|Research – 10 June 2019
Lester Davids, Unum Trading Desk
|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.
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|1||MSCI All Country World Index – The index is a collective representation of stock markets globally.
Following a strong sell-off during the monthly of May, the index currently trades at a three week high, having breached the downward trend that has been in place since 03-May. The short term moving averages (8/21 SMA) have started to turn up, signaling that the short term upward momentum has recently shifted higher. Friday’s price high saw sellers take some profits off the table near the 10 and 16 May pivots. Looking out further, the price is making an attempt to hold above the downward trend line resistance that goes back to January 2018.
|2||JSE Top 40 (Spot): Following the index managing to hold the support level at 48847 for the week 27 – 31 May, the price has continued it’s upward trajectory. Last week saw another attempt to breached the downward trend that has been in place since January 2018 where a ‘flat bottomed triangle’ has developed. The 4-week moving average, which reflects the primary trend, has held as support and is starting to turn higher.
|3||S&P 500 Index (Futures): The index is once again attempting to breach the 16-month overhead resistance level which approximately around the 2890 level. Should we see this level turn to support, it may represent a strong attempt by the bulls to keep the upward momentum going and break to the upside of a sideways range that has been in place for the past 16 months.
|4||US Dollar / South African Rand (USDZAR): On Friday we saw the pair trade above the R15.00, extending it’s early week gains which was caused by the SA GDP release. The pair, which traded as high as 15.17, closed at 14.94, retreating from the overhead resistance that has been in place from the peak of January 2016 as well as the swing high of 04-September-2018. The pair remains above the major moving averages (50/100/200-day) and within the upward channel that has been in place since 04-January 2019.
|5||Naspers: A sharp rebound off the prior breakout level sees the share making an attempt to test teh overhead resistance level as well as ‘gap’ near the 3676 level.
Tencent: The 60-min RSI has shifted back into bullish territory which is in the upper range of the applied Bollinger Band as well as holding above the trend line breakout level. In pre-market, the overhead resistance level was HK$333.60 of which a break above would see the share make a bullish reversal and target the 200-period moving average.
Tencent Pre-market: https://www.tradingview.com/x/yXQLArWE/
|6||Relative View: Naspers vs Capitec. Two of the strongest names in recent years, I’ve taken a relative view of the two shares. Naspers looking to recover from a 7-year low versus Capitec. During October 2017 we saw a breakout which was subsequently followed by a sharp backtest. This backtest sees the price having made a triple bottom at the August 2012 breakout level. Should we see the 8-month overhead resistance being breached, this would see Naspers start to outperform Capitec on a relative basis.
|7||Relative View: Blue Label Telecoms vs Telkom: Last week we saw the relative price print an inside bar, at the lower boundary of the trend line that stretches back to November 2010. An observation of the technical indicators suggest that this may be a false breakdown with both the RSI and MACD not confirming the new low (a bullish divergence).
|8||Anglo American plc: From a short term (including intraday) trading perspective, the share has provided excellent opportunities to add profits to one’s trading account. Recently we saw the strong rebound off the 345 level. It has breached the down ward trend line however is approaching a potential ‘distribution zone’ near the 384 to 386 level. In addition, I also note the falling wedge formation breakout which often results in a backtest of the breakout level. This opportunity is ideally for traders with an ultra short term time horizon.
|9||JSE Food Producers vs JSE Platinum Shares: Food Producers currently trade at a two and half month low versus Platinum sector shares. Could we possibly see a short term rebound
|10||Shoprite: The share has largely traded in a sideways range, providing limited opportunities for those with a medium term trading time frame. Instead, much of the action has been in the intraday to 3-day time frame where swift action would have allowed traders to capitalize on ultra short term moves. Stepping back, the share is trading in a gradually downward channel, with a downward trending 20-EMA (exponential moving average). On the long side, an average price of R155 is seen as an accumulation zone while R178.50 to R181.65 is where one should be selling the share short. For more short term time frame, get in touch with the desk today.
|11||Absa Group: Potential long/short scenario on chart [TRADE IDEA].||https://www.tradingview.com/x/uPRBvfzf/|
|12||Spar Group: Over the past 6 to 7 months we have seen very choppy price action, with a tight range and lower highs and lower lows having developed. While the 200-day moving average has acted as a support level year to date, we are now starting to see this starting to act as a resistance level while the short and medium term 20 and 50-day moving averages have started to turn lower. Potential short (breakdown) setup looming.
|13||US Oil / ZAR: The Rand/Oil price continues to show a weak trend having until recently made lower higher and lower lows. The price action prior to Thursday and Friday’s rebound is unconvincing while the short and medium term moving averages suggest that the trend remains down.
|14||DXY: Short term. Looking at support at approximately the 95.80 level. Circled green area on chart. Bigger picture (medium term) there may be further weakness (before the next leg higher) as highlighted in the note dated Monday 03-June-2019.
|15||Gold: For the short term traders, the metal is signaling the potential for a bearish reversal on it’s 1-hour chart. RSI bearish divergence while the candle structure signal sellers starting to emerge following the strong short term run higher. On the higher time frames we could continue the move higher as the US Dollar continues it’s correction.
|16||Electronic Arts: Monitoring for a break higher. Last close at $96.99. Looking for a longer term move higher to $122.
|17||AT&T: Breakout looming. Buying opportunity.||https://www.tradingview.com/x/HVf2V1xz/|
|18||Walmart (Update): Has broken up to new highs.||https://www.tradingview.com/x/kvEQQ10N/|
|19||Nvidia (update): A brief dip below 135 before a reversal higher (now back above 145).||https://www.tradingview.com/x/bmUhSZ6n/|
|20||Raytheon Co (Update): A name I recommended around two weeks ago. Technically, the price is breaking up and out of bull flag. Reports stating that United Technologies is looking to purchase Raytheon Co in an all stock deal.||https://www.tradingview.com/x/FnMUiRQi/|
|*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) 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.|