Technical Overview of Salmar - You Could Get This One Cheaper

-
 Last Close of Salmar: NOK431.60

Tonight (15-January 2019), I decided to tune into the latest episode of Stockwatch, a business television programme that is aired Mondays to Thursdays here is South Africa. Basically, the program features prominent investment industry personalities that discuss the daily developments on the JSE and global markets. At the end of each episode, the professionals recommend 1 share that viewers could consider as a buy (or sell).

This evening we had one of the absolute best and top performing hedge managers in SA, Jean-Pierre Verster (Fairtree Capital) recommending Norwegian-based Salmar as a BUY. Naturally I had a look at the share chart, upon which I made the following conclusions regarding the share's technical position.

Since listing in 2013, the share has been in a strong upward trend, appreciating from the early NOK50s to it's recent high of NOK519, which was reached in November 2018. Since then the share has retraced in the form of a 'blow-off' while having simultaneously breached the inverse arch price formation that has been in place since January 2018. At current levels, the price appears technically overextended and poised for further short term weakness which may provide fund managers and investors the opportunity to purchase the share at a lower price which could reduce the average entry cost (remember, starting valuation and the price you pay in an investment matters dearly over the long term).

The break of the aforementioned inversed-arch as well as the breach of support on the Relative Strength Indicator, suggests that the secondary trend line which goes back to September 2015 may become a medium term price target zone. This is in line with the rising 200-day moving average and comes in at approximately NOK365 to NOK340. Should we however see the secondary trend line being breached, a new level of support, at approximately 295 down to 275, may act as a target.

While the fundamentals remain sound (as per JP Verster), the technical setup helps us manage risk of short term under-performance as well as the opportunity to purchase the share at a lower price thereby increasing the odds of adding alpha over the medium and long term. 






Comments

Post a Comment

Popular posts from this blog

Flash Note: Firstrand Ltd - A Long Term Technical Sell

-
Image
Summary: At a PE Ratio of 14, Firstrand appears elevated. This is in relation to it's peers, in the context of a below average SA growth rate as well as the increasing market competition. Additionally, at current levels, the market may not be discounting the R20bn execution risk of UK-based Aldermore while technically, warning signs are starting to flash. At R66.77, this share is a Portfolio Sell .        I believe one has to consider  the valuation of SA Banks and whether they are indeed "value". Yes, we have the traditional metrics which is often cited such as the sector's "low" PE Ratios and very attractive, above average Dividend Yields. While these attributes are welcomed, the SA economic conditions have been relatively poor for years, so one would think that banks would trade at decade/multi-year lows. Not so. E.g. Although Absa is lower YTD, it trades near multi-year highs. Firstrand, with it's last close at R66.77, trades a mere 13.5% off i
Read more

2020 Trade Ideas Review: What Worked and What Didn't

-
Image
ALSO: Read about my Sappi Calls: https://re-rate.blogspot.com/2021/01/sappi-long-and-short-of-it.html Updated with last prices as at 24 December 2020.   The following is a review of the 2020 trade ideas that I have suggested. These were generated in my employment at two South African-based stockbroking firms as well as in the social media sphere where I occasionally share my technical perspective with market participants such as (private) proprietary traders, institutional traders and analysts and portfolio managers.     Trading Desk Analyst (Responsible for 80% of private client research. July 2016 to June 2020).  Investment Strategist (Headhunted to start and take full responsibility for the  private client  research. These include quarterly reports with the 'best ideas' for the period. July to December 2020).   The ones highlighted below stood out the most, on both the long and short side.   This is not a comprehensive view of either the best or the worst, but merely a sn
Read more

Testimonials: Feedback Received On Research and Ideas (Not Comprehensive)

-
"As we head into the festive season I’d like to send a shout out to our Investment Strategist Lester Davids who I brought onto the team nearly 6+ months ago. He was worked above and beyond to put out the highest quality of charting and analysis out there, we can all agree at some juncture we have seen one of his calls and traded it PA. Lester is contacted daily by Bloomberg and Reuters for comment and thus all our clients should feel rest assured we have one of the best Sales Teams in SA at present with our winning trade calls  locally and abroad hitting nearly 70% success rate. Well Done Lester." - Ex-Institutional Trader for a R130bn Boutique Asset Manager and a later a co-head of a CPT based Hedge Fund . (21 December 2021). Hi Lester, I trust you're doing well. I just wanted to commend you for all your analysis you keep putting out. You don't get enough recognition at all and it is just brilliant! Thanks for all the hard work - Sales Trader at IG SA ( 04
Read more