Killer Trade: Capitec, Remgro
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. ■