CHARTS POST 5

NPN YEARLY COMMENTARY

If you are someone who follows this blog regularly you will know that I am personally bullish on NPN as I love the space that the business is in and the growth I see in the market in which it operates. This post will not specify the technical chart but will simply look at the trading disparity between the company and other related listings. The first comparison that is looked at is the trading price of NPN locally to its main driver Tencent. What is immediately evident is that in June last year both were trading at the same value when looking at the difference in price percentage. However, looking at the price action of both now there is currently a 34.92% difference in trading price value between Tencent and NPN local. Taking this into account, the current USD/ZAR chart and the NPN chart, the local NPN share is looking very good in my opinion.

USD/ZAR WEEKLY CHART

Today post will not only depict technical analysis of a chart, but also display a lesson that I believe is highly valuable. 

The lesson that I am referring to is predetermined bias. When looking at a technical chart it is sometimes easy to take ones subjective opinion of the share, commodity or index and transfer that to what we are analyzing through technical analysis. This can be a short fall as Technical Analysis itself is used to determine what the price action is saying about what we are analyzing. Applying this to the USD/ZAR is where I fell short. I in my mind looked at the chart with a predetermined bearish bias to the Rand which in turn made me ignore what the chart was saying. 

Looking at the price action the pattern formed could not have been clearer. Descending price action moved into a horizontal channel and broke below the support a classic Technical Analysis pattern that is very easily noticeable. This pattern in my mind was ignored due to my predetermined bias. Another example of a horizontal channel can be seen in the post below with JSE NPN as a bullish set up. This is due to price action moving upward into the horizontal channel. 

Now looking at the chart the two targets are the min and max horizontal channel widths subtracted from the support line.

For those of you following this journey with me I hope that this lesson can help in your trading to first analyse what is being presented as objectively as you can and then apply your own thoughts afterwards. 

NPN DAILY CHART

NPN is another stock that I personally like a lot. The price action of late has been moving through a bullish horizontal channel. The price action is once again above the 200MA a break above the overhead resistance will target the two levels shown in the graph. looking at the indicators they too are confirming this bullish sentiment. 

Having most of the company being made up of its holding in Tencent is for me, very positive. Also the companies exposure to the mobile gaming sector is one that I favor as this is an industry that is growing in double digits year on year. I believe that as technology develops this will continue to grow. The trade will remain bullish with price action above the horizontal channel bottom. 

SNH DAILY CHART

One of the darling shares SNH has hard a hard time since April 2016 coming off from its high of R96.96 to R62.15. However the chart is now looking good for this share once again. Looking at the share price action it is easy to see the massive double bottom that has now formed. Looking at the indicators they too paint a bullish picture with the RSI showing a buy divergence on the RSI bottoms and a bullish cross with its moving average. Looking at the stochastic there is a buy zone grouping and a bullish cross between the fast and slow stochastics. The target levels are given in the chart and will remain long as long as the price action does not break the double bottom level. 

For the investors following this blog SNH is one of those companies that in my opinion is a great one for the portfolio. Only criticism from my part is that the company may pay bit a bit much for its acquisitions, but it almost always sees them to be massive successes. 

STXFIN WEEKLY CHART

For those of you that follow the blog regularly you will know that the local financial sector is not one that I am particularly bullish on. This post serves as an update to the chart posted a few weeks ago. What is evident is that the huge bearish triangle formation is still in play with the strong resistance level holding. Tomorrows budget speech will have a significant impact on weather the index breaks above or below this formation. As long as the weekly candle sticks do not have a close above the resistance line the strong bearish sentiment remains on the financial sector. 

JSE TOP 40 BULLISH PICTURE UPDATE

Since the chart was posted the Top 40 has retested the 45 067 level to form a nice tweezer bottom formation. The index is now once again above the all important 200MA as well as the 50 MA level. The bullish picture stated before is thus still very much in play and the chart is looking good. Looking at the RSI there is a very clear definitive buy confirmation on the RSI bottoms. Looking at the stochastics the picture is also positive with the indicator approaching the buy zone. The target stated before is still in play at 47 105.