Short BidCorp today, as its rally peters out
Bidcorp's share price is hitting a ceiling after a V-shaped recovery from the March lows. The R280 to R290 is an area of congestion for the share price and a sustained break above R290 is unlikely. The downside risk is a return to the R250 level. We'll look at the chart in a minute.
Today marks BidCorp's financial year end and the past 6 months have been a tough environment with significant restrictions and lockdowns for the past three and a half months. Its half year results to 31 December 2019 weren't great.
The lockdowns and gradual re-opening of economies is expected to impact its earnings and outlook. Results are due end of August so there shouldn't be any upside surprises in the coming weeks that could see BID rally above R290, R300.
Take a look at the chart below to see the trade set up.
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Between R280 and R290, buyers and sellers jostle for power. This congestion zone has become a significant support and resistance level.
Right now it’s a resistance level to the recent rally.
The R250 area is where a wave of selling pressure was defended by buyers. It’s now a support level that traders will be eye for a price reversal.
As you can see, shorting BID above R287.50 for a pull back below R260 has a very good risk to reward ratio. Any spikes above R292.50 should be curtailed.
Short BID above R287.50 with a stop loss at R297.50 and a target price of R257.50.
Lock in a 71% gain on TFG short
Last week, we tipped a short on TFG above R75.00.
Traders were given ample opportunity to short well above R75.00 we even suggested shorting half your normal position above R75 and the next half as it approached R80.
This worked like clock-work and the share made a low of R65.63 yesterday. We still think it could fall to our target but don’t want to give up any gains.
Lock in gains by putting in a stop loss at R70.00. This will lock in at least R5 of gains and a geared gain of 71% on margin.
See you next week.
Contributing Editor, Money Morning