Brent Crude technicals were warning us 17 months ago. Published an idea 4-Oct-2018 @ $84 titled
‘Is Brent Crude Cracking?’
The current (2020) carnage in oil is not something I expected (I
expected some sort of reversal higher) however looking back the sell @
$84 on 04 October 2018 was a good one and taught the lesson that trends
persist longer that one expects.
Current chart:
Brent Crude Oil (as at 05 April 2020 - Monthly Chart. $35 to be monitored.
Dec-2008 & Jan 2016 the level acted as support.
Now, as was case in Oct-1990 & Sept-2000, it's serving as a distribution zone.
JSE Top 40: 20 January 2020 – Potential Decline
Comment on Telegram and Twitter: Indices | JSE
Top 40 J200 | The current technical setup is reminiscent of the August
2018 period where we saw the index break to the upside a bullish flag
formation, producing a 5% move on the break. At current levels, the
price is around 4.6% above the breakout level, with a slight overshoot
and test of the resistance trend line going back to November 2017. We
are also 9.3% (or 4400 points) up from the 4-December-2019 lows. Keeping
an open mind for a potential retracement.
Updated Chart: As expected, the price action played
out exactly as expected (similar to the Aug-2018 period). The today
decline to the recent lows were 37% or close to 20000 points on the Top
40.
The Foschini Group @ R161- expected a large drop
over the next few years. The price has since drop from R161 to a recent
low of R55.
Comment on Telegram and Twitter: Comment
on 27 December 2018: TFG (M)- must hold 6yr channel or price action
could resemble May ’96 & Oct ’07. Downside break on RSI (upper
panel) could be 1st sign of weakness. Price has been hogging top of
30-year channel. Must normalize. Wouldn’t be surprised to see <100 on
a multi-year view. #TechView
Updated Chart
Growthpoint: Long Term Technical View – Triple Top Formation warning us about potential downside. Since then SA listed property has come under immense pressure.
Comment on 03 December 2018: Posted on Twitter
“DON’T like the
look of this Growthpoint chart. 20-year incline support breached.
200-week MA rolling over. Triple Top. If you don’t look at the bigger
picture it could very well be a bull trap. #YieldSeekers$JSEGRT
Updated Chart – GRT is down 50% since (over a 16 month period)
Sell Emerging Markets: 29 January 2018 – This was the around the same week EM peaked and has been on a downward path since.
Follow Up Chart: Since then EM declined 42% to it’s lows
Also bullish on the US Dollar at a time (15 January 2018) when there was much negativity around the currency. My comment was as follows:
$DXY
US Dollar Index (90.50) looking interesting on this monthly chart.
Folks are so negative on the greenback right now. Call me crazy but I
see a falling wedge. Watch out Emerging Markets. Buy Puts Options on
iShares MSCI EM? $EEM
Original Chart:
Update: US Dollar has been strengthening since, recently testing 102 on the DXY.
___________________________________________________________________________________ Impala Platinum Long Bias @ 1827c on 18 September 2018:
Below is the comment and chart at the time: "The long term share chart
of IMP reflects the mining industry’s boom and subsequent bust, as well
as the impact of the global financial crisis on commodities and
related company stock prices. From an initial strong breakout from R13
in March 1999, we saw the price make a 9-year run to reach a high of
R368 in March 2008. This was subsequently followed by massive
decade-long decline that has recently seen the price test a
millennia-low of R15.61 during August 2018. At current levels we see the
price trade near it’s 25-year upward trend line and having also tested
the lower boundary of the downward channel. With the price having made
a new low, the RSI has refused to confirm the newfound weakness – this
an early long term reversal signal. Bias: Long Term Bullish."
This
technical view was highlighted on the Unum Capital Trading Desk on
Tuesday 18 September (pre-market) and communicated via the Unum Premier
Chat platform.
Updated Chart:
Since Jan 2020 I have also been advocating that Platinum shares were very overcooked and the biggest sell sector. IMP fell from around R150/R160 to R45. Here’s a
J153 hart from Twitter and Telegram:
Dis-Chem Pharmacies (DCP) – Weak Candle Structure, Possible Short Term Top Developing
The
price action for DCP is signaling excessive selling around current
levels. Over the last 3 months, the price has traded between a high
(resistance) of approximately 3780/3905c and a low (support) of
3330/3380c. On Wednesday 28-Feb-2018 the price broke below the incline
support in place since April 2017, suggesting a change in medium term
trend. The price is still above it’s 200-day moving average however the
RSI is signaling a weaker tone. Traders/investors looking to buy at
current levels should take caution – this is a share on a price-to-earnings ratio of 40 times and any negative surprise could undermine the exciting growth story.
Updated Chart
Sell EOH @ R171 – October 2016
I also expected the share to reverse at R60, which was not to be.
Nonetheless, in hindsight, the sell call on the share at 171 was a
prescient call.
I have been publicly bearish (and consistent) on SA banks since November 2018.
My comments started as follows:
At the time ABSA traded at 158. Fifteen months later it trades at 6900c.
15 November 2018: SA Banks Index J835: Price trend
line on RSI going back to Dec2015 has not been breached however RSI
support for the same period has. Price also testing 9 1/2 yr incline
support. Nenegate happened but we haven’t seen true capitulation in SA
Banks yet. Trend line price concerning.
Updated: Banks have fallen significantly over the last 17 months.
Discovery Holdings – Sell Call @ 161 on 14 November
2018 (Posted on twitter https://twitter.com/_Lester_Davids/status/1062650610925912064 ) – going against the grain. At the time, the new bank (Discovery
bank) was being launched however valuations were stretched and technically, the warning signs we starting
to flash, with the technical indicators providing an early long term
sell signal. The has since declined by 65% to it’s recent lows.
Flash Note: Boeing, A Long Term Technical Sell
Summary: At $335.95, Boeing is a long term, technical SELL.
Chart as at 19 November 2018
From a price of $335, the share, less than 17 months later tested a low of $89 - a decline of 73%! (this was a great idea for a hedge fund). My long term target for Boeing has been set at $57 and $28.
Clicks – Short Idea That Failed (Short Term)
TRADE IDEA – CLICKS
The price action for the shares of beauty and pharma retailer Clicks
has, in my view, been uninspiring. Despite trading near all time highs,
it appears that there are pretty aggressive seller capping gains around
the 217 to 218 level. That is to be understood considering the
fundamental valuation which sees the share command a 33
price-to-earnings ratio, which is significantly elevated and, doesn’t
leave any room for negative surprises. Based on the price action and
technical factors while being supported by fundamental factors, traders
could look to short/sell the share. Please see the trading levels below:
Trading Plan:
Sell/Short CLS at 21600 or higher
Use a stop-loss of 22100c to protect capital
Take profit at or near 20650c
Technically, I had the foresight to recognize that Sasol was facing
technical risk at R433 in November 2018, but eventually failed to foresee the last recent leg lower. The entire thread is chronicled
in this blog post here: https://re-rate.blogspot.com/2020/04/sasol-chronicling-calls.html
Recognized the large multi-year top at R240. By that time the share had been going sideways for a number of year.
Comment: Aspen Pharmacare: Scary breakdown as per the weekly chart. Descending triangle triggered. R240 support has been lost. #technicalview
Updated chart shows follow-through:
I also got caught wrong-footed with APN, having thought we may see a
reversal at the R144 level. Comment and chart as follows (19 Feb 2019):
Dear Trader
The technical setup and trading action for Aspen Pharmacare is
signaling that it is willing to make further price advances. Late last
week, we received additional confirmation of this as the share traded in
the low R140s after which we saw a strong push toward the 144 to 146
level. The R139 to R141 level has been a fairly strong support zone
while the share is also currently making another attempt to regain it’s
50-day moving (MA). This MA is starting to stabilize on the downside,
signaling a slowdown of the bearish momentum and a potential for a
medium bullish move. We also note the formation of a bull flag pattern –
where the share has broken to the upside and is now making a small
retracement toward R144 – a level where traders should monitor to
determine whether there is still strong buying support. In addition, the
short term 20-day moving average is also being challenged which could
add to the short and medium term bull case. On the upside, the targets
are R152 and R157 (top of bull flag ) while R163 could be reached over a
longer time frame should the aforementioned levels be eclipsed. On the
downside, a stop-loss of R139.30 could be applied. Preferred
accumulation levels: R144.30/144.80. Share Code: APN
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
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
"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
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