Pre-Market
Here's How Unum Capital Clients Have Benefited
Our view over the last 2 to 4 weeks has been for clients to take advantage of the extreme positioning, by reducing/selling SA-facing shares and by buying resource/commodity-related counters.
This past week, this view has started to bear fruit, with resource/mining shares experiencing aggressive buying activity (PGMs, Diversified Miners) while SA-focused shares continued to pull back from multi-month highs which coincided with excessively overbought levels as per the weekly charts. Some of these 'SA-Inc' shares continue to trade at extended levels versus their 200-day moving averages (e.g. banks) while others (e.g. retailers have started to reflect distributive price action) for which earnings releases and trading statements were a catalyst for aggressive selling pressure. Think about the food retailers such as Shoprite and Spar which were both sold heavily on earnings. Other names such as Foschini (TFG) retreated from excessively overbought medium term levels of around 14400c-14700c, a range which we flagged as a distribution zone.
At the other extreme, African Rainbow Minerals gave traders an opportunity to buy into the previous swing lows (view published) while the strategy alert for Northam Platinum (published at R93) coincides with a range low for a rebound. More broadly, SA-focused shares were trading at extended levels ABOVE their 21-week exponential moving averages while mining/commodity shares were trading at extended levels BELOW their 21-week exponential moving averages. These extended distance readings (vs the 21-weel EMA) have been extremely useful in assessing reward-to-risk and positioning for subsequent share price moves.
As part of the daily research published, these are some of the ways in which my views have been expressed.
JSE Top 40 Index: Buy pullback into 21-week EMA (decent ultra s/term cash flow generated here)
SELL FSR - entry triggered, +300c in the money
SELL MRP - entry triggered, moving into the money
BUY EXX - entry triggered, starting to move into the money
BUY KIO - entry triggered, in the money
BUY NPH (Strategy Alert) - Strong rebound from R93 to R105
BUY ARI (Strategy Alert) - Strong rebound from R154 to R173
SELL SHP above R314, trade down to R284.
Accounting for the automated data for example, the Tactical Trading Guide, opportunities have been plentiful.
Lester Davids
Analyst: Unum Capital
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