Killer Trade: Capitec, Remgro

Finweek English Edition - - Contents - By Mox­ima Gama

capitec, formed in 1997 and reg­is­tered as a bank in March 2001, is one of the largest re­tail banks in the coun­try. In a re­cent trad­ing up­date the bank said it ex­pected head­line earn­ings for the six months to 31 Au­gust to rise by be­tween 18% and 21%. Capitec was ex­pected to re­lease its half-year re­sults by 26 Septem­ber. Out­look: From a low at 200c/ share in 2014, Capitec tested an all-time high at 110 000c/ share in De­cem­ber 2017. It then dipped sharply on the back of the con­tro­ver­sial Viceroy re­port which claimed that Capitec is con­ceal­ing losses by over­stat­ing its loan book. Capitec’s share price re­gained com­po­sure and traded side­ways in the form of a tri­an­gle, even­tu­ally breach­ing the up­per slope.

On the charts: Capitec has re­cov­ered some of its losses. It tested a high at 103 500c/share. It has also re­versed be­low its sec­ond trend­line. By breach­ing that trend­line, Capitec would have re­sumed its pre­vi­ous bull trend. With the three-week rel­a­tive-strength in­dex (RSI) aban­don­ing its medium-term bull trend, buoy­ant sen­ti­ment could be turn­ing.

Go short: Capitec is points away from key sup­port at 90 815c/ share. Be­low that level, Capitec could re­trace to ei­ther the ma­jor sup­port trend­line of its long-term bull trend, or the 81 100c/share level. It should hold there and re­cover. Fail­ing which, a neg­a­tive break­out would be con­firmed be­low 74 700c/share, and sup­port at 66 860c/share could be tar­geted.

Go long: Capitec would have to trade above 103 500c/share to re­sume its pre­vi­ous bull trend and retest the 110 000c all-time high. Above that level, Capitec would form a new bull phase to new highs to­wards 150 000c/share. ■

SOURCE: ShareNet

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