Unum Capital Trading Desk Research - 03 June 2019

Unum Capital Trading Desk Research - 03 June 2019

Research – 03 June 2019

Lester Davids, Unum Trading Desk

 

Chart Link
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 alpha-generating opportunities while simultaneously managing risk. 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.

Please chat to the Unum Capital Trading Desk to take advantage of any trading opportunities or open an account to receive access to research on a consistent basis.

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*PLEASE NOTE THAT NEWS FLOW AND MARKET SENTIMENT MAY CHANGE AND HENCE PRICES HAVE THE ABILITY TO OVERSHOOT ON EITHER SIDE. THE LEVELS MENTIONED ARE AN ATTEMPT TO UNCOVER THE HIGHEST PROBABILITY TRADING OPPORTUNITIES HOWEVER, AS A TRADER, LIVE DECISIONS (AS PRICES ARE ON THE MOVE) ARE IS THE PREFERRED OPTIONS (I.E. WE ATTEMPT NOT TO PRE-EMPT). FOR MORE SPECIFIC LEVELS ON THE FOLLOWING RESEARCH/IDEAS, PLEASE GET IN TOUCH TODAY.

US Dollar Index: Adopting an investing (non-trading) time frame, the USD is facing the potential of a short to medium term price correction. i.e. I expected around current levels to be start of a bearish move in the US Dollar. This is informed by the following technical factors:

– Candle Structure: Following eight attempts to break above the 98.25 level, on Friday 31 May, we saw the index print a strong bearish reversal candle. Should we take out 97 as a low, the index has a fair probability that it may commence it’s short to medium term correction.   

The Relative Strength Index is printing a bearish divergence. This is reflected on the daily chart where it has also breached the incline support that has been in place since 20 March.

– The MACD has broken the incline support that has been in place since 14 January.

Longer term, using the monthly chart, the price has the potential to continue it’s upward trajectory, with the April 2011 trend line being major support. Chart: https://invst.ly/ax-hd      

Flowing from the US Dollar (based on any time frame and directional bias) are a number of trading opportunities, for e.g. if one is to view the US Dollar as bearish, a trader may be long EM and/or potentially Gold. One could also be view US-based Multinationals as buy/long opportunities since the majority of their earnings are derived offshore thus when translated back to USD it increases.

Depending on the time frame, short, medium and long term, one is able to take advantage of the opportunities of the opportunities that exit around the USD.

https://www.tradingview.com/x/CRA4IZbB/
Anglogold Ashanti: Previously recommend around the 170 level, we saw the price move lower briefly before a sharp move to close at R194.68 on Friday. In the short term, a pullback below 184 would be an opportunity to buy with a target of 19700c, with a stop-loss of 17900c.

Alternatively, should we see the price become overextended on the upside, traders could look to sell/short. Referencing the prior highs, I see the 207/210 levels as a distribution zone.

https://www.tradingview.com/x/QVUwxZTh/
Massmart: On Friday we managed to get in and out of the share with a small profit. On the hourly chart the price actions has turned bullish with the technical indicators signaling a move higher. Should we see the price pull back below say 6500c, traders could look to accumulate, using a stop-loss of 6100c and target of 7400c.   https://www.tradingview.com/x/H1kqhmkT/
Absa Group: Last week, local shares briefly came under pressure as cabinet delays as well as ‘concerns’ around now Deputy President David Mabuza were some of the major factors. ABG, which traded down toward our previously identified accumulation zone of 158/160saw it’s price back at the trend line resistance, closing at 16900c. With markets in the US closing weaker on Friday, we may see the share retreat. Here I am looking for a print below 16400c as an opportunity to take a fresh buy/long position, with the potential for the share to break the downward trend line going back to 31 January. Provisionally, traders should target 17300c with a stop-loss of 15700c. Alternatively, a print above 175 would incline me to consider selling the share short. If you would like to obtain the live buy signal, please click on the following link: https://unum.tradedesk.co.za/Mandate/Mandate https://www.tradingview.com/x/OO1xfPk0/
Mediclinic International Plc: Depending on your time horizon, the share could be represent two opportunities. On an intraday basis we may see the current swing low of 5554c acting as a support level i.e. traders that opt for intraday opportunities may monitor the share to determine an intraday low and decided to participate in a rebound. The current swing low would be considered a secondary support, while those looking at a higher time horizon may view the primary support as a higher probability accumulation zone.       https://www.tradingview.com/x/3DrFBTAI/
Netcare: Following a sharp decline from around the 2400c level, the share has spent the last two weeks consolidating around the 1810/1870c level. As per the hourly chart time frame, we may be due a short term bullish reversal, with some of the technical drivers being: (1) bullish divergence on MACD, RSI. (2) MACD Level and Signal Line attempting to regain the centre line. (3) Money Flow Index breaking it’s downward trend line resistance. In terms of price, resistance is around the 1881c level (confirmation). The take profit target would be 2045c, with a Stop-loss of 1745c.     https://www.tradingview.com/x/e5eYkJFA/
Kumba Iron Ore: When viewed on it’s daily chart, the price has broken to the downside of the upward channel that has been in place since 15 May. The share has briefly dipped below it’s 50-day, while the 20-day moving average has also briefly started to trade below this level following being extended above it for an extended period. The RSI is rolling over and losing it’s position within the bullish zone, further adding to the potential for a bearish price reversal when one takes a medium term view. For now, the R460 appears to be a distribution zone. For now I am monitoring for the opportunity to take a a sell/short position with a medium term view.       https://www.tradingview.com/x/98Zwq3yE/
Vodacom: Adopting a non-trading/equity portfolio view, the price is starting to consolidate above it’s 20 and 50-day moving averages, both of which are starting to make a small turn to upside. As per the week chart, the MACD and RSI are printing bullish divergence while the Money Flow Index is attempting to make a 22-month high. Equity investors could consider the share as part of an equity portfolio with a 6-9 month view.   https://www.tradingview.com/x/9GEt4Z3X/
Moving Average Ratings of JSE Major Sectors vs JSE All Share Index (J203): 

 

*SMA = Simple Moving Average

 

J210 (Resources 10 Index) vs J203:

 

Price vs 20SMA: Below 20SMA, SMA Trending Down

Price vs 50SMA: Below 50SMA, SMA Trending Down

Price vs 200SMA: Above 200SMA, SMA Trending Up But Momentum Slowing

 

https://www.tradingview.com/x/Ref7kvCc/
J212 (Financial 15 Index) vs J203:

 

Price vs 20SMA: Above 20SMA, SMA Trending Up

Price vs 50SMA: Above 50SMA, SMA Flat But Turning Up

Price vs 200SMA: Below 200SMA, SMA Trending Up But Momentum Slowing

 

https://www.tradingview.com/x/a1BTBBUB/
J257 (Industrial 25 Index) vs J203:

 

Price vs 20SMA: Below 20SMA, SMA Trending Down

Price vs 50SMA: Above 50SMA, SMA Trending Up

Price vs 200SMA: Above 200SMA, SMA Trending Down But Momentum In Early Stages of Slowing

 

https://www.tradingview.com/x/yyQad4dD/
J150 (Gold Index) vs J203:

 

Price vs 20SMA: Above 20SMA, SMA Trending Up

Price vs 50SMA: Above 50SMA, SMA Flat

Price vs 200SMA: Above 200SMA, SMA Trending Up

 

https://www.tradingview.com/x/wpe3ze4U/
J153 (Platinum Index) vs J203:

 

Price vs 20SMA: Above 20SMA, SMA Flat But Turning Up

Price vs 50SMA: Below 50SMA, SMA Turning Down

Price vs 200SMA: Above 200SMA, SMA Trending Up

 

https://www.tradingview.com/x/9HrRKAmK/
J560 (Telecommunications Index) vs J203:

 

Price vs 20SMA: Above 20SMA, SMA Trending Up

Price vs 50SMA: Above 50SMA, SMA Trending Up

Price vs 200SMA: Above 200SMA, SMA Flat

 

https://www.tradingview.com/x/odROktCM/
Shoprite: Adopting a non-trading/equity portfolio view, the share is attempting to break the downward trend line going back to March 2018 i.e. we may be seeing a change in trend from bearish to bullish. During May 2019, the Money Flow Index tested it’s highest level since June 2017 while the RSI has made a bullish divergence and is attempting to break back into the bullish zone. https://www.tradingview.com/x/TsixzFsm/

 

 

JSE Ltd: Daily Chart View – The current candle structure, support by the technical indicators suggest that the share is on a short to medium term bullish trajectory, shifting from a consolidation zone to an upward trend. While I have named this my “anything-can-happen” chart, the MACD and RSI are both positive, while a break above the 14760c level would set the share up to close the ‘gap’ at 15401c. Supporting the bullish setup is the price starting to trade above the 5, 10 and 20-day moving averages, all of which are starting to turn up. https://www.tradingview.com/x/VQuxs3oM/
Anglo American plc: I’ve spotted a very interesting short term setup on Anglo American and at some point this week or next there may be an opportunity at the appropriate level. I will refrain from pre-emting the entry, stop-loss or target price, so if you want to know what I am watching, get in touch.
Tiger Brands: This share is building some nice momentum and if you have monitored the intraday price action you would have noticed that it has turned quite bullish. It’s last close was 21999c and I don’t know if we will see a small pullback however I am monitoring for more opportunities to ride the newly formed upward trend as per the lower time frame.   https://www.tradingview.com/x/WMN2vZTN/
Previous watch-list plays: Remgro, Tsogo Sun and Distell have been shares that I have identified as opportunities should certain levels be tested. In all three cases we saw these shares test the levels followed by a move in the anticipated direction.

 

Remgro: https://www.tradingview.com/x/L24tG1kM/

Tsogo Sun: https://www.tradingview.com/x/iHpM3rx3/    

Distell Group: https://www.tradingview.com/x/baojkqCL/

 

As a trader, it is a quite useful to keep your shares on a watch-list, as a illustrated above. While the opportunities may not be immediate, they do set you up for futures profits. Check in with the trading desk today to find out which potential opportunities we are monitoring.

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