Massmart setting up for a move higher? $JSEMSM

12 Jul 2019

Massmart has been a serious under-performer in the retail sector this year, shedding some 37% off its levels seen at the end of last year. With the SARB likely to cut interest rates at their meeting next week, perhaps this will be a little kicker for consumers which should benefit most of our local retailers. The share may be just a little too oversold for the time being, and should we manage to break out this box between R61.50 to R67.60, we could see the counter make a counter trend rally up into the R77 - R80 range. This level of R80.00 was previously significant horizontal support which could now turn into resistance if we get there. What makes this R80 level more significant is the fact that this also coincides with a major downtrend which has been in place since the highs in March 18, which the stock has battled to overcome on 4 prior tests. The RSI indicator on the daily is also making higher lows, notwithstanding price which has gone sideways which further adds conviction to my bullish call in the short term. I would take my bets on a rally from current levels up to R77-R80, and perhaps if we do see that level it could be a great area to reverse the position short.