Unum Capital: Market Commentary, Technical Research + Connect With Traders

Unum Capital: Market Commentary, Technical Research + Connect With Traders

Research – 09 September 2019

Lester Davids, Unum Capital Trading Desk

 

 

Market Overview: South African equity markets closed at a three week high on Friday, following global markets on the back of news that the US and China are set to meet to continue trade talks as well as expectations that Chinese authorities would provide stimulus to boost the world’s second largest economy. Also influencing end of week trade were US economic data, the most important being US Non-Farm Payrolls which showed a rise of 130,000 jobs added for August. On the upside, movers for the week included: Pepkor (+9.9%), Capitec (+9.6%), TFG (+8.84%), Momentum Metropolitan (+8.27%) and Bidvest (+7.31%) while on the downside Goldfields (-11.8 %), Sibanye Gold (-11.02 %), Sasol (-9.52 %), Sappi (-8.34 %) and Anglogold (-7.37 %) lagged the market. In economic data, Statistics SA reported that GDP has accelerated by 3.1% versus consensus forecasts of 2.4%. These gains were driven by the mining, finance and trade sectors which advanced by 14.4%, 4.1% an and 3.9% respectively while construction (-1.6%) and agricultural sectors (-4.2%) found themselves at the bottom of the list. In Europe, the major indices advanced with the CAC40 leading the way, adding 2.25% for the week while the DAX added 2.11%, the EuroStoxx 50 2% while the FTSE100 gained a moderate 1.04% as the pound capped a strong advance. In the US, weekly gains were slightly lower with the Dow Jones, S&P500 and Nasdaq Composite adding 1.49%, 1.79% and 1.76% respectively.

 

 

Technical Research: Global Macro Risk Radar

 

US 10 Year Bond Yield: Although payrolls on Friday were lower than expected, the report was solid nonetheless while Federal Reserve Chairman Powell later during the session expressing that he sees foresees no recession, describing the future as one likely to reflect continued moderate economic expansion. Yields have started to reverse higher, with the price clearing the short term 8 and 13 exponential moving averages. Having a look at the weekly chart we see the price making a strong rebound off the 1.44% level which has been tested on three occasions since 2012. https://www.tradingview.com/x/wTW7f3K2/
US Dollar Index: The daily chart sees the index remaining range-bound whilst hovering just above a key prior resistance level of 98.25. A close below this level could see the price temporarily shift back into the small channel below the upward trend where the incline going back to 21 June should act as a support. https://www.tradingview.com/x/LCEjekTh/
USDZAR – US Dollar / South African Rand: The candle structure, specifically the last leg lower, leads me to interpret the pair as downward trending. This is supported by the price below the 8, 13 and 21 exponential moving averages while the RSI is at a weak 43 and the Money Flow Index trades near two-month lows. Possible support for the pair is at the 50-day simple moving average at 14.63 while the 50% Fibonacci Retracement comes in at the same level. A failure of this would see the 61.% FIB at 14.46 attract the share.        https://www.tradingview.com/x/ltaTaS9Y/
Brent Crude Oil: Currently testing the resistance trend line that goes back to the 25 April peak however the strong candle structure may see the price push through resistance to test the 200-day moving average at $64.06 with the RSI in bullish territory at 55 and trending higher. Bigger picture still see a falling wedge/channel developing giving the commodity a favourable medium to longer term technical outlook.       https://www.tradingview.com/x/3nKXG33f/
Gold Futures: Sharp and quick pullback over the last few trading sessions, with the commodity trading near two week lows. The technical indicators suggest the the reversal may continue as the RSI attempts to break into bearish territory.     https://www.tradingview.com/x/ENuKOT4v/
Iron Ore: The short term trend remains down with the 8/13/21 acting as resistance. We have also, for the first time since December 2018 shifted to below the 200-day moving average. Watch 81/78 as a support zone. https://www.tradingview.com/x/js1CcUck/
Copper: The price has quickly reversed to trade back above $2.55 as talk of Chinese stimulus has boosted risk on sentiment. Overhead resistance however comes in the form of the downward trend line that goes back to 17 April followed by the 200-day moving average at $2.74. Failure to hold 2.60 to 2.55 as a support zone would see $2.44 and $2.26 come into play however any further upward momentum would see $2.80 act as a target.      https://www.tradingview.com/x/CDyLeO2g/
AUDJPY: Known as the ultimate risk pair, the upward movement has been reflective of the risk on sentiment globally. Short term overhead resistance is at 74.10 followed by 76.19. The price has also started to trade above the near term moving average while the RSI is too clearing it’s overhead resistance, signaling positive momentum. https://www.tradingview.com/x/8n5lt6Dl/
Global Safe Haven Index: Our custom risk off measure, the SHIX has started to make a bearish reversal, coinciding with the risk-on sentiment (bullish reversal) in risk on assets. The RSI has broken it’s double top support, hovering just above the 50 zone. For now, the index remains extended well above the 200-day moving average, signaling the potential for further downside or moderation of safe-haven assets. https://www.tradingview.com/x/Ga1C1xHt/
EM Currencies vs Global SHIX: Another way of measuring risk would be to view the relative performance of risk currencies versus safe-have assets. Here we have an equally weighted basket of 5 Emerging Market currencies relative to Gold, US Treasuries, the Japanese Yen and the Swiss Franc. As per the daily chart, we note the EM Currency Basket potentially starting to find a short term base versus the SHIX. The candle structure is positive while the RSI is attempting to enter a bullish zone (closing at 50 on Friday 06 September). https://www.tradingview.com/x/ZUOU166i/
 

Short Term Trading Levels/Opportunities *(Provisional Levels)*

 

Anheuser-Busch Inbev (ANH): Price trending toward lower boundary of channel. Monitoring the R1326/1335 levels as an accumulation zone for a move back to R1401. Stop-loss: R1312 https://www.tradingview.com/x/OFd6yk55/
British American Tobacco: (BTI) The share has been in a downward trend since mid-August in what appears to be a falling wedge formation. I am monitoring the 508/513 level as an accumulation zone. Note: The 200-day moving average has acted as a resistance level since December 2017 however the moving average has started to act as a support zone since late August, potentially signaling a change in trend. In terms of a distribution zone, traders should monitor 55500c to 55800c. https://www.tradingview.com/x/5rnQzLp6/
Discovery Holdings (DSY): The price faces double resistance in the form of two downward trend lines. Should we see the price trade above R121, traders could look to take a short/sell position for a move back to R114.80. Use a stop-loss of R124.30 to protect capital. https://www.tradingview.com/x/xCZ18bLb/
Anglo American Platinum (AMS): The share has started to retreat from the overhead resistance above R900. In the short term the price has lost the 8-ema however should provide an opportunity for vigilant short term traders. I’m monitoring the 838/845 level as a short term accumulation zone. This is also where the share may find support of it’s 50-day simple moving average.   https://www.tradingview.com/x/ZsKmrMKu/
Barloworld (BAW): In the short term I view 10950c to 11000c as an accumulation zone while 11800c is a level to put in an order for a short/sell. The distribution zone is also in line with the share’s 50-day moving average. https://www.tradingview.com/x/80NxkMLb/
TFG: The share has seen a strong move from below 14800c to the last close of 16380c. Should we see a pullback to 15520/15580, traders could look to re-enter a long, alternatively, I am looking at 17150 to 17380 as a distribution/sell zone.     https://www.tradingview.com/x/f2UbR9EW/
S&P500 E-mini Futures: We have seen a strong move higher from the 26 August lows at 2810. At Friday we saw the price close at a 5-week high, above resistance level 1 of 2973. The index has the potential to test 3000 however traders should monitor the lower time frames for weakness and signs that we could see a reversal. Should we see a reversal I am looking for the level close to 2939 to be tested.     https://www.tradingview.com/x/UQQsKVyH/
JSE Top 40 Futures: On Friday we saw the price test the swing high reached on 08-August at 49917. Should we see a pullback, I would be looking at 49000 as a potential entry (8-ema) however, an overshoot to 50179 could be seen as an ultra short term distribution zone.    https://invst.ly/c5tpx

All Charts by TradingView.com

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