The Power of the Monthly Chart: Implats and Amplats
If interpreted correctly, monthly charts could assist a trader, portfolio manager or analyst by providing a powerful perspective of the instrument being reviewed. Unfortunately, the time frame itself (monthly) leads many traders to believe that it is not useful, Personally I have found the monthly chart to be the most powerful when performing analysis. Of course, if I am looking at ultra short term trades, say 1-3 days or 2-6 weeks, then this time frame will be of less importance. However, if you are look at the longer trades or making portfolio decisions, then the analysis could provide an input, especially from a risk management perspective.
In recent years, analysis of the monthly chart has given me an advantage and has benefited our clients, with clear calls to action. Ironically, both of today's examples are from the PGM sector.
1. Impala Platinum. The attached chart is Amplats however the smaller 'white' chart is IMP from 18 September 2018. If you recall, this was a name that traded sub-R20 in Sept-2018. On 18-Sept, it was a name we analyzed for clients, specifically providing our perspective on the monthly chart where we saw the price nearing a 25-year trend line support. The prior day close was R19.26. Most recently (in under 3 years), the name traded as high as R300.
2. Anglo American Platinum: On this platform and in my research note (on 21 March) I made a clear call to portfolio holders to sell AMS, with the comments as follows: "Anglo American Platinum ( AMS , 211542c ) |Long Term Overextended To The Upside | If you've held this name in a long term portfolio for the last 5 years, should you be selling? Yes. From it's January 2016 low of R156 to it's March 2021 peak of R2224, the share is higher by over 1300% and technically, it appears overextended: (1) the price is ~226% above it's 50-month exponential moving average . (2) although strong, the RSI has developed it's first lower high. (3) in December 2020, we saw the price breach resistance of it's multi-year swing highs (May/June 2008) and (Dec-2019 to October 2020). Often a share will perform a back-test of the breakout level, which could see the share retrace to R1500.Chart Time Frame: Monthly"
As at Friday 20 August (5 months later), the share closed at R1518, 28% lower from the time of the call. Could it reverse higher in the short term? Sure it could, however from a portfolio perspective (using the monthly chart), the price continues to trade at elevated levels, having already advanced substantially over the last number of years. Not only did the clear call avoid a potentially poor LONG entry, but also help existing clients capitalize on multi-year highs by selling at, what now appears to be, an appropriate exit level.
The original AMS publication from this platform is attached below.
Bottom Line: Are you perhaps missing opportunities by not utilizing the monthly chart? If yes, why not get in touch today and connect with an alternative perspective that has the ability to not only recognize opportunities, but more importantly help manage technical risk.
Both myself and the rest of trading desk are here to help.
All the best for the week ahead.
Regards
Lester
In recent years, analysis of the monthly chart has given me an advantage and has benefited our clients, with clear calls to action. Ironically, both of today's examples are from the PGM sector.
1. Impala Platinum. The attached chart is Amplats however the smaller 'white' chart is IMP from 18 September 2018. If you recall, this was a name that traded sub-R20 in Sept-2018. On 18-Sept, it was a name we analyzed for clients, specifically providing our perspective on the monthly chart where we saw the price nearing a 25-year trend line support. The prior day close was R19.26. Most recently (in under 3 years), the name traded as high as R300.
2. Anglo American Platinum: On this platform and in my research note (on 21 March) I made a clear call to portfolio holders to sell AMS, with the comments as follows: "Anglo American Platinum ( AMS , 211542c ) |Long Term Overextended To The Upside | If you've held this name in a long term portfolio for the last 5 years, should you be selling? Yes. From it's January 2016 low of R156 to it's March 2021 peak of R2224, the share is higher by over 1300% and technically, it appears overextended: (1) the price is ~226% above it's 50-month exponential moving average . (2) although strong, the RSI has developed it's first lower high. (3) in December 2020, we saw the price breach resistance of it's multi-year swing highs (May/June 2008) and (Dec-2019 to October 2020). Often a share will perform a back-test of the breakout level, which could see the share retrace to R1500.Chart Time Frame: Monthly"
As at Friday 20 August (5 months later), the share closed at R1518, 28% lower from the time of the call. Could it reverse higher in the short term? Sure it could, however from a portfolio perspective (using the monthly chart), the price continues to trade at elevated levels, having already advanced substantially over the last number of years. Not only did the clear call avoid a potentially poor LONG entry, but also help existing clients capitalize on multi-year highs by selling at, what now appears to be, an appropriate exit level.
The original AMS publication from this platform is attached below.
Bottom Line: Are you perhaps missing opportunities by not utilizing the monthly chart? If yes, why not get in touch today and connect with an alternative perspective that has the ability to not only recognize opportunities, but more importantly help manage technical risk.
Both myself and the rest of trading desk are here to help.
All the best for the week ahead.
Regards
Lester
