Unum Capital Trading Desk Research Note: 15 July 2019

Unum Capital Trading Desk Research Note: 15 July 2019

Research – 15 July 2019

Lester Davids, Unum Trading Desk

 

Chart Link

(Please click on the link to access charts)

1 Dow Jones Industrial Average: A view of the monthly chart sees the index continuing to test new highs, breaking above the previously identified 26800 zone while the Relative Strength Index has broken the downward trend line going back to January 2018.           https://www.tradingview.com/x/ZHbzvfXL/
2 S&P500 Index: The major 3000 level has been breached on the index ending an 18 month sideways consolidation.   https://www.tradingview.com/x/AKAJNkNo/
3 All Country World Equity Index: A view of the weekly sees the ‘flat bottomed triangle’formation continuing to play out, with the index testing 18-month highs. In the medium term, the price trades just above the swing highs/horizontal resistance at 528 index points. https://invst.ly/b9e2l
4 US 10 Year Bond – US 3 Month Treasury Note: With a strong US Non-Farm Payroll print, as well as a stronger than expected Core CPI reading, the widely watched recessionary indicator has broken out from it’s double bottom pattern and breached the downward trend line that has been in place since 05 October 2018. A positive reading (above 0) should allay fears of a US recession (including Non-Farm Payrolls, Core CPI data). https://www.tradingview.com/x/mChKWEls/
5 JSE Top 40 (Spot): In the short term, the index continues to show a downward bias, as it trades below it’s downward trending 5/10/20 moving averages. In terms of accumulation levels, the 61.8% (50155) should act as a key zone for short term traders looking to take a buy/long position.   https://www.tradingview.com/x/FEiBsHRr/
6 J210 Resources 10 Index: Acceleration of selling pressure. Potential closing of gap which is in line with the 61.8% Fibonacci Retracement level. https://www.tradingview.com/x/dFyPFIhQ/
7 J253 v J203: Relative to the JSE All Share Index (J203), the SA Listed Property Index is developing a double bottom pattern, one that has been emerging over a 4-month period. A breach of the mid-point sets up the index to test it’s early February highs. https://www.tradingview.com/x/cF9whWho/
8 Hyprop Investments: Daily Chart – The price has continued to form a base since March 2019, with resistance around the 7300c level. The Relative Strength Index has continued to make higher lows while the price has regained it’s the 50-day moving average.

 

Weekly Chart: The price has found support off the 2012-2014 trend line support, while the RSI is pending a break of it’s downward trend line resistance that has been in place since January 2018. In addition, we see the price extended well below it’s 200-week moving average (currently at 10754c) vs a price of 7197c.

HYP Daily:

https://www.tradingview.com/x/TJ0ynYZf/

 

HYP Weekly:

https://www.tradingview.com/x/3HyICumq/

 

 

9 Discovery: In the short term, the share has retreated from the 15550c distribution zone, which was in line with the downward trend line as well as the 200-day moving average. For traders with a short term time horizon, the level below 13700c is horizontal support going back to March 2017 which is also in line with the medium term incline support trend line in place since March 2019. Should we see the price trade around this level in the days or weeks ahead, it may offer an opportunity for traders to take a buy/long position in anticipation of a rebound. Provisionally, I am looking at a print below 13680c as a buy zone, using a stop-loss of 13220c and a take profit target of 14300c.   https://www.tradingview.com/x/vWQNUPGl/
10 Capital and Counties: I don’t know if anyone noticed the bullish engulfing candle being printed on Friday. If yiu also have a look at the SI you will noticed how it has breached the downward trend, back-tested and is turning up. Unfortunately there is no CFD on the share however traders could consider an equity buy over the medium term. Bullish confirmation is above 3960c, targeting 4360c and 4550c, using a stop-loss of 3640c. https://www.tradingview.com/x/RgmzFfZF/
11 Woolworths/Clicks Group: Monthly Chart sees a long term bullish reversal where Woolworths is stating to outperform Clicks. The Relative Strength Index, which has been in a weak/bear zone since May 2017, has printed a bullish divergence and is attempting to move up from oversold territory. https://www.tradingview.com/x/wTwpk3RD/
12 Mediclinic International vs All Share Index (J203): A strong change in trend is evident on the weekly chart where MEI has made a false breakdown/bear trap versus the JSE All Share Index.

 

Sticking with Mediclinic, I’m looking at the share from two time frames. Firstly, the weekly chart. Here we see the price threatening to breach the downward trend line going back to May 2018 whilst potentially developing a double bottom pattern. For investors/traders with a longer term outlook, the mid-point of the double bottom formation is further confirmation of a return to medium term strength.

 

For traders with a short term outlook, the price action also remains positive, with the last close above the short term moving averages which are turning higher. We have seen the 5550c level acting as a support zone, while Friday’s candle saw a bullish engulfing formation develop.

https://www.tradingview.com/x/mSX0WSvk/

 

MEI Weekly Chart: https://www.tradingview.com/x/eNpZwh5Q/

 

MEI Daily Chart:

https://www.tradingview.com/x/3TKSN8pE/

13 Massmart: Some positive signals starting to emerge via the technical indicators: RSI printing a bullish divergence while pointing up sharply. Interms of price, a close above 6615c would see the bulls regain control and open up 6950c and 7200c as provisional targets.    https://www.tradingview.com/x/XF9UQ8ks/
14 Long4Life: Wow, what a match between Roger Federer and Novak Djokovic at Wimbledon yesterday. I wonder if the intensity of one of the most watched finals in years could spur many to pick up a racquet & start playing? If you are somehow looking participate in the sector, JSE-listed Long 4 Life, which owns Sportsman Warehouse may be a great entry. Since October it has made higher lows & has recently crossed above it’s 200-day SMA. For further confirmation of strength, a print above 500c may see the bulls take control over the medium term.        

 

https://www.tradingview.com/x/9vbLY12s/
15 Mondi (MND): A look at the monthly chart sees weakness starting to emerge as the Relative Strength Index trades near 7 and 1/2 year lows while the price threatens to break a two year level of support in the form of a head and shoulder formation. We also note the price trading below it’s 50-month moving average while the price is trading below it’s 20-month moving average which is turning lower. It is noticeable that the 20-month MA acted as a support level since February 2012. In terms of a medium term accumulation level, the R250is a key zone to monitor.         https://www.tradingview.com/x/yL679EO1/
16 Kumba Iron Ore: Kumba Iron Ore is retreating from it’s multi-year highs, more specifically, levels last seen in May 2013. Following the strong run-up it is natural to expect a pullback which is being confirmed by the bearish divergence on the Relative Strength Index technical indicator as per the month monthly chart.

 

Drilling down to the daily chart, we note the price breaching it’s incline support while starting to trade below it’s 20/50 period moving average. In addition, the Relative Strength Index has moved into a weak zone with a print of 43 and pointing down.    

KIO Monthly Chart:

https://www.tradingview.com/x/UQh8sSGg/

 

KIO Daily Chart:

https://www.tradingview.com/x/ELHZVXx1/

17 Baltic Dry Index: Trading near 5-year highs. See Invesco Shipping ETF Below: https://tvc-invdn-com.akamaized.net/data/tvc_a0016950bebf460ebb06993332a2fc76.png
18 Grindrod: With the Baltic Dry Index near it’s 5-year highs, it may be worth taking a look at Grindrod. The price is potentially developing a double bottom pattern and has for the better part of 2019 made an attempt to regain it’s 200-day moving average. For now, a print above 700c would provide technical comfort that the share is on a path to recovery. https://www.tradingview.com/x/NC288iSt/
19 Citigroup Economic Surprise Index: Sticking with the theme of global growth (see Baltic Dry Index above), the Citi Economic Surprise Index is starting to turn up. Could it have anything to do with the recent jobs data and Core CPI print. Considering the slew of negative economic data for the first half of 2019, could we see some positive sentiment starting to filter through? https://pbs.twimg.com/media/D_cgbFZXUAMYwIy.png
20 JSE Sectors Starting To Outperform The All Share Index In The Short Term:

 

Criteria: 

 

– Price of relative chart has recently crossed above rising 20-day moving average.

– RSI is trending up.

 

– J253 SA Listed Property ( https://www.tradingview.com/x/ib34eIgg/)

– J540Healthcare Index ( https://www.tradingview.com/x/bcCDHMoW/)

– J537 General Retailers ( https://www.tradingview.com/x/Uq6v4aTr/)

 

21 JSE Sectors Starting To Underperform The All Share Index In The Short Term:

 

– Price of relative chart has recently crosed below a declining 20-day moving average.

– RSI is trending down.

 

J210 Resources 10 ( https://www.tradingview.com/x/NUMZ8zGo/ )

J212 Financials 15 ( https://www.tradingview.com/x/Go6ZMfI7/ )

 

 

22 iShares MSCI Malaysia ETF (EWM): A opportunity to purchase the the ETF is presenting itself as the index (in US Dollars) is breaching a 15-month downward trend. In addition, the last three and a half years has seen the ETF find support at the $28 level with strong candle structure prior to the breakout. https://www.tradingview.com/x/H67km9JX/
23 iShares MSCI Latin America 40 v SPDR SPY S&P 500 ETF: New 50-day MA upward cycle starting where the Latin American Equities have the potential to outperform US Equities.    https://www.tradingview.com/x/nnpujP0m/
24 iShares Trust IBOXX USD High Yield Corporate Bond ETF: As a widely watched measure of risk, the price is breaching the a 5 year downward trend line. https://www.tradingview.com/x/zOWENV2G/
25 Invesco Shipping ETF (SEA): At $9.14, the price is potentially developing a double bottom pattern with a pending break of the downward trend line that has been in place for 5 years. I view these levels as an opportunity to an to a long term portfolio. https://www.tradingview.com/x/28Wart04/
26 Best Buy Inc. is a buy/long candidate as it’s breaks up from it’s consolidation range. Last Close: $74.77.    https://www.tradingview.com/x/5uOocktO/
27 Activision Blizzard: The share has been trading in a sideways range since November 2018. We continue to see the share forming a rounding bottom pattern, with potential to break the downward trend line resistance. Here, traders should be looking for a break above $48.95 to trigger further upside. Target: $60, Stop-loss: $44. https://www.tradingview.com/x/GCQvkbHE/
28 Ctrip.com International: Another travel stock that has caught my interest is Chinese company, Ctrip.com. This one is not for an immediate purchase, but rather to keep on the watch-list.    https://www.tradingview.com/x/rfjTJfJX/
29 Public Storage: When the trend toward down-sizing, it may be worth taking a look at Public Storage (PSA), the largest brand of self-storage services in the US. The share has been listed for 4 decades, with 3 long term consolidation breaks having taken place since listing, each occuring during the first quarter (February 1993, February 2001 and February 2010). Recently (April 2019) we have seen the share break it’s consolidation, possibly suggesting a new leg higher in this long term growth story.

 

Market Cap: $43bn

PE: 28x

Dividend Yield: 3.21%

https://www.tradingview.com/x/4K9vKTcz/
30 WeightWatchers International: Following a torrid 2018, WW is setting up to recover it’s loses. Forming a rounding bottom pattern year-to-date, the price has also regained momentum above it’s 50-day moving average, whlist clearing the neckline of an inverse head and shoulder. A 8% move higher on Thursday may just be the start of a short to medium term recovery. https://www.tradingview.com/x/im4xvWjG/
31 Burberry: Breaking on the upside. Long Bias. https://www.tradingview.com/x/CzJmvF65/
32 3M: Holding channel support. It has taken a short while but I think we are starting to see a recovery (up 4% in last two days). Last close: $173.34.         https://www.tradingview.com/x/VHsV6DCc/
33 Momo Inc: I’m looking at Momo as a recovery play. For just over a year we have seen the share trade in a sideways to downward fashion, from it’s high of $54.06 to it’s 31 December low of $23.60. At the last close of $34.44, we potentially have a pending break of the downward trend line going back to the peak 14-June-2018 peak. Over the medium term, a break of the overhead resistance would see $41 and +$47 come act as targets.    https://www.tradingview.com/x/U00fOm3q/
34 General Electric is a longer term play where a break above $11 opens the door for a recovery for this once-loved market darling. Technically, things are looking up, with the price clearing it’s 200-day moving average while trading above both the 20-day and moving averages, both of which are trending up. Stop-loss: $9.55. Take Profit Target: $13.30.      https://www.tradingview.com/x/FIts9oZW/
35 Deere: Despite concerns around global trade, including agriculture, the equipment maker trades near it’s all time highs with the price action suggesting a break up from the 22-month consolidation zone. Currently, resistance is the $172 level where a break above this price zone would see the share, over the long term test $200 and potentially $220.    https://www.tradingview.com/x/3Lfpx5fz/
36 Spotify Technologies: At it’s last reporting date, SPOT reported Monthly Active User growth of 26% to 217 million,  it’s launch in India (taking it’s footprint to 79 countries while Premium subscribers grew 32% YoY to 100 million. Free cash flow was also up by 134% YoY to $173m and with growth of 106% QoQ. Technically, the share is setting up for higher levels, with the $153 level being a key zone. The price has recently cleared it’s 200-day moving average and is trading above a rising 20-day and 50-day moving averages. Traders could look to add this to a medium term portfolio, using the following levels: Purchase at current levels ($152.30).Stop-loss: $144.00. Take Profit Target: $169 and $185.          https://www.tradingview.com/x/2BX9URC5/
37 Blackrock Inc. It’s undeniable that there is has been an acceleration in the global shift to passive investing where a portion of an investors portfolio is made up of core and satellite positions. Blackrock is the one of the world’s biggest investment managers and have been a front-runner in the accumulation of assets as well as advancing the use of ETFs in conjunction with active management. Technically, the share is showing a return to positive price momentum, having breached the downward trend line going back to 22 January 2018. The 200-week moving average continues to trend higher with the 20 and 40-week moving averages acting as a support level, turning up. Last close: $482.46. A break above $490 would target $522 and $552 over the medium term to long term. https://www.tradingview.com/x/jeaSkTBz/
38 Invesco DB Multi-Sector Commodity Agriculture ETF: We are seeing a pending break of the 200-day moving average with strong price action around these levels. In addition, the inverse head and shoulder formation supports a move higher. Last close: $16.89.   https://www.tradingview.com/x/UjUJyuQN/
 

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 as well as clients and other recipients 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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