AG Capital -Storm trading Morning Call 17 January 2022We give a quick recap of markets overnight and the previous day and insights into the day ahead with a few trade ideas on the day. Ideas are strictly NOT INVESTMENT ADVICE.
CFRHF trade ideas
5 Stocks To Watch This WeekWell, there's a bit more than just 5 stocks. I've got a watch-list of names that I picked up both manually and via my scanners, both local and offshore that are potential plays, depending on the price action (as always).
For now let's look at Richemont, which turned out to be a very solid trade idea as I managed to publish/alert on the 2nd highest trading day of all-time (27 July) at around R187, from which we have seen a move to 158.61 on Friday.
An extract from tomorrow's note: "The share continues to trade lower, having exceeded our short target in place from 27 July. The price is below the declining 50-day EMA while the MACD and Signal is firmly below the centre line. The downside gap at 14765c may act as a target. Note, the 200-day simple moving average may, amidst the bearish structure, act as a short term line of defense (consider a possible overshoot here to close the gap)."
5 Stocks To Watch This Week:
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CFR: A Bit Too Riche...On a fundamental valuation basis, the global luxury sector is appears expensive. At 33x trailing earnings, shares of Richemont reflect it's 'blue-sky' prospects. In the short term however, the share price does appear extended to the upside and may be due a moderate pullback with the key drivers as follows:
- 7-Day RSI bearish divergence
- Price extended versus both 50-EMA and 200-SMA
- Price extended versus pivot
- Price testing upper boundary of linear regression channel.
At current levels or better, the reward-to-risk appears attractive and thus we consider a sell/short on the expectation that a retracement occurs.
Trade Levels:
Price at publication: 18760
Sell/Short in the range of 18740c-18965c
Stop-loss: 19425c
Target Range: 17540c-17810c
JSE:CFR Richmont Remaining Very StrongAfter the initial markup - see posts below - we have seen a very shallow pullback. The pullback showed a lot of effort (high volume) without response indicating that all available supply is being bought. Yesterday there was a significant range bar and the markup is now set to continue.
JSE:CFR Richemont Markup Set to ContinueThis month, I looked at Richemont as an investment stock to follow during the mark-up on a weekly chart - see post below. At the time I felt a pullback to R120 was possible but looking at price action last week it looks like the stock could already be ready to mark up further. In the smaller trading range on the daily timeframe, we have seen a spike in buying with volume below R146. A clean break of R148 could quickly push us higher.
JSE:CFR Richemont Breaking Up from Long Accumulation RangeRichemont has been in an accumulation range since 2014. After some preliminary supply (PSY) and a buying climax (BC) price moved sideways with someone accumulating stock between R100 and R105. After a spring down to R80 in March 2020 price met with high volume buying and has pushed higher on slightly lower volume indicating that the buyers are holding the stock and not selling reducing supply. We are now testing R150. It is possible that we may see a pullback to the breakout range at R120 but the Wyckoff markup phase has started. Looking at the length of the accumulation range (2014 to 2021) there is significant upside potential. Definitely a stock to campaign on its way up.
RichemontOne of the shares I'm reviewing for next week is CFR.
Richemont | Channel Resistance Holding, With Bearish Divergence | Year-to-date, the share has been incredibly range-bound, having traded between a support range of 139/141 and a resistance range of 148/149. Looking back over a 14-month period, we note the share having tested and held a broader trend line resistance level that has formed part of an upward channel. At current levels, the year-to-date resistance appears firm, with sellers continuing to dominate. We also note the RSI having developed a bearish divergence, with the indicator now at 51 and trending lower. A possible reason for the continued price strength has been the rumors of a potential buyout by one of the larger luxury goods houses. Any confirmation of this would mean that all bets on a short term price decline would be off.
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Richemont finally breaks out of consolidation areaJSE:CFR has been trading sideways in a consolidation area since early Jan and it has really struggled to break through the resistance around 15000. With yesterday's price action it broke out of the top of the "buy-box" and it is looking promising for an upward move. This is a new all-time high, so, with no existing resistance in sight, if it continues upward, I would be surprised if it goes all the way to the 16000 level.
