Unum Capital Trading Desk Research - 18 June 2019

Unum Capital Trading Desk Research - 18 June 2019

Research – 18 June 2019

Lester Davids, Unum Trading Desk


Chart Link
1 MSCI All Country World Equity Index: Following a pullback toward horizontal support, the index has made a second consecutive weekly close above the downward trend line going back to the all-time highs seen in January 2018. A further consolidation above the 505 level would be seen as positive as the price continues to break up out of the ‘flat bottomed triangle formation’. https://invst.ly/b1a5i
2 Dow Jones Industrial Average: The 26940 level has remained resistance for the index over the last 18 months.  This is illustrated by the monthly chart which reflects the long term sideways trading range. Here, traders and investors may want to know whether we could see a breakout or breakdown to determine the next major move. Having a look at a technical indicator such as the Relative Strength Index (RSI), we see that the downward trend line is being tested, suggesting that a bullish turn may be imminent and that higher levels on the index is possible.  https://www.tradingview.com/x/7yQSXi1B/
3 JSE Gold (J203) vs JSE Healthcare Index (J540): On a relative basis, the Gold Index is trading in overbought territory vs Healthcare Index.   https://www.tradingview.com/x/ImY1nXuT/
4 Tiger Brands: The weekly chart is signaling bullish divergence, with the RSI moving up from oversold territory. Recently our ultra short term view called for a buy/long below the 214 level. Long term we may not be out of the woods just yet, with the 245/250 level being seen as a resistance/distribution zone. https://www.tradingview.com/x/9kEPRW3H/
5 Capital and Counties: Losing 32-month horizontal support. RSI has slipped back below incline with a ‘bearish zone print’ of 37. From an equity portfolio perspective it still looks very weak with no clear support. https://www.tradingview.com/x/qPwvqWHi/
6 Sappi:


Daily Chart: Sappi is making a bullish reversing off the prior horizontal support level seen during December 2015 to April 2016 as well as trading back into the channel that has been in place since October 2018. Throughout this bearish period, we have seen the RSI trade in the lower range of the Bollinger Band. Now, in a potential bullish confirmation, the RSI is attempting to break above the RSI downward trend line that has been in place since 10 August 2018 as well as trade back with the bullish zone.


Monthly Chart: The potential for a medium term rebound can also be seen on this chart time frame as the prior breakout level (October and November 2015) has been tested and where there share is currently looking to find support.


For illustrative purposes, the monthly chart shows clear buy and sell signals where the RSI traded into the bullish zone (October 2013) while the sell signal was confirmed in August 2018. Long time readers of the research will recall a post titled “Sappi’s Share Slowdown” dated February 2017 where the technical structure and setup forewarned of long term downside.


If you would like more specific analysis on a share of your choice, please get in tough with the trading desk today.      

Daily Chart: https://www.tradingview.com/x/wvhTkgsb/


Monthly Chart: https://www.tradingview.com/x/Kvm4aEwR/

7 Richemont has been an absolute favourite of mine in recent times. The share has acted well and has provide great opportunities to add gains to a medium term trading account. While the last few sessions have been range-bound, the momentum still appears to be up and hence I do not want to run the risk of playing a reversal too early. If you asked me where I would get in (as a short/sell) I would start looking above the 124 level for a better risk-to-reward ratio. Here we have some resistance in terms of the underside of the rising trend lines.


Should we see a sizeable pullback, investor may want to consider the share as part of a longer term equity portfolio. On the weekly chart, I am looking at the lower boundary of the channel to accumulate for a potentially major move higher. See the monthly chart for the potential scenario. Weekly Chart RSI remains strong at a print of 64!

Daily Chart: https://www.tradingview.com/x/W3ORrs48/


Weekly Chart: https://www.tradingview.com/x/DQw6qpxS/

8 Bidvest Monthly Chart. 3 Key Features Suggesting Potential Downside Risk


– RSI pending a break below 50 (start of bearish zone). Hasn’t traded below 50 since June 2009.

– Money Flow Index gradually trending lower.

– Incline support going back to financial crises lows looking vulnerable.

9 Rand / Oil Price Weekly Chart https://www.tradingview.com/x/LNBp3117/
10 Rand / Gold Price Daily Chart https://www.tradingview.com/x/vphpxLOl/

Leave a Reply

Your email address will not be published. Required fields are marked *