|Unum Capital Trading Desk Research – Lester Davids
13 – 17 May 2019
|1.||Japanese Currency Index (JXY): As a measure of risk, the Yen is often considered a safe-haven. Over the longer term the price is nearing a breakout, highlighting the potential for a global‘risk-off’ scenario. In the short term and from a trading time frame perspective a print around 92.50 may signal a ‘short term’ bottom in equities. Medium to longer term, technical structure of the Yen pints to higher levels suggesting a bearish equities scenario.||https://www.tradingview.com/x/LhEK3CwD/|
|2.||DAX Spot Index: Another STS – (Sold Too Soon) Medium term short idea from 12350 – tested low of 11957 on Thursday with a small bounce on Friday. New setup/potential scenario on chart.||https://invst.ly/arocl|
|3.||Shanghai Composite: Monthly chart sees index trading at an inflection point where the price could potentially trade back below a 23-year trend line as well as outside of a 27-year channel. Take caution that tyhe current support trend line does not turn into resistance.||https://invst.ly/arqls|
|4.||Cross Sector Positioning: JSE Food Producers (J357) vs JSE Platinum and Precious Metals (J153) – A chart I previously highlighted. On Friday we saw the downward trend line going back to 15 August 2018 being breached. This follows a base that has been building since 27 February that took the shape of a head and shoulder formation. Adding to the bullish setup is the RSI that broke out one month ago and continues to gain by crossing into bullish territory with a print of 65 while the price has broken above the 50-day moving average. Bottom Line: The technical setup suggests that J357 is to outperform J153 on a relative basis.||https://www.tradingview.com/x/J7wOLlaB/|
|5.||Cross Sector Positioning: JSE Resouces vs JSE General Retailers – J210 v J537: Relative to the General Retail Sector (J537), the JSE Resources Index ( J210 ) has been an under-performer. On 30-April we saw the incline support going back to November 2018 being breached while the technical indicators show strong downside momentum ( daily chart ). Relative to prior periods (Nov-2017 and Oct-2018) the price has lost it’s 50-day moving average support with the MA starting to curl to the downside. What is also noticeable is the ‘shakeout’or sharp drop following the price decline. Similar price action may occur in the weeks ahead which would see the price trade toward the lower boundary of the channel that has been in place since January 2018.
|6.||Brent Crude Weekly Chart Sees the price retreating from the 61.8% fibonacci retracement level.
Brent Crude Daily Chart: Falling wedge formation bullish breakout, finding support on it’s 50-day MA – buy you have to watch the lower times frames closely for potential weakness.
Bear in mind: different messages on various time frames. All depends on your time horizon.
|7.||Sasol ADR (NY): Taking a step back, I’m once again having a look at Sasol’s US listing. At current levels, the share trades just above a 3-year incline support that appears to be a part of bigger bear flag formation that had been in development since the share made a ‘final’ peak in September 2014. It should also be noted that the 200-month moving average, which acted as support from April 1999 to July 2015 is now serving as resistance. Holders of Sasol within a long term equity portfolio should monitor the share for break of support as this may signal a shift in trend from sideways to bearish.||https://www.tradingview.com/x/JTQ24d1s/|
|8.||Pioneer Foods Group: The next break for PFG will be key. Holding just above the consolidation breakout level and below the downward trend line going back to Jan-2018 and 200-day MA, I am looking at a break above R90 as a open door to 101 and 107.||https://www.tradingview.com/x/i7MXNbMB/|
|9.||Kumba Iron Ore: The share has broken it’s medium term upward trend, specifically the incline support that had been in place since 23 January 2019. Following a brief back-test of this level, a swift move lower has seen the price trade just above it’s 50-day moving average with the 415-417 level being the next key test. A break below this zone would see the 395 level opening up as a target followed by 364 over the medium term. Confirmation of this medium term downward trend is the Relative Strength Index which is pointing down and trading in a bearish zone with a print of 43 while the accumulation distribution is starting to roll over.||https://www.tradingview.com/x/xBKHVhsK/|
|10.||Mr Price: The share threatening to break in the incline support that has been in place 27 March. Here, I am looking at the share on both the long and short side.
Long: As is common with breakdowns, back-tests, often sharp one’s, are possible. As a support level, 206 appears to be a ‘level of interest’/ new accumulation zone.
Short: Sell 222/22 for a move back 213.
|11.||Absa Group: A long/short perspective, ‘new’distribution and accumulation zones highlighted on chart. Buy below 158.80, sell above 177.00.||https://www.tradingview.com/x/4vBrzzcj/|
|12.||Barloworld: I don’t know whether we will see sub-122 on the share and on that basis I would start to accumulated the share if it trades below 124.00. Target is 138 with a SL of 117.||https://www.tradingview.com/x/3U6Q6hqs/|
|13.||Exxaro Resources: A long/short perspective, ‘new’distribution and accumulation zones highlighted on chart. Buy below 157.00, sell above 171.15. Potential scenario highlighted by blue and red lines on chart.||https://www.tradingview.com/x/OUs934ha/|
|14.||Bid Corp: Previous rounding top identified at 300. Short term top at 299 has now been breached. For now I am monitoring the 284 level as an accumulation zone for a ‘range trade’. Target? The prior break down level of 297-299 before a new leg lower. Keep your SL tight as the 06-Dec trend line has been breached while the RSI is signaling the potential for medium term weakness.||https://www.tradingview.com/x/L7O2UlCP/|
|15.||J560 v J150: On a relative basis, the recent technical setup of the JSE Telecommunications sector (J560) versus the JSE Gold Sector (J150) reflects the period for June 2015 to September 2016 where the channel breakout supported a 4-week out-performance of J560 versus J150. At current levels, the price faces resistance at a downward-trending 40-week moving average while the breakout may be followed by a pullback/re-test of the lows. Bottom Line: IN the short term I am looking for the telecommunications sector to under-perform the gold sector on a relative basis.||https://www.tradingview.com/x/rl9098uG/|
|16.||MTN (Monthly Chart): See current month candle resistance levels.||https://www.tradingview.com/x/yKKwAd5Q/|
|17.||Sibanye Gold: The recent pullback makes me think that we may have a high probability trading setup with a fairly attractive risk-to-reward ratio. The level I am monitoring? The second incline support close to 1175c which is also just above the share’s rising 200-day moving average. Bear mind that we may have to give the idea room to breathe so look for a potential test of 1130c (2nd accumulation zone). The potentially strong rebound may just be one that we are looking for.||https://www.tradingview.com/x/Sm753pD4/|
|18.||Snap Inc: The last call on SNAP gave us more than what we bargained for: At the last close, an 85% ungeared return in just over 4 months. At current levels, the price trades with head shoulder formation as per the daily chart however a pullback toward the 200-day moving average may provide another opportunity for fresh longs. Something to note: Though the the weekly chart RSI is rolling over a look at monthly chart RSI sees the price attempting to make it’s way out of bearish territory.||https://www.tradingview.com/x/gydz07yp/|
|19.||Netflix: Range Range support could remain intact. Monitoring 340-343 as an accumulation zone. With a SL of 335 and a take profit target of 367.||https://www.tradingview.com/x/G3HDi4ol/|
|20.||3M Company: Down for three consecutive weeks on the back of poor results. The share now trades at $175.86 after dropping from $219. A look at the weekly chart sees the price trading at the prior breakout level which took place in February 2017 as well as the downward trending support. I see support kicking in here and a bounce back to 192.||https://www.tradingview.com/x/vDW5nywW/|
|21.||Walmart Inc: Long Term breakout pending. Portfolio/Long Term View.||https://www.tradingview.com/x/xUY84j7q/|
|22.||BMW: Megaphone formation. New accumulation zone around the 67 level. Potential scenario on chart.||https://www.tradingview.com/x/ZkRmMTsG/|
|23.||Hammerson plc: Currently not under coverage but just noticed it hit at all time low (JSE) and now trading at lower boundary of channel, on it’s trend line. Extended well below it’s 200-day moving average. Worth a pick-up here?||https://www.tradingview.com/x/oUhRa4Rj/|
|24.||USDCAD: I see this pair moving higher. Potential scenario on chart.||https://www.tradingview.com/x/gcuzNT0R/|
|Week Ahead via tradingeconomics.com
This week the US will be publishing retail sales, industrial production, housing data and flash Michigan’s consumer sentiment. Elsewhere, other important releases include: UK unemployment and wage growth; Eurozone industrial output and foreign trade; Germany Q1 GDP growth; China industrial production, retail sales and fixed asset investment; Japan housing starts and current account; and Australia employment figures, business and consumer morale.
In the US, the preliminary reading of Michigan’s consumer sentiment should point to an improvement in morale during May; while figures from the Census Bureau will probably show housing starts and building permits increasing in April, following small declines in the previous month. In addition, retail sales are expected to post a modest advance, after rising the most in one-and-a-half year in March; while industrial output is set to rebound, following the previous month’s fall. Other notable publications are foreign trade prices, business inventories, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, NAHB Housing Market Index, and overall net capital flows.
Fed Vice Chair for Supervision Randal K. Quarles will testify before the Senate Banking Committee on Wednesday.
Elsewhere in America, the Bank of Canada will be publishing its Financial System Review. Additionallly, the country will be releasing consumer inflation rate for April and ADP employment change. The Central Bank of Mexico will probably leave its monetary policy unchanged when it meets on Thursday.
The UK will be publishing wages data and unemployment figures; and several European countries are set to release preliminary GDP figures for the first quarter of the year, including Germany, Finland, Poland, Norway and the Netherlands, while the Eurozone will be publishing its second estimate. The bloc’s largest economy is seen expanding by 0.4 percent in the first quarter, after stalling in the previous period. Other key data include: the Eurozone industrial production, trade balance and construction output; Germany ZEW Economic Sentiment Index; France unemployment rate; Italy foreign trade; Sweden inflation rate; Poland interest rate decision; and Turkey unemployment rate.
China will be releasing updated figures for industrial output, retail sales, house price index and fixed asset investment. In Australia, investors will focus on employment figures, NAB business confidence, Westpac consumer confidence, home loans, wage price index, and consumer inflation expectations. Meanwhile Japan will be publishing housing starts, current account, leading economic index, bank lending, Eco Watchers Survey, and producer prices. Investors will also be waiting for India’s trade balance, consumer and wholesale prices. Consumer inflation is expected to rise to a 6-month high while producer inflation is set to slow. Other highlights for the Asia-Pacific region include: New Zealand food inflation, visitor arrivals, business NZ PMI, and Q1 producer prices; South Korea unemployment rate; Hong Kong final Q1 GDP growth; Indonesia interest rate decision and trade figures; and Malaysia Q1 GDP growth.
Investors will also react to OPEC’s monthly report and further news on US-China trade talks. On the political front, the Philippine general election will be conducted on May 13th and Australian federal election on May 18th.
Unum Capital’s Trading Desk Research is a collection of general research, technical and fundamental observations, charts of interest, key technical levels as well as trade ideas that is produced to assists traders on the desk in identifying money-making opportunities. These ideas may be immediately actionable or worth placing on the radar for a potential trade at a future date. Please note that trade ideas (including key levels) are subject to change as new information becomes available and price action changes.
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