FTSE/JSE All Share Top5 oversold/overbought according to 14day RSI indicator as follow:
Oversold:
Intu Properties 16
Nampak 26
Ascendis Health 26
Hudaco 28
Datatec 29
Overbought:
Royal Bafokeng Platinum 81
Prosus 78
African Rainbow Mineral 77
BATS 77
Northam Platinum 77
Spending some time on Hudaco (HDC). With HDC’s results for period ended 30 November 2019 expected to be released 3 February 2020, it is interesting to note the recent pressure HDC’s price experience lately. Either the market’s expecting worse than expected results or the liquidity had just dried up. When you look at HDC’s average daily trade turnover over the past 2 years, interest clearly has come down a lot. During the 2018 year, HDC traded about R400m in value per day. Over the past 2 years, it averaged R350m/day. The big pullback over the past month was however done with an average daily trade value of only R230m/day, which clearly can take some of the blame for the magnitude of the pullback. It’s for this reason why I do think that HDC might just be unlucky to find itself in an EXTREME OVERSOLD environment according to its 14-day RSI.
As mentioned, results are due in 2 weeks, which might be prudent to wait for before taking any short-term, long positions. With their latest set of results, they did mention that “Hudaco’s prospects depend largely on how the economy performs and that in turn depends largely on government policy and its implementation. Tough decisions together with action plans, time frames and measurables have to be made by government. We had hoped that these would be in place by now. Unless they are soon, we believe that the outlook for the economy for the rest of the year and 2020 will be no different from what we have experienced in the past 18 months.” We know now that the SA Economy is still extremely under pressure, with no big short-term turn expected in the near future.
What should be noted is that 14% of HDC’s turnover is generate from the mining sector, which has seen some improvement lately. HDC still finds itself in big value territory, with any surprises in the results, that could have a substantial affect on the share price. Fundamentally the company is sound, trading at a historic PE of 8 times and a dividend yield of close to 6%.
For the past 5 years, we’ve seen HDC’s share price find support at R100 on numerous occasions, something I’ll be monitoring very closely. Should we see a break and close below R100, could see the share price test the bottom of the parallel channel at R90, with this being my firm stop-loss if I was a short-term trader.
Should the current support hold and we see a bounce, could see the 50-day moving average (MA) at R107 being next resistance level. Next resistance level after this is R114 (which is also my short-term target), with the very downward sloping 200-day at R116, being next resistance. A break and close above these levels, could very much see the share price test the top of the parallel channel, which one could only expect was achieved by positive results in two weeks’ time. This will be a VERY strong resistance level, with a break and close above R120 most probably taking us back to our current target levels. For more information on the company, read our July 2019 report on HDC here: http://oldoak.co.za/wp/index.php/2019/07/05/get-to-know-your-jse-companies-hudaco-industries-ltd-jse-hdc/
Oversold:
Intu Properties 16
Nampak 26
Ascendis Health 26
Hudaco 28
Datatec 29
Overbought:
Royal Bafokeng Platinum 81
Prosus 78
African Rainbow Mineral 77
BATS 77
Northam Platinum 77
Spending some time on Hudaco (HDC). With HDC’s results for period ended 30 November 2019 expected to be released 3 February 2020, it is interesting to note the recent pressure HDC’s price experience lately. Either the market’s expecting worse than expected results or the liquidity had just dried up. When you look at HDC’s average daily trade turnover over the past 2 years, interest clearly has come down a lot. During the 2018 year, HDC traded about R400m in value per day. Over the past 2 years, it averaged R350m/day. The big pullback over the past month was however done with an average daily trade value of only R230m/day, which clearly can take some of the blame for the magnitude of the pullback. It’s for this reason why I do think that HDC might just be unlucky to find itself in an EXTREME OVERSOLD environment according to its 14-day RSI.
As mentioned, results are due in 2 weeks, which might be prudent to wait for before taking any short-term, long positions. With their latest set of results, they did mention that “Hudaco’s prospects depend largely on how the economy performs and that in turn depends largely on government policy and its implementation. Tough decisions together with action plans, time frames and measurables have to be made by government. We had hoped that these would be in place by now. Unless they are soon, we believe that the outlook for the economy for the rest of the year and 2020 will be no different from what we have experienced in the past 18 months.” We know now that the SA Economy is still extremely under pressure, with no big short-term turn expected in the near future.
What should be noted is that 14% of HDC’s turnover is generate from the mining sector, which has seen some improvement lately. HDC still finds itself in big value territory, with any surprises in the results, that could have a substantial affect on the share price. Fundamentally the company is sound, trading at a historic PE of 8 times and a dividend yield of close to 6%.
For the past 5 years, we’ve seen HDC’s share price find support at R100 on numerous occasions, something I’ll be monitoring very closely. Should we see a break and close below R100, could see the share price test the bottom of the parallel channel at R90, with this being my firm stop-loss if I was a short-term trader.
Should the current support hold and we see a bounce, could see the 50-day moving average (MA) at R107 being next resistance level. Next resistance level after this is R114 (which is also my short-term target), with the very downward sloping 200-day at R116, being next resistance. A break and close above these levels, could very much see the share price test the top of the parallel channel, which one could only expect was achieved by positive results in two weeks’ time. This will be a VERY strong resistance level, with a break and close above R120 most probably taking us back to our current target levels. For more information on the company, read our July 2019 report on HDC here: http://oldoak.co.za/wp/index.php/2019/07/05/get-to-know-your-jse-companies-hudaco-industries-ltd-jse-hdc/