SAMPLE: 21 Charts To Keep In Mind (21 - 24 December 2020)

Instruments Covered: US 10-Year Bond, Copper, Platinum, Platinum/Palladium Ratio, Iron Ore, Brent Crude Oil, DAX, Shanghai Composite, Absa, AECI, Mpact, Naspers, Imperial Logistics, Home Depot, Visa, Faro Technologies, JNJ, Iqvia, Genmark Diagnostics, Constellation Brands.

Fixed Income

US 10 Year Bond Yield - We've been banging the drum on higher interest rates from just under the 60bps level. Subsequently we saw the US10Y sell off (i.e. higher yields = lower bond prices) to test a multi-month high of 0.98% on 11 November. Since then, we have seen a sideways consolidation with resistance between 0.96% and 0.98% and support from 0.82% to 0.84%. Tracking performance from March 2020, we note the yield has developed a base formation with the aforementioned consolidation just above the 200-day simple moving average. Look for a break through the 0.99% level as a trigger for the next level higher. 

 

 

 

Commodities

Copper | On Friday, the commodity tested it's highest level since February 2013, continuing it's strong performance off the lows off the multi-year lows seen in April 2020. Consumers of our research will recall the technical perspective outlined on 03 May 2020 whereby we envisaged a repeat of the 2001 - 2003 period where Copper broke it's multi-year downward channel which was followed by a strong move in the subsequent years. Over the last 9 months, the price action and chart structure has started to reflect the 2001/2003 period. Over the short term, we may be slightly extended to teh upside, however the long-term outlook remains constructive.

03 May 2020 

 

 

Copper Monthly Updated

 

 

Platinum - On a long-term basis, the metal continues to improve, having broken it's 4-year consolidation base and trade at a 4-year high. Depsite the recent strong move, the positioing of the technical indicators suggest a strong but not overbought condition. Here's what I mean: The 14-period RSI trades at 60 and is trending up. Typically, we would consider a reading of +80 as nearing overbought territory. We also note the MACD starting to reclaim the zero bound after trading below this level since December 2012. The $1000 level has also been a key psychological level which was previously resistance and is now looking to turn to support. A re-test and rebound off $1000 would be technically constructive.  

 

 

 

We also note Platinum reversing its downward trend versus Palladium.


 

Iron Ore - We present our perspective of the monthly chart where the price is testing the channel resistance extending back to February 2015. Considering the strong move from April 2020, the risk-to-reward is unattractive on the buy/long side. We expect a consolidation at the channel resistance, with potential for a short-term retracement.


 

Brent Crude Oil ($52.30) - Time for some caution? Oil appears slightly overextended relative to it's 200-day moving average ($39.47) with a 30% difference between the price and SMA. In addition, we note the technical indicators nearing overbought territory.
 

Global Indices

DAX - At a broad index level, we remain positive on German equities, taking our direction from the strong long term price structure of the DAX's monthly chart where we note: (1) strong price action at the 3-year overhead supply. (2) the 14-month RSI at a reading of 58 (moderately strong even though price trades at an all-time high), (3) continuation from mid-point of a 19-year channel. Technically, this index is setting up for a print above +15700 over the medium-term and +17000 over the long term. 

 

 

Shanghai Composite - China's main index has done relatively little over the last 5 years with the current price below its December 2015 highs. At current levels, we note the development of a base formation which if breaches and closes above 3580 on a monthly basis, would see a commencement of a new trend and a continued rebound off the 26-year channel trend line. With the current setup, we also note similarities to September 2006 and November 2014 where a breach of the multi-year downward trend line (within the long-term upward channel) led to sharp advances in the subsequent years. I'm quite excited about this chart and over the next few weeks I'll drill down for individual stock/sector opportunities. Chart Link: https://www.tradingview.com/x/jMBIHGpa/
 

Equities: Local

Absa Group (ABG) | Possibly More Room To Run However Technical Caution Ahead | Revisiting and updating our analysis of the monthly chart for ABG we note the 76.00 level having held as a multi-year horizontal (from 1990) and incline support extending back to June 2008. At current levels, the medium-term price action and momentum has remained strong with possibly more room to run however is now approaching the prior support-turned-breakdown level which was seen during February and March 2020. This is highlighted by the red shaded area. Traders and investors having taken advantage of the consolidation at multi-year lows now enjoy strong gains however should take caution that over resistance may develop around the R126-R134 zone.  Chart Link: https://invst.ly/t70nz 
 
 

 

AECI Ltd (AFE) | Commodities and Commodity Stocks have run. Is it time for AECI to catch up? | The share has traded in a R15 to R20 base since March 2020. A current level, the price is testing the resistance zone of 8815c up to 8970c, of which a break and close above this level would see the consolidation cease and potentially see the price target 9700c-9900c and 10650 as a 'stretch target'. Stop upon trigger: 8510c. Chart Link: https://www.tradingview.com/x/9G5Dn0s8/
 

 

 

Mpact (MPT) | The share is attempting to break out of the base in place since March supported by the Tuesday's elevated volume of just over 30m shares traded. Potential to trade up to 1780c/1900c (overhead resistance). Stop: 1115c  https://www.tradingview.com/x/PyqdMZVF/


 

Naspers (NPN) The overhead supply in place since May 2020 has held with sellers overwhelming buyers on the back of (1) the rotation out of technology shares into cyclical and value orientated sectors. Throughout last week we saw the share trading just below the incline support followed by a back-test and rejection and a strong breakdown on Friday. This breakdown saw the share lose it's 21-day and 50-day moving averages. Chart Link: https://www.tradingview.com/x/MebLKFoF/

 

Imperial Logistics | In November we relied on the Telkom chart structure and setup to identify a similar potential move in KAP Industrial (KAP). Since then, the KAP has advanced by 31% with a recent high of 361c. Currently, we see similarities between the two shares and Imperial Logistics where a break above the monthly pivot around 4220c could see a strong short-term advance toward the next resistance level just under 4800c. Upon the trigger, your stop-loss is 3911c. https://www.tradingview.com/x/kWLEplJz/

KAP/TKG - Original View


 

KAP /TKG - Follow Up https://www.tradingview.com/x/J8KXmYNd/iew

 
 

Imperial Logistics Monthly Chart

 

 

Equities: Offshore

Home Depot (HD) | A small improvement as it clears it's tier 1 downward trend line (A_B). Some more work to be done (possibly into early Feb 2021) however a move through line (C_D) could see strong upward momentum returning. While the previous setup suggested a head and shoulder formation, we know that a failed H&S setup can be very bullish, helping the share continue the upward trend preceding the H&S technical formation.  Chart Link: https://www.tradingview.com/x/J8KXmYNd/

 

Visa Inc (V) | Persistent tests of an overhead resistance zone is not a poor characteristic of a technical chart setup. In this case, the overhead supply zone for Visa has been in the range of 214-217 and has been tested on several occasions year-to-date. Over the last 6 weeks the stock has traded in a tight range just below this level in the form of a pennant. Here, we want to see the $216 level being cleared and held with 216.50 as a buy stop. Stop-loss: 209.40. Targets: $232-$239. Chart Link: https://www.tradingview.com/x/dH59WFQl/ 

 

Faro Technologies (FARO) - a leading global source for 3D measurement, imaging and realization technology for 3D Metrology, AEC (Architecture, Engineering and Construction) and Public Safety Analytics. For 40 years, FARO has provided industry-leading solutions that enable customers to quickly and easily measure their world, and then use that data to make smarter decisions faster. FARO continues to be a pioneer in bridging the digital and physical worlds through data-driven reliable accuracy, precision and immediacy. The Company develops and manufactures leading edge solutions that enable high-precision 3D capture, measurement and analysis. The long term technical setup is starting to shape up with the price having broken out to an all-time high by emerging from a nearly 8-year consolidation which leads to believe that a new bull trend is developing for a stock in a growth sector. At the end of the month, we want to see a close above $70 to confirm the breakout, with an open target and a stop-loss of $57.  https://www.tradingview.com/x/p0Uzxg2E/

 

Johnson and Johnson (JNJ) - The global pharmaceutical giant is showing it's willingness to break out to new highs by knocking on the door of it's 3-year resistance range of between $150 and $155. This is also a range that has absorbed oversupply which is now looking to cease judging by the candle structure and price action of the weekly chart. We see a weekly close above $155 as a trigger for a medium term long position with a target range of $172 to $185. Stop-loss: $143. Chart Link: https://www.tradingview.com/x/LFRezNx7/ 

 

Iqvia (IQV) - with a market cap of $34bn, IQV is a leading global provider of advanced analytics, technology solutions and contract research services to the life sciences industry.

Full-year 2020 guidance raised for revenue, Adjusted EBITDA and Adjusted Diluted EPS
Full-year 2021 outlook for revenue $12,300 million to $12,600 million, Adjusted EBITDA $2,725 million to $2,800 million and Adjusted Diluted EPS $7.65 to $7.95
Company to resume share repurchase program

Technically, the medium-term outlook is attractive with the stock clearing overhead resistance which has held over the past 17 months. In November, we saw the stock break above the resistance range of $165/$170, which was followed by a back-test and follow-through as the share found support on the prior resistance which now looks to be turning to support. Traders want to get long above $180, with targets of $205 to $215, using a stop-loss of $164. 

Chart Link: https://www.tradingview.com/x/Z4bNpwNc

 

 

 

Genmark Diagnostics (GNMK) - with a market cap of $1bn, GNMK is a leading provider of multiplex molecular diagnostic solutions designed to enhance patient care, improve key quality metrics, and reduce the total cost-of-care. Technically, traders are alerted to a pennant formation where the price is looking to breach its downward trend line resistance in place snice the 06-August breakdown. A print and close above $14.45 triggers a 'swing long', using a stop-loss of $12.60 and upside targets of $16.50 and $18.45. Chart Link: https://www.tradingview.com/x/buNgVZzD/ 

 

Constellation Brands (STZ) - an American producer and marketer of beer, wine, and spirits. Constellation is the largest beer import company in the US, measured by sales, and has the third-largest market share of all major beer suppliers. Last week we saw the stock break out to a 2-year high however just below the all-time highs ($236.20, April 2018). We view multi-month and multi-highs as technical constructive and believe that they preceded further price gains. Taking a medium-term view. Upside targets for the share is $242.00 to $255.00, using a stop-loss of $192.00. Chart Link: https://www.tradingview.com/x/l3yI0YTa/

 

US Dollar Index: It won't be a straight line up however there's a a massive multi-year move coming for the greenback.  Setup very similar to the period 1981/1982 and 1998/1999. Caution if you're too short.