I've always viewed Richemont as a bull market stock. What do I mean? Well, when the ultra-wealthy look at their portfolio and see green, what better way is there to spend those after-tax gains on a fancy piece of jewelry? Similarly, red on their screen could see them refrain from stepping out and making a luxury purchase. This is where luxury stocks fit in. Over the last few months, the sector has been under pressure due to a drop-off in equity markets, not to mention the fact that the individual names (on JSE and in Europe) appear relatively expensive. On the back of a strong Rand, Richemont has been under pressure, declining from a peak of R135 in September to it's most recent lows of R88.74. Over the medium term I believe that lower levels are warranted however the short term technical setup may represent an opportunity to play to a potential short term 'bounce'. Both the RSI and MACD is signaling bullish divergence while the price is attempting to breach a 5/10MA cross. Additionally, the Money Flow Index (MFI) is turning up and applying a 20 (twenty) period moving average on the MFI we can see the indicator moving above this level (the MFI) which can be used as a signal to go long. See red vertical lines.
On this basis, I believe traders could look to take a buy/long position.
What about the out GDP figures and rand strength you may ask? Well, we have come off a low base and country's electricity supply is erratic. Q4 GDP? That could be a shocker. CFR could be a nice short term hedge.
These are the levels:
Buy/Long CFR below 89.50c
Stop-loss: 8650c
Take Profit Target: 9850c
On this basis, I believe traders could look to take a buy/long position.
What about the out GDP figures and rand strength you may ask? Well, we have come off a low base and country's electricity supply is erratic. Q4 GDP? That could be a shocker. CFR could be a nice short term hedge.
These are the levels:
Buy/Long CFR below 89.50c
Stop-loss: 8650c
Take Profit Target: 9850c