be found at 6826c. Should we see the price trade near the secondary level of support (below 6940c) traders could look to take a buy/long position in anticipation of a short to medium term price rebound.
These are the trade levels:
Buy TRU at 6950c (or better)
Stop-loss: 6670 (or 2% trailing)
Take Profit Target: 7630c (+9.7% ungeared before costs)
Please Note: Over the longer term and using a higher chart time frame, TRU is potentially building a larger triple top formation while could see lower levels come into play however in the short term, CFD traders could look to take advantage of a potential rebound, should the price trade at the lower aforementioned levels.
Please click on the image below to access the trade levels for Coronation Fund Managers and Mediclinic International plc.
Please chat to the Unum Capital Trading Desk to take advantage of any trading opportunities.
All the best,
Unum Trading Desk Analyst
Tel: 011 384 2923