Research: Mr Price, Kap Industrial, Prosus, Bidvest, Sibanye Stillwater, JSE Top 40 [01 June 2020]
Mr Price MRP
In the short term, the market appears optimistic regarding potential value accretive opportunities arising from from the current COVID-19 property/retail casualties. Technically, the chart structure sees a consolidation phase in the form of a medium term sideways trading range and most recently a series of higher lows. This past week has seen four consecutive closes above the 8 and 21-day exponential moving averages with a sixth attempt to break above the 50-day EMA. Should we see a pullback, 12395c is a support level to monitor before a potential break above the consolidation zone.
KAP Industrial Holdings KAP
Volume has picked up since 20 May with higher lows being printed while the 211to 214c level is looking to be cleared. The last two sessions has seen the price close near the high of the day potentially suggesting the willingness of buyers to continue accumulating.
Following a significant appreciation off the March lows, the share has retreated with the strength of the Rand being one of the major drivers. The price has slipped below both it’s 8 and 21-day exponential moving average with the current retracement being -14% from it’s peak of 166046c. While the immediate and short term trend remains down, the price is approaching it’s 50-day EMA which is in line with the top of the upward trending channel in place since 10 December 2019 as well as the ‘gap’ created on 05 May 2020. Now I don’t know if we’ll see a rebound at that level as we also have a ‘gap’ at 132101c, created on 16 April hence we may see the price target the mid-point of the channel before making a bullish reversal.
As mentioned on Tuesday, I was expecting BVT to appreciate, but before that, pause to consolidate, however, did not pause and has continued to run. Sometimes it does, or doesn’t go or up or down in a straight line – we never actually know how the price action is going to play out (Prior expected scenario on chart). As at Friday’s close, we saw the price print a bearish engulfing candle which may suggest that a short term pause is now due. From a support level I am looking at 14549c (8 21 EMA cross) as a first ‘level of interest’, followed by 14335c with the short term view. Price is also above rising 8 and 21 EMA. Current 50-EMA is resistance.
Sibanye Stillwater SSW
SHORT TERM VIEW: 7 out of the last 8 trading sessions has seen a negative close, with the price being down by 22.3% from the 20 May peak of 41870c. In this case, there may be a possibility that we could see a ‘small’ rebound at these swing lows. MEDIUM TERM VIEW: The medium term bias is lower with the price below the 8, 21 and 50-EMA’s – all of which are starting to show a sideways to downward bias. There is also a risk that the price loses the current support and targets the next swing support which is just below the 200-day simple moving average.
JSE Top 40 Index J200
The JSE Top 40 Index has been fairly choppy of late and my sense and analysis suggests that the surge we saw from the mid-March lows is slowly starting to fade with a change of character in the recent weeks. From the low on 19 March to 14 April, the index advanced by 36% – a period where the chart structure reflected a steep trend. Following this period the market made a gradual grind higher by pushing into the breakdown zone i.e. prior support. From the end of the steep rise (14 April) to Friday’s close – a period of just over six weeks – the index is higher by only 861 points, reflecting the range-bound trading action. On Friday we closed lower by 1.91% while the index printed a daily bearish engulfing candle. This morning Asia, trades strongly while US Futures are flat hence we could see the index open in the green however the medium term structure suggests fatigue. Complacency abounds, so take caution.
Trading Desk Analyst
Unum Capital (Pty) Ltd
An Authorised Financial Services Provider (FSP 564)