Unum Capital Trade Ideas (SAP + MEI) and Research Note - 17 July 2019

Unum Capital Trade Ideas (SAP + MEI) and Research Note - 17 July 2019

Trade Ideas + Research, 17 July 2019

Lester Davids, Unum Trading Desk


Chart Link

(Please click on the link to access charts)

1 – 2 Dear Trader


This morning, two short to medium term technical trades have crossed my radar and may provide an opportunity for traders to take a position with the aim of banking a profit.  


#1. Sappi:


Yesterday was a relatively good day for the share, with a 4.52% gain and normally I am not one to chase a share but for this one, there may be room for further upside, driven by the following factors:

– Price trading and rebounding off lower boundary of channel (support).

– The Relative Strength Index has not confirmed the new swing lows and has started to turn higher.

– The price remains extended well below it’s 200-day simple moving average (7117c).   

Should we see the price trade below 5160c, traders could consider taking a buy/long position in anticipation of a return to the upper boundary of the year-long downward channel.

Stop-loss: 4820c

Take Profit Target: 5715c

Please click on the following link to view the chart: https://www.tradingview.com/x/gVIGdBZF/


#2. Mediclinic International plc:  

MEI has shown it’s willingness to make a further price advance, as it breaks above it’s short term downward trend line resistance. The share has held it’s 5500c support zone, with a recent bullish engulfing candle, while the price is clearing it’s 20 and 50-day exponential moving averages on the upside. Supporting the bullish technical thesis is the Relative Strength Index (RSI) which is trending higher and testing the bullish zone, above the 50 level.

These are the trading levels:

Buy MEI better than 5740c

Stop-loss: 5390c

Take Profit Target: 6340c

Please click on the following link to view the chart: https://www.tradingview.com/x/xyFucXMo/    

Research Commentary
3 US Dollar Index: Despite Chairman Powell’s comments that the Fed could look to ease, the index remains strong, with the price testing the downward trend line resistance, looking to break above it and despite briefly trading below the 200-day sma, ,we have regained this level.

The Monthly Chart, which speaks to the long term, suggests higher levels for the index i.e. an advancing US Dollar.  

Daily Chart View: https://www.tradingview.com/x/pxOCE6vF/


Monthly Chart View:



4 In addition to the US Dollar Index, remaining firm, the US 10 Year Bond Yield has continued to hold above the 2.10 level, reaching a high of around 2.14 during last week. Firmer economic data out of the United States making the case for a deep rate cut difficult to justify.


5 CME Fedwatch Tool: Interesting to note that despite relatively steady data, the market is pricing in a 73% chance of a 25 bps cut and a 29% chance of a 50bps cut. Market participants should keep an eye on the further US (and global) data releases in the run-up to the 31 July FOMC meeting.       https://ibb.co/hHkyHqw
6 Gold: Commitment of Traders (COT) Positioning: Large Speculators are highest net long since September 2017 while Commercials are the highest net short since September 2016. Potential for a reversal as the US Dollar advances.  
7 Palladium Futures: The short term bearish reversal continues, with the price making a shift back below it’s short term 20-day EMA, while the RSI is pointing down. https://www.tradingview.com/x/wvQcZzAM/
8 British American Tobacco: Technically, the price has potentially printed a triple bottom formation as it retraces from the downward trend line and finds support on the 61.8% Fibonacci Level. Traders should be monitoring for a potential break of the downward trend line as a trigger that medium term upside momentum can be attained. https://www.tradingview.com/x/g1SY2vlg/

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