Top5 oversold/overbought according to RSI & Richemont

2019年10月5日

This week, the most noticeable thing to point out is the fact that 4 out of the top 5 most “overbought” companies are all Platinum mines. With the recent pullback in the Platinum price (in USD) and somewhat stronger Rand, I will caution any long positions in all four these mines over the shorter term.

Oversold:

Prosus 28
Ascendis Health 29
Richemont 30
Rhodes Food 31
Cashbuild 31

Overbought:

Northam Platinum 77
Capitec Bank 76
Royal Bafokeng Platinum 76
Impala Platinum 75
Anglo American Platinum 71

This week I want to spend some time on Richemont. First, my disclaimer. I like this company and is personally invested. I bought Richemont just below R100/share in November last year (http://oldoak.co.za/wp/index.php/2018/11/16/get-to-know-your-jse-companies-compagnie-financiere-richemont-jse-cfr/) and recently sold half the position just over R120/share as we felt the share price was somewhat “overvalued”. Would I buy it back now?

We still believe that Richemont is a quality business, and if you don’t own any, could use these “oversold” levels to buy for example, half of your total portfolio weight. The 50-day moving average is still pointing downward, which indicates that the trend is still very much downward. Should we see further weakness, we could get some support at R97.60, where I would look to buy back the other half of my position.

Should we see a breakthrough R97.60 levels, we could see the share price seeking support at R92.50. Short-term traders would most probably use this level as their stop-loss as a break and close below these levels, breaking a 3-year support line.

Should we see a recovery in the share price from current levels, could see resistance firstly at the 50-day moving average (R107.52), with, next resistance being the 200-day moving average (R116.64).