Mikey_Scali

HARVEY NORMAN (ASX:HVN) In overbought territory

Short
ASX:HVN   HARVEY NORMAN HOLDINGS LIMITED
Harvey Norman is a popular electronic and household appliance branch in Australia however despite profit levels and steady insider buying some data outlines HVN may be due for a correction.

Based on Fundamentals HVN has both negatives and positives.

Positives:
--> High returns despite covid-19 as Australia retail sales dropped 1%
--> Steady insider buying ($1.1 mil) in past 6 months
--> Heavy insider ownership at around 41%
This essentially shows that in the long term insiders are comfortable with the direction of HVN and believe in long term success.
--> Vaccine rollout is commencing in Australia meaning lockdowns should not occur

Negatives:
--> As covid-19 is still around the unlikely chance of a lockdown can be debilitating to the stock price.
--> Australian Retail sector is overall struggling

On a technical analysis pov HVN shows some rather bias signals.

Some include:
--> Completion of dark cloud cover candlestick pattern ( Bearish Reversal Signal)
--> Hitting resistance of wedge pattern and as of 22/03/2021 was unable to break
Oversold in terms of:
--> RSI
--> Bollinger Bands
--> MFI

Overall in short term perspective HVN is oversold and a short position can be effective however with good management and growth in profits can be a good long term stock.
A stop lose will be when price opens above the trend line of wedge as it may act as support level
Profit levels are at minor support levels however if price strength appears then profit levels may be increased to bottom of wedge .

Comment: A bearish fundamental news article was released today @4pm esstentially saying some retails will fall against giant Amazon in terms of market share.

https://www.news.com.au/finance/business/retail/analysts-cool-on-retailers-jb-hifi-and-harvey-norman-as-amazons-australian-expansion-powers-on/news-story/aa7555425813a4e666ac25caf7db1fb5
Comment: Ex dividend date today expecting slight sell off, may exit trade depending on opening
Trade closed: target reached: 1st Target Reached however important lesson to be learnt about trading during an Ex-Dividend. Brokers provide a price adjustment where they subtract the number of shares shorted times the divdend. Therefore naturally reducing all profits in the short.

To overcome this ensure trade is closed prior or does not affect profit targets.

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