TECHNICAL ANALYSIS: Bullish retail stocks signal possible improvement in SA economy | Fin24
 
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TECHNICAL ANALYSIS: Bullish retail stocks signal possible improvement in SA economy

May 07 2019 16:39
Colin Abrams

Retail stocks on the JSE have been battered over the past 12-months. However, the JSE general retail index is now moving up from important support levels and this is bullish for retail stocks. Moreover, it may be an early sign that the SA economy is improving. 

JSE GENERAL RETAIL INDEX – Rallying off support

Investment Strategy: Hold/Med-term + buy

Long-Term Trend: Sideways

(Monthly chart)

Retail chart

Overall Comment: The JSE general retail index gave a classic monthly bullish reversal candle for April from its main support zone of line/s 3 (as circled).

  • Coupled with the fact that its monthly Stochastic (on top) is oversold, and is giving a positive divergence (i.e. making a higher low, unlike the price), this scenario is very bullish for retail stocks.
  • While they are certainly still a hold, retail stocks can be bought for the med-term+ e.g. 6-12 month view.
  • The first target is 7486 (dotted line), but the main target (for taking profits/reducing holdings) is back to line 2 at 8900. (It was trading at 6777 at the time of writing).
  • Main support levels are 6060 (just below line/s 3), and the stop-loss is a monthly closing price below there. Line 1 is 5206.

Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend trading courses, please go to www.themarket.co.za

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

equities  |  markets
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