Category Archives: Technical Analysis

Gold Surges


Six weeks ago, on 24th June 2019, we ran an article about gold under the heading “New Gold Bull”. In that article we drew attention to the fact that gold in US dollars had broken convincingly up out of a long-term wedge formation and we suggested that it was probably entering a new bull trend. Since then the dollar price of gold has risen by a further 7,8% to reach $1506. Consider the chart:

US Dollar Gold Price October 2010 to August 2019 – Chart by ShareFriend Pro

For South African investors, however, an investment in gold or gold shares on 24th June 2019 would have been significantly enhanced by the recent collapse of the rand to levels above R15 to the US$. The rand price of gold has surged from R20052 to R22596 – a gain of 12,7%.

Gold always has been and remains the world’s best defense against the weakness of paper currencies. It is the ultimate store of value. Unfortunately, it does not pay any dividends rent or interest, but it holds its value through thick and thin. Read More

S&P500 Going to 3506


In December 2016 we wrote an article on the use of a Point and Figure (P&F) horizontal count to forecast the future of the S&P500 index. At the time, the S&P had been in a long sideways pattern which made a good horizontal count possible once there was an upside breakout. In our article, we published this P&F chart to explain the count:

First Horizontal Count – Point and Figure Chart of the S&P500 Index 2014 to 2016 – Chart by MetaStock

P&F is a one-dimensional chart (it has no time dimension like normal charts) so this chart shows data from November 2014 to December 2016 which enabled a horizontal count of 9 and predicted that the S&P would rise to 3027 from its position at the time of just below 2200 (i.e. a 38% rise). Read More

Your Stop Loss Strategy – Example of Capitec


It has been well said that the secret of success in the share market is to cut your losers and keep your winners. And that implies some sort of stop-loss strategy (if you are not familiar with the concept of a stop-loss strategy, please read module 12 of the PDSnet Online Investment Course). We all tend to get emotionally involved with the shares that we buy and those emotions interfere with our objectivity, no matter how careful we are.

The logic of having a stop is contained in the question, “How much am I prepared to lose?” Shares are a risk investment and so you should have a clear idea of how much you are prepared to risk. Most investors do not want to lose more than 10% to 15% of an investment. Certainly no one wants to lose 50% – because then you have to make 100% just to get back to where you started! And, if you are unwilling to lose 50% or more of an investment, then you have to have a stop-loss strategy. It’s as simple as that.

The great benefit of a stop-loss strategy is that it eliminates emotion with a series of hard and fast rules which are there to prevent you from losing your shirt when you make a bad decision. The problem with stop-loss is that those rules have to be established before you invest, because otherwise you will be tempted to constantly adjust them as the market and the price of your share changes. Read More

Horizontal Count on Afrimat


Afrimat was originally a construction company which specialised in the supply of what are known as “aggregates” to the road-building industry. With the collapse of the construction industry following the 2010 Soccer World Cup, Afrimat set about re-inventing itself to become a mining company.

The decision to rely less on the road-building industry has paid handsome dividends. It began with the acquisition of the Demaneng iron ore mine in the Northern Cape. More recently (on 8th April 2019) it announced that it had put in a firm offer to buy Universal Coal Plc., a company listed in Australia but which has operations in South Africa. Afrimat has offered R2,1bn for the business which mainly supplies coal to Eskom through contracts valid until 2023. Read More

FirstRand


FirstRand (FSR) is a company listed on the Johannesburg Stock Exchange (JSE), well renowned and highly favoured by big institutions because of its large volumes (trading daily on average 1.3 million shares per day) and its quality management.

It operates in 10 African countries, and has platforms in Africa, Asia and Europe. It also has representative offices in Dubai and Shanghai, as well as a branch in India. The company was founded by Laurie Dippenaar, G.T. Ferriera and Paul Harris in the 1970’s. With a market capitalisation of R355bn, it is by far the largest banking group in South Africa. FNB offers a diverse range of banking products to consumers, small and large businesses and government departments. Wesbank is the largest asset financing company in Southern Africa covering vehicles of all types, both private and consumer, as well as aviation assets and agriculture. It also has operations in the UK and in Africa to the North. Ashburton is in asset management and related markets in the UK. RMB offers corporate and investment banking in 35 African countries. Read More