Technical Analysis: Micron Technologu Inc.

It's clear from a quick glance that the downtrend has broken coupled with a strong accumulation of buyers coming into the stock in the last six months. The steady upward momentum has reached a major resistance point at $20 which most would've thought could slow down the pace of buyers but this hasn't been the case. 

Price has pierced the upside of $20 and looks firm in its placement together with the recapturing of the area above the 200 day moving average adding the element of confluence to this chart. 

The steady uptrend in the MACD shows signs of a strong trend that could ensue in weeks to come as price re-establishes itself above this crucial support. 

Technical Analysis: Blackberry Limited.

Today I haven't drawn the usual upwards, downwards and sideway trend lines that I often exhibit in my blogs but chose rather to highlight an important aspect to keep in mind when considering technical analysis as a form of understanding price movements. 

To the left and right of the chart one will notice diminutive sized candles that hardly help establish the ideal buying and selling points while in the middle of the chart is filled with an explosion of the price range characterised by a rapid rise and fall that's indicative of a bubble. 

Hindsight would tell us we would be correct in our thinking however undertaking analysis on this basis will only show up after the fact. 

The quickening of price in either direction without a sustained test of the trend is never a feasible environment to trade in although the perception might imply it. 

A chart that possesses a smoothness and steadiness of trend as well as showcases neatness are more predictable than one which is erratic  and temperamental. 

Company Analysis: Life Healthcare Ltd.

Admittedly this stock drove my interest sheerly from the voluminous SENS statements that's been released this year and more particular in the second half of the year with much to digest.

Firstly it should be noted that the company had two major buyers acquiring it's shares throughout the year one of these being Allan Gray, the other Lazard Asset Management, a UK based fund that initially placed staked a 5% holding in the company but subsequently increased that to 10% in late September.

This came before the company announced an offer to buy the Alliance Medical Group, a leading provider of complex molecular and diagnostic imaging in Europe with headquarters in the UK. The progressive increase in holdings made by Lazard indicates a degree of confidence in unlocking value for this proposed purchase by Life Healthcare.

LHC Acquisition of Life Healthcare securities by clients of Lazard Asset Management (“Lazard”) https://t.co/hXeLZRwhyX

— JSE_SENS (@JSE_SENS) September 29, 2016

Data taken from MoneyWeb. For more go to:
http://www.moneyweb.co.za/tools-and-data/click-a-company/?shareCode=LHC

The deal is worth approximately R9 billion which lends some perspective to the scale of management's ambitions are working towards. Life Healthcare is currently valued at almost R33 billion so it's relevance in the bourse would be placed amongst the midcap selection. 

Management have said that they're looking to fund the deal with a range of financing options at their disposal such as a rights issue and loans facilities provided by various banks. 

Highlighted at the bottom of the table posted above shows the availability of shares that can still be issued and the number in issue. There's a good amount of flexibility in this respect and should be noted that the company has offered shareholders the choice of deciding whether to elect to receive dividends or take up new shares with profits distributed. 

This began in late 2015 and is continuing into the current activity in the company which implies management may have been eyeing this acquisition for some time but chose to wait for the results of the British referendum that's work favourable for them. 

Technical Analysis

On a technical basis it seems as if the stock price has found support along the R30 level which looks set to play an important part in delivering a good returns to traders and investors alike. 

The highlighted red area on the stochastic shows how many times the stock's price fell into the oversold territory during a five year period with circles pointing out the exact locations. The previous two occasions produced stellar results with the current situation possibly indicating the same prospects. 

Technical Analysis: Barrick Gold Corp.

Gold started the year off with high expectations following a tumultuous 2015 that saw the market come under attack from theme's such as the Chinese economic slowdown and the Fed's decision to alter the course of interest rates in the US to an upward trajectory. 

Needless to say the past few months haven't boded well for it's yearly performance and this stock is a good example of how gold miners have been adversely affected by the sudden weakness in the yellow metal.  

There was an amazing run up to the highs registered in June of this year against the backdrop of a staggering underperformance by this commodity for a number of years. The subsequent consolidation that happened between June and October produced a topping pattern in the form of a Head & Shoulders with the breakdown  occurring at the beginning of October.

Price had initially broken to the downside with a solid red candle but crept it's way above the neckline of the formation that made optimists hopefully of a resurgence however that has been short-lived ever since the price has reversed back down and begun it's descent once again.

Those trapped in long positions might find themselves compromised should the price be able to get lower than November lows with a heavy selloff expected.

The 50 day moving average has a negative gradient that's shaped itself out over the last few weeks which gives impetus to the sellers finding ways in tearing apart a good performance for the year.  

Technical Analysis: Yelp Inc.

A solid uptrend that's been in place over the medium term with a healthy an expected pullback occurring during the month of October. The interesting part about this is the price tested the trendline and responded with a firm candle in an upward direction.

The short term moving averages of 8 & 21 provided the signal for traders to get in but the aftermath leaves little to be excited about. The shorter moving average of 8 (yellow line) has breached underneath the 21 moving average (blue line) suggesting a bearish sentiment taking control over proceedings.

Considering the placement of price currently and the less than desirable bounce off the trendline with a renewed test happening quite shortly after the initial pullback indicates there could be a lack of conviction in this stock.

Company Analysis: Murray & Roberts Holdings Ltd.

The construction industry in South Africa has faced an uphill battle following the conclusion of the largest infrastructure program tendered out by government in successfully winning the bid to host the 2010 Soccer World Cup that placed a mandate to upgrade existing facilities and in some instances building brand new amenities to cater for the needs of hundred of thousands of tourists attending the soccer spectacle.

Rapid Rail or Tepid Sail???

Murray & Roberts was one part of the construction consortium brought in by government to implement the required expansion before June 2010 which added an extra element of time risk to the projects given the enormity of scale in what was needed to be achieved as well as in terms of the lucrative value attached to finalising the projects.

The company's main project came in constructing Africa's first rapid rail transit system together with an operating license valid for fifteen years after the completion of the project. The Gautrain offered investors in the company a chance to get in on a share of a project that had enormous potential in expansion from the initial phase as well as being rewarded from a steady income of concessions obtained from the operation of the transit system.

However as fate would have it, construction costs ran over budget while time kept ticking away and although the company was able to deliver the service on time, disputes were raised by the Gauteng Provincial Government over the responsibility of the costs to the segments of the delivered project that hadn't gone to plan in budgetary terms.

Many saw these actions as delay tactics by government in trying to lower the cost it paid for the project while others saw it as a necessity given the accelerated progress that was needed to complete it as well as considering the initial cost proposed by government and the final cost count was largely out of proportion.

Having dragged out the matter long enough both parties decided to settle their disputes in the interest of focusing on running the transit system to full capacity in an effort to sell the idea of a third phase to the project which would see the reach of system extended to the outskirts of the main cities.

All the while investors patience in tapping into the lucrativeness of the contract faded with every proceeding year the disputes lay unconcluded while the company was found wanting in having been found guilty in colluding with other companies in the sector in charging the government exorbitant amounts for completing the projects.        

Bombela Concession Company, in which Murray & Roberts has 33%, and the Gauteng Provincial have agreed to settle of all #Gautrain disputes. pic.twitter.com/3vQRZuxlry

— Justin Brown (@JustinBrownSA) November 18, 2016  

Read more here: http://www.iol.co.za/business/companies/gautengs-bombela-deal-buoys-mr-2091758 

Top Left Bottom Right

Murray & Roberts Holdings Ltd.

From the time highs made in 2007 there's been a consistent downward direction in place that's hardly produced any opportunity to the upside. More interesting are the price movements endured in recent times especially when you look at the highs made in the beginning of 2014 and the lows touched this year which represent a mere 33% of those previous levels.

What lies ahead?

The dismal performance in recent years has meant M&R management have no other choice but to restructure the business given the dry up of projects in South Africa due to the lack of trust between them and government and not forgetting the downturn in economic growth in the continent of Africa which the Group concentrated vigorously in finding new sources of revenue.

An announcement made by management surrounding the sale of the Group's Infrastructure and Building Platform operations are stark indications that it no longer sees opportunity in doing business with government and instead has decided to place its attention on infrastructure within the natural resources sector.

However jumping into an industry that's had its own fair share of misgivings over the past five years does present risks that might not make every investor comfortable with taking on especially when considering the major commodity producers have taken to size down on expansionary projects in the last year in an effort to cut back on debt.  

MUR Disposal of the Murray & Roberts Infrastructure & Building Platform and Withdrawal of Cautionary Announcem... https://t.co/GyAafUm4ea

— JSE_SENS (@JSE_SENS) November 1, 2016

Fundamental Analysis

A decent size company of R5 billion although much smaller to what it had been, there's scope to see some upside however with the company going through a transition it could take time before the true value is unlocked. 

The P/E ratio is suggesting the stock is cheap with the Net Asset Value showing that investors would be receiving the stock at a 50% discount at current levels. 

There's still quite a bit of shares available to issue which does play favourable to management who might utilise such capital to expand the company's ambitions.

Technical Analysis: Las Vegas Sands Corp.

In terms of price performance this stock has done relatively well in the last year most notably in the second half of 2016 where a steady uptrend has developed in guiding the price off yearly lows that occurred sometime back.  

Nonetheless the uptrend that had been supporting the steadiness in price of late has broken to the downside in dramatic fashion leaving trend followers unattracted in taking a position. The positive gradient of both the 50 day & 200 day moving average did add an element of bullism to this stock but as a result of price falling below the 50, this would need to be re-assessed. 

However all is not lost in that price found support along the lateral level of $54 which is defined as a medium term area. The bounce that materialised was hardly spectacular but the fact it lifted fractionally off a round number such as this one shows there are buyers around. 

The most likely outcome we should see happening over the next few months will be a consolidation in price given the P/E ratio has quickened in a short period of time from just under 15 to over 30. This kind of valuation would support a need for a pullback in the near term and yesterday's price action signals the beginning of the process.  

Company Analysis: Metrofile Holdings Ltd.

Metrofile has been a stock that's performed outstandingly throughout the years possibly because it's business model isn't difficult to understand and the services it provides of storing documents, the majority of which comes from sectors of the economy where government makes it a requirement to hold documentation for a set period, is seen as an industry that lacks excitement yet contains the element of reliability during tougher economic times when the stability of revenue streams are hard to come by.

A pocket-sized company when compared to the likes of JSE giants such as Naspers or BHP Billiton but hardly a pushover when considering a market cap of over R2 billion as well as paying out stockholders a healthy dividend yield of 6.25% per annum, it's easy to see why so many investors have become attracted to this company especially given the variability of earnings in other segments of the equity market.  

Data taken from MoneyWeb.
www.moneyweb.co.za 

However the Price to Earnings ratio of 15.74 is sure to make prospective buyers consider their choices a little better as this would suggest the stock is hardly cheap.

The information that drew the most of my attention was the Authorised Shares that can be issued and the actual number of Issued Shares in circulation. A quick glance reveals that there are about 73 million shares still available to be issued after an initial 500 million was authorised. This would imply that should the company wish to expand operation it has the option open to approach stockholders in raising further capital requirements however this scheme could become limited unless a resolution is passed and more shares authorised to issue.

MFL Addendum to subscription agreement entered into between Metrofile and MIC Investment Holdings Pty Ltd ("MI... https://t.co/o792xmtHOU

— JSE_SENS (@JSE_SENS) December 5, 2016

This leads us to the next point of observation where there is a proposed agreement in place between Metrofile and MIC Investment Holdings (Pty) Ltd for the subscription of 8 million Metrofile shares by MIC in exchange for cash.

It's important to note that MIC (Mineworkers Investment Company) is currently the largest shareholder of Metrofile with 34.41% stake in the business which contributes the biggest share to Metrofile's status as a black-owned company which sits at over 53%.

Although the 8 million shares being issued to MIC only represents 1,87% of total shares issued it does indicate top management's intentions of being on the charm offense when implementing its strategy. Since the need for it's services are directly generated from government's involvement in legislating the storage of documents for regulatory purposes as well as utilising the services of companies such as these in storing their own documents, it makes sense to be top rated in terms of BEE which could be the distinguishing mark for the industry in the future.  

From a technical standpoint the price has been in a consolidatory range for a number of months but when weighed up against the momentous rally that took place over a series of four years any form of pause in the trend makes sense. 

The issue of new stock will dilute earnings in the future but not to a dramatic extent however it could ensure the trend of consolidation continues until real growth earnings is found once again. 

Levels to watch are R5.50 as the resistance and R4.00 as support with both these prices playing a crucial part in holding back or keeping up the trend.   

Technical Analysis: Synergy Pharmaceuticals Inc.

Synergy Pharmaceuticals Inc.

After bottoming out with an undersized double bottom price has managed to find it's legs and put on a superb performance in the past six months however momentum has slowed down in recent weeks as price begins to meet resistance at just under $6.

Although the degree of optimism may have tapered off following this there is still hope of an upside breakout occurring with evidence of a large cup and handle formation in place readying itself.

The stochastic is lying in the overbought region but it doesn't put any stop to the ambitions of the bulls besides price resistance.

Given the fact that price has fallen dramatically long term investors will be eager to see their breakeven marks being returned.

The Closing Position: A Wrap of this Week's Blogs

#TechnicalAnalysis: Chesapeake Energy Corp. https://t.co/tJOQSJrqWj #trading #stockmarket $CHK #NYSE $SPX $SPY $DJIA #commodities pic.twitter.com/8K7FrfII4N

— Quinton Mendes (@CadeTradeR) December 2, 2016

#TechncialAnalysis: Dollar General Corp. https://t.co/dyQJrO3g7m $DG #trading #stockmarket $SPX $SPY $DJIA $EURUSD #NYSE pic.twitter.com/T1mqP7xab6

— Quinton Mendes (@CadeTradeR) December 2, 2016

#TechnicalAnalysis of Xilinx Inc. https://t.co/GUodwbGVFl $XLNX #trading #stockmarket #NASDAQ $SPX $SPY $QQQ $DJIA pic.twitter.com/HZQOlD6nim

— Quinton Mendes (@CadeTradeR) November 30, 2016

#TechnicalAnalysis: United States Steel Corp. https://t.co/gZS4sVQ07I #trading #stockmarket #investing $SPY $SPX $DJIA #commodities pic.twitter.com/CgDA63iAIP

— Quinton Mendes (@CadeTradeR) November 30, 2016

Are investors ignoring the risks of #Italy's referendum? https://t.co/9LEjCiMJG4#trading #investing #stockmarket $SPX $SPY $DJIA

— Quinton Mendes (@CadeTradeR) November 29, 2016

Technical Analysis: Chesapeake Energy Corp.

Following the announcement of OPEC's commitment to cutting oil production in the near term, prices of oil stocks have received an added boost after experiencing stagnancy for a number of months after an impressive rebound began at the start of this year. 

Chesapeake Energy is one such stock with some interesting development currently underway which could see further gains made on lost ground. 

From a trending perspective there doesn't seem to be a fixed support line that would assist trader's in identifying buying areas however there are signs of upward momentum in place when observing the series' of higher highs and higher lows as shown by the circled points. 

The RSI built a healthy dose of momentum leading up to the peak in prices during September but subsequently fell below the all important 50 mark that indicates the presence of buyers. 

The current level is back above 50 with a recent retest and bounce amongst critical support suggesting a buyers market accelerating which could motivate traders to breakthrough $8 and upwards.    

Technical Analysis: Dollar General Corp.

Dollar General Corp.

Often a rare technical pattern yet impactful to say the least, this cup and handle formation with the lower high located on the left hand side of the chart has showcased how lethal it can be to either side of optimism or pessimism. Up to the point where the breakdown occurred, this stock was following a upward trend in an orderly fashion with a considerable amount of upside potential.

The combination of the 8 & 21 day moving average appears to have been a good indicator of direction of the trend with the current reading marking a bearish sentiment. The price action at $80 is what interests me the most and subsequently forms the line of polarity as seen on previous occasions.

On the first attempt to surge higher the buyers lacked conviction which resulted in the price drifting lower however the second attempt left no one uncertain of the direction of the trend. It's also important to note that the price found support along this line a number of times before the swift move downwards encroached on traders bullism.

In saying this, if we are to witness a comeback from the bulls from these levels we'll need to see a solid candle that engulfs the $80 level but as things stand this looks unlikely for a few reasons.

Price is meeting opposition against the 21 day moving average at the same point of lateral resistance. This confluence will definitely favour the sellers together with the overbought reading on the stochastic.  

Technical Analysis: Xilinx Inc.

Xilinx Inc.

After an initial rejection of yearly resistance followed by a resurgence of buyers interest occurring during the pullback phase, the captive attention of traders has grown significantly enough to warrant a closer inspection to the developments happening in this stock at present with a strong indication of bullish momentum dominating direction from here onwards.

The price performance in the second half of this year has been responsible for generating much of the hype around the stock after it found support at $43 in an otherwise shapeless market and is yet to look back on the impressive grounds gained up until today. 

Resistance just over $55 was always going to interrupt proceedings given the relatively trendless price formations in place however it might only provide a momentary pause when analysing the RSI which managed to hold onto the 50 level, indicating a vigorous attempt from the bulls in defeating price resistance.

The rebound off $49 and back towards this year's highs may have caught laggard shorts who sold into the move downwards with evidence of deep selling as suggested in the recent weekly candles. 

Technical Analysis: United States Steel Corp.

United States Steel Corp.

From the lows of $16 experienced in September till present this stock's price has doubled in value leaving many traders anticipating a reversal in trend when judging the steepness of the incline in price. In understanding the reasons to why we've seen a surge in price over a relatively short span of time I think its fair to assume that this stock like so many others in the commodities space was heavily shorted given the poor sentiment built into the sector over the last few years. 

A sudden change in the supply and demand dynamics has caused a reactive response from traders who had been stubborn in changing their view however observing the trend in volumes does suggest the buyers might becoming absent once again after an impressive rally that's yielded great returns. 

I wouldn't be surprised to see a pullback incur in the weeks ahead as traders in profitable positions take advantage and begin selling off exposure while knowing markets are headed into the festive season. 

Can we ignore the run up to Italy's referendum?

When pundits and pollsters tracked the probabilities of a "Brexit" type outcome at the beginning of the year many had thought the possibilities weren't completely out of reach but the likely occurrence would see the British public support the idea of remaining within the Eurozone agreement after experiencing the beneficial configuration(and least to say the detrimental effects) of open borders amongst Europeans.

But as chance would have it the most improbable scenario markets could've foreseen descended into reality, heaving a worrisome blow to the market's perception over the acceptance of defective policies meted by politicians throughout Europe by its own citizens whom were underestimated in the strength of their convictions to effect change.  

Fast forward to the beginning of November and the same knee jerk reaction was felt when the announcement of Donald Trump as the US presidential elect caused market participant to re-consider the variability of polls and their purpose in measuring certainty.

Investor Who Backed Brexit Sees Euro Breaking Up Within 5 Years https://t.co/1hXzZ03KET via @stespezzati pic.twitter.com/1bF7OztQyD

— David Goodman (@_DavidGoodman) November 28, 2016

Being on the cusp of yet another referendum to be held in Italy over constitutional reform set to take place on the 4th December 2016, the market has surprisingly not learnt from its previous mistakes of the past and seemingly looks self-assured that Sunday's election won't significantly alter the viewpoint.

Unfortunately this unrealised risk poses the potential to reinforce the idea that cross border syndication of promoting the shift in policy away from socialism ideals into a nationalist-driven protection of sovereignty may be gaining momentum when considering the results of two major and decisive electoral outcomes.

Perhaps the disproportionate balance of views between investors and citizens can be understood by observing the dynamics in dealing with catastrophic economic circumstances where politicians have settled for maintaining the status quo and injected confidence in financial markets in allowing participants appetite for free money be feed with extended and expansive monetary programs whilst ignoring the issues on the ground.

Here are four things to watch for as Italy prepares to vote in a referendum called by prime minister Matteo Renzi https://t.co/qsJeeqvItk pic.twitter.com/Y7F5SR8r74

— Financial Times (@FT) November 25, 2016

However the miscalculated sentiment borne from these events compared to that of the situation unfolding in Italy doesn't match. Since scrapping the Lira in favour of the Euro back in 1999, Italian's have seen their economy plagued by chronic low growth, mass unemployment and uncompetitive manufacturing prices relative to its other European counterparts, namely Germany. With the advent of these events and the can kicking occupation of Brussels has led Rome into the most indebted economic states on record with little much resolution from the European Union in fixing it.

When weighing up the mood of Italians against that of the British or American public before their respective voting days, it's clear that there's abundant signs of dissatisfaction on the part of the former as opposed to the latter which simply cannot be ignored.

Tiger Brands pounces on it's skeptics with a rebound in results

South Africa's largest food producer Tiger Brands reported a healthier set of numbers for the full year ending 30th September 2016, giving investors a first glance at its business with the absence of a key asset Dangote Flour, a Nigerian flour mill the company had purchased four years ago that garnered sharp criticism from stockholders of what they believed to be management's overextended price tag paid in its acquisition as well as generating countless problems in adapting operations to differing business culture in countries other than its own.

A shake up in the top brass which saw CEO Peter Matlare replaced by Lawrence MacDougall has sped up the process of cutting away at deep losses, there's still much work to do in securing the company's long term path of sustainable earnings growth that's being threatened by new entrants.

Companies such as Rhodes Food Group who have emerged with ambitious plans to capture the market dominance of Tiger Brand's much beloved Koo brand, the preferred choice amongst consumers in the canned food market, has offered stiff competition to the company in a sector where it previously hadn't found the need to work on due to it's unadulterated support.        

South Africa's Tiger Brands FY profit up after Nigeria sale https://t.co/CJaQwxRpKB #Africa #business #news

— Business in Africa (@Afrinnovator) November 23, 2016

Consumers in South Africa are feeling the pinch more now than ever before with price of basic necessities making up a heavily weighted part of their decision in purchasing an essential product . The company may have successfully disguised it's premium priced goods by explaining them away with the severity of drought experience in South Africa, it shouldn't be expected to last longer once prices stabilise again whilst competitors consistently beat margins lower in an effort to capture market share.

Added to the dilemma that it's finding harder trade conditions in other African countries it's setup operations in, the established operations of the company will be under strain in feeding support to these areas of the business in the hopes of making a footprint on the continent however judging by previous endeavours shareholders can't be blamed for a degree of skepticism.

But when assessing the outlook of the global economy and the risk off nature markets have taken over the last year, it wouldn't be completely unrealistic to take a defensive view and in saying, Tiger Brands falls neatly into this category which can't be ignored.

From a valuation perspective, it's P/E ratio is hovering close to that of Pioneer Foods at around 17 but is slightly cheaper than Rhodes which sits at 21.

Is the shipping industry going through a bottoming phase?

Having noted the recent bankruptcy of South Korean shipping co Hanjin in September and subsequent announcement of a merger between Japan's three largest freight lining companies, it's pretty obvious that the strain seen in the shipping industry has taken on a new form with the resultant actions of these corporations pointing to a dire situation.

However there's been a fair amount of reaction to news feeding itself through that shows the optimism of traders awaiting signals of a rebound one of which was Donald Trump's surprise victory in the US presidential race that saw market's momentarily flummoxed in a blind-sided attempt to verify both the positive and negatives a Trump administration would bring to the world economy.

Trump's acceptance speech drew the most attention when he stated his intended purpose when taking office to start a program aimed at revitalising some of America's biggest inner cities in a bid to seek out growth the US had missed out on in these past years with the added benefit of boosting employment.

But Trump's victory didn't stop there, it lit a flame underneath the hopes and desperations of a small Greek based shipping company called DryShips Incorporated that's had creditors on it's heels for unpaid debt and stockholders wary of its aspirations when weighing up the bleak outlook of even the biggest operators within the sector.

$DRYS running from $4 to $100. Trump winning. All we need now is Armageddon to happen next week. pic.twitter.com/HKSHEn6EK6

— $NIPER TRADE$ (@vicerock4) November 15, 2016

A highly shorted stock, the surge in sudden optimism from Trump's victory based on the premise of an uptick in demand for trade in dry goods, products which DryShips Inc. moves for commodity producers, would shift the dynamics in favour of survival as opposed to bankruptcy as has been the case for some time.

Nonetheless the degree of short interest in the stock had been so severe that it caused the price to explode from less than $10 to over $100 in a matter of days and subsequently back down to $10 again. The occurrence of such an event is stirring up conversation amongst traders who are debating the tangibility behind the move and what it could be suggesting about the shipping industry.    

If there's one thing that does stick out it's the fact that the shipping industry has been sold off heavily over the past few years and the sudden change in tone has entered the possibility of a bottoming out phase in the minds of traders. In saying that it's highly doubtful that the negative press the shipping industry is receiving at the moment will simply go away in a hurry.

It's by this thought that gives rise to the awareness of bit-size optimisms that begin to trickle through as to the state of the shipping industry and whether they hold enough substance to support the industry into the future. It's too early to say the definite direction but there's reasonable foundation to believe there's something happening in the sector.

PPC's poor performance goes beyond tough economic conditions

With fiercely growing competition and the presence of a protracted slowdown in the South African construction sector, Pretoria Portland Cement or better known as PPC Ltd. has yet to convince stockholders of it's intended recovery in progress as it reported another dismal set of half year earnings that were largely filled with higher financing costs.  

PPC's main competitor and relatively new entrant Sephaku Cement has grabbed a considerable size of the market share with the backing from well-known Nigerian cement producer, Dangote Cement owned by Africa's richest man, Aliko Dangote. The South African company's failure to reap a decent return from their expansion into the African continent and seemingly losing out on it's market dominant position in it's home country does point to a poor execution of strategy by it's management.

PPC Earnings Slump After Cement Maker’s Financing Costs Surge https://t.co/4Zw4iyarxk

— Tom Robbins (@BaragwanathBiz) November 16, 2016

Who can forget the publicly aimed spat the company's board had with former CEO Ketso Gordhan over his intentions to get rid of Chief Financial Officer Tryphosa Ramano for reason that weren't compelling to the board.

Gordhan's focus on cutting back on cost fell in line with the efforts made by current CEO Darryl Castle and in hindsight it's recognised that Gordhan's mission wasn't flawed when assessing the performance of the company after his departure.

What it does highlight is the impact such event can have on a company and in the case of PPC, occurring at a crucial moment in the company's esteemed history being faced with a tougher economic environment than usually experienced and the need to find new avenues to take advantage of Africa's growth engine all of which management has failed to do.

Had management left their ego's outside the boardroom they perhaps would've been better equipped to see the risks that lay ahead at that particular moment and concentrate their energy on protecting their market share instead of finding ways to line their pockets.

The Closing Position: Wrap of this Week's Blogs

Why systems aren't the only importance in #trading https://t.co/tgfAFDxz1l #stockmarket #forex $SPX $SPY $DJIA $DXY $EURUSD $GBPUSD $DXY

— Quinton Mendes (@CadeTradeR) November 14, 2016

How doubt affects the mindset of a trader? https://t.co/qR0WhpUOCZ #trading #stockmarket #forex $SPX $SPY $DJIA $EURUSD $GBPUSD $USDJPY $DXY

— Quinton Mendes (@CadeTradeR) November 15, 2016

Is your #trading being affected by recency bias? https://t.co/THPthYOX7q #stockmarket #forex $SPX $SPY $DJIA $DXY $EURUSD $GBPUSD $DXY #FTSE

— Quinton Mendes (@CadeTradeR) November 16, 2016

My thoughts on @SJosephBurns quote;

"The best traders are simply slaves to the market's price action" https://t.co/WTH2l0Z79x pic.twitter.com/CQUFejZJrn

— Quinton Mendes (@CadeTradeR) November 17, 2016

Is the jury still out on #Dischem's #JSE listing? https://t.co/qqWqvueRuk

— Quinton Mendes (@CadeTradeR) November 18, 2016

Are financial derivatives a necessity in #trading? https://t.co/R0460AdO7I #stockmarket #forex $SPX $SPY $DJIA $EURUSD $GBPUSD $USDJPY $DXY

— Quinton Mendes (@CadeTradeR) November 18, 2016

Is the jury still out on Dischem's JSE listing?

Although the fanfare generated around the listing of pharmaceutical retailer Dischem on the JSE today may have attracted a lot interest leading up to it's debut, there are a number of analysts who remain skeptical of its ability to deliver quality earnings to stockholders.

Besides this there has also been quite some displeasure from retail investors after the company decided to allocate its full placement with institutional investors rather than the former sparking fury over the company's failure to extend its reach closer to it's customers.

Social media has weighed in on the PR disaster with this particular poll attempting to gauge the true feeling of retail investors.  

The way @Dischem chose to exclude retail investors from the placement ahead of its listing on the #JSE makes me:

— Jack Adze (@4shizngizzles) November 18, 2016

From a trading perspective, the placement of the entire issue in the hands of institutional investors makes the prospects of liquidity bleak to say the least. If retail investors had a portion of the placement it would've created enough liquidity to drive price movements that would entice the interest of traders who'd be able to shape the price pathway of the company more clearly.

Does trading allow all the freedom you want?

One of the biggest allure's people have in gravitating towards a career as a trader rests on the notion that the freedom it affords those who make a success of it is probably the highest in the world. The error of falling into this line of thinking only makes its presence known when an aspirant trader, whose whole life has been shaped around rules and laws of society, finds misfortune at the opposite end of it's outcome leaving a vastly different perspective to a previously idealistic thought.

Although the freedom we attain through taking control of our financial well-being and shifting our profession from being boxed in under a job title into a much more independent role as sole decision maker with the liberty to stimulate our growth as we see necessary, the completeness of freedom should never be overstated.

I often recall the literature of the late Mark Douglas contained in his book Trading in the Zone where he spoke at length about the difficulty most traders find themselves in when dealing with contradictions stemming from their reluctance to depart from their habitual ways learnt from the ordinary process of being exposed to the world along with its beliefs.

However in markets nothing is ever fixed and no exact moment is replicated, it's in constant evolution from the status quo and as much as we'd like to think there's a hierarchy of intellectual authority on the market none such thing exists for freedom allows for the ease of adjustment to new information and not the imposition of an individual's opinion on the market.      

I found an excellent quote by Steve Burns, a leading mentor and author of numerous books on trading, that clearly described the trait of traders who've mastered the understanding of survival in financial markets by saying;  

The best traders are simply slaves to the market's price action.

— Steve Burns (@SJosephBurns) September 30, 2014

The fact of it all is we might believe there's a considerable amount of freedom attached to trading for a living, a trader's real success is bound to his ability to recognize the change in behaviour of the market before committing too far into a lost cause as well as how easily he can adapt to that change.

Price, in it's rawness, is the only indicator that accurately exhibits a true reflection of the market's mood at any point in time. Mastering the skill of understanding the tone of veracity displayed in the movement of price is a major step towards accepting your view on the market is singular and possibly possesses flaws which can only be verified through the process of market action.

Why systems aren't the only importance in trading

I stumbled across an interesting tweet this morning that came from Assad Tannous, the founder of Asenna Capital and much revered trader within the trading community having accumulated a wealth of experience through personal encounters in financial markets and offering pearl's of wisdom he learnt from his time as a novice most of which aspiring traders face frequently.

Today's lesson came from a common fallacy accepted by new traders that leans towards placing a considerable amount of priority on developing a trading system while neglecting to recognize the importance of the other remaining aspects involved in trading that all play an important part in ensuring long term success.

I couldn't agree more with the statement as I can often recall going on a frantic search in finding the "Holy Grail" of systems that would generate me returns every time I decided to participate in markets only to be disappointed by the living with dogmatic results on most occasions.  

If trading is..
15% system,
15% risk management,
70% psychology,
Why do most traders spend 99% of their time working on developing systems.

— Assad Tannous (@AsennaWealth) November 14, 2016

But here's the thing, our expectation on markets to perform consistently and profitably over time can be no further from the truth and because we take up these unrealistic presumptions we constantly find ourselves falling into the trap of either tinkering with the existing system by making it more complicated or heading on a renewed mission to find a new one that coincides with current conditions that simply goes "broke" after the market changes appearance.  

And while trading systems form an integral part of the entire trading process, being able to acknowledge it's effectiveness under certain pressures when active holds a greater value to your success as a trader than mindlessly executing a system that can't cope 3/4 of the time.

A trading system provides the structural characteristics of a trade with the goal of promoting organisational flow which allows you to observe your trade performance in an analytical manner, helping you to easily identify areas of improvement.

Risk management should remain in place at all times as an acknowledgement on the part of the trader recognising the markets ability to transition from a favourable environment into a climate that becomes indifferent to rules, reason and return in quick succession.

Finally, psychology is needed to help the trader better cope with these transitional periods, requiring the bulk of a trader's energies in understanding that probably the greatest source of emotional instability is produced from that which we are not in control of.

Processing emotions properly assists the trader in freeing up the pressures of having the feeling of restlessness interrupt the normal course of placing a trade which becomes distorted in not realising the control over the system and risk management.  

Have markets become difficult to trade?

There’s a seemingly stale mood hanging around financial markets since Wednesday after the unexpected election of Donald Trump as the president-elect of the United States of America that caught most off guard and added yet another degree of complexity to an already complicated economic outlook.

Having avoided the event by sitting on the sidelines due to the volatile nature often associated with major political and economic outcomes, I’ve found my trading activity continues to be intimidated by the fear of uncertainty that’s extending it’s presence over financial markets as participants attempt to understand the good(or bad) fortunes that may be brought into the future.

Since the occurrence of the divisive “Brexit” vote which was held on the 23rd June 2016, markets around the world have had the shine with which they once offered handsome returns from, abruptly taken away as ordinary citizens send a stern message to politicians that complacency that’s wrought significant policy decisions will no longer being tolerated.

The first indications of a poor trading environment happened when markets found stability sometime during August when a handful of opportunities exhibited themselves with all the hallmarks of a high probability setup.

From this analysis I decided to seek out setups that possessed the highest possible chance of succeeding which was influenced by the lack of direction and poor performance of markets during the year. My thought process stemmed from the idea that by selectively choosing the best setups to trade might aid my efforts to a decent return that had escaped me this year.

But the failure of every single trade I put on whilst spending a considerable amount of time finding them was enough for me to conclude that the difficulty in picking the right trade was substantially higher than it had been in prior years and thus necessary for me to taper off my trading activity until some traction in either a upward or downward trend can be found.

In saying this my strategy will be paying close attention to multi-year highs and lows of major world indices so as to gauge direction, most particularly when price nears them with a focus on a convincing break up or down as this could possibly indicate a break out of the motionless sideway range but more importantly a shift towards trendiness.

The absence of trendiness as a feature in markets has meant most traders have found it hard to churn out a profit in the last year let alone the last month. The fact that it’s occurred more frequently in recent times does suggest many may have taken the hint and opted to watch proceedings without taking part and in essences saving themselves from ruining their account.

If I’m going to be confident in the markets ability to find a direction, I’ll need to see a strong indication that exposure is being taken up and participation flowing freely again. Until then I’m treading cautiously and patiently in the hope that the uncertainty clears up and we’re able to see conviction in the movements of markets.

Will Mexico's relations with the US change under Trump?

The last few days of trade in financial markets worldwide has been characterised by a mild dose of uncertainty mixed with high outputs of volatility generated from a shock victory of Donald Trump as the president-elect of the United States after he defied all expectations of a landslide defeat and secured his spot in the Oval Office for the next four years.

Although the banter around Trump's victory simply won't go away anytime soon, the adjustment to the type and character of administration he would assemble prior to his appointment on the 20th January next year has driven the markets to hastily assess the variability of his rhetoric and decipher whether the effects will be positive or negative.

Yesterday we saw a major selloff in most asset classes following the prospects of Trump securing the the nod from American voters which was assertively returned to the levels of the previous close later in the day when Trump delivered his first speech after his victory was declared which resonated loudly with the chances of seeing a boost in infrastructure spend, a policy issue the Republican party has been pressing the incumbent administration on for months now.

The ups and downs of Mexico’s peso during the U.S. election https://t.co/huVKDZSycc pic.twitter.com/EDXy23z0JF

— Bloomberg Markets (@markets) November 9, 2016

However the instrument that drew the most attention was the gigantic 14.5% depreciation in the Mexican Peso against the US Dollar based on comments made by Trump in the earlier days of his presidential nomination candidacy for the Republican party. The comments have seemingly followed him throughout his entire campaign serving as a backdrop to what many believe highlights the grave shortcomings in Trump's ability to lead the United States, implying he shows no consideration for the rights of other people besides Americans.

We can only expect firm convictions from Trump once he takes office in appeasing the masses who turned their backs on the mantra of "Yes We Can" instead opting to focus on making "America Great Again" on the back of promises to exclusively allocate it's energies to the needs of the United States whilst stepping away from its responsibilities as the leader of the Free World.

In theoretical terms it might sound feasible, practically speaking it's devoid of any sense of realism and the ease with which Trump may have attested to the speed in how quickly he can get things done, there is a feeling he might be met with more political barricade's than he could've ever imagined making this move one of many battles his going to face as president, if not the largest.

Donald Trump sweeps to victory in a landmark US presidential election

Possibly the biggest upsets in recent US political history, Donald J. Trump overcame his seasoned Democratic opponent Hillary Clinton to seal his fate in becoming the 45th President of the United States of America. The property tycoon's critics stood perplexed as the results continued to pour in and the likelihood of a Trump presidency transitioned from impossible into a reality.

In a strong wielded message to the political establishment, Trump supporters have shaken the core of American politics by upending the promises made by those in office who fail to deliver and positioned themselves towards a grouping that resonates closely to their grievance in relations to the management of the economy.

BREAKING: DONALD TRUMP ELECTED PRESIDENT https://t.co/raG0r7TGId #ElectionNight pic.twitter.com/DNXw8JBLoL

— Bloomberg (@business) November 9, 2016

But what does Trump bring to the table?

The biggest issue is uncertainty in policy having endured through a number of blunders where his opinion has contradicted a previously stated view on the same topic. This type of political inexperience leads markets to believe his "bulldozing" approach to solving problems will likely be met with stiff resistance from both the Senate and House of Congress even though the Republican party has comfortably secured a major in both.

A political show down between the US president and opponents in his own party won't bode well for confidence and could hurt future prospects.

Trump did however express an intention to boost infrastructure spend in his acceptance speech, an issue that's been driven on debate by his own party over a number of years. A boost in this sector of the economy could translate into real job creation and an expansion in economic activity.

However Trump's lack of a foreign policy and threats to renegotiating or scrapping existing trade agreements with long term partners has driven fear that his policies could throw world trade into disarray. This type of reaction is to be expected considering the levels of globalisation reached through progressive policies aimed at integrating countries closer to each other.

Protection of US goods and services will be high on the agenda for Trump if he wants to re-establish the manufacturing muscle his nation once boasted that has subsequently been taken away by the likes of China and many other nations offering cheap labour.

Although the US can't offer cheap labour it can find efficiency which will allow it to compete against these alternative products and services imported from abroad on top of the benefit of providing employment to millions of US citizens seeking income.  

In concluding inasmuch as the height of fears have been raised I believe Trump is likely to have access to some of the brightest minds to help him implement his plans but we'll have to wait to see who he brings on board when he enters the White House on the 20th January 2017 to be able to make a full assessment of the situation.

Hillary Clinton vs. Donald Trump ... who's it going to be?

As the world braces themselves for US election fanfare over the next 24 hours analysts have been hard at work trying to decipher the reaction financial markets might incur after the announcement of results are made on early Wednesday morning. So much has been said by both candidates in the build up of today's historic vote which makes the possibilities endless when attempting to predict a scenario.

Let's start with the favourite to win Hillary Clinton; With a wealth of political experience Mrs Clinton has all the attributes required to effectively lead the United States of America however not without scandal following close by. The personal emails sent by Clinton via a private server whilst in office as the Secretary of State has raised questionable doubts over her integrity in leading her country.  

Be it as it may her candidacy offers the better experience when compared to her opponent Donald Trump who may have decades of business acumen behind him yet lacks the niceties of operating in the political sphere.

Her marriage to Bill, the former President of the United States and their subsequent political dream team has meant the Clinton's have considerable stay power to influence policymakers within the Democrat's Party as well as being seen as a dynasty in American politics. This has also translated to a much broader scope globally where Bill is seen in a favourable light in most countries around the world.

Investors would probably see more certainty in a Clinton victory after featuring in current US President Barack Obama's first administration as the Secretary of State, with many expecting the same type of policy to be used by her if elected. She's said on previous occasions drug manufacturers and financial houses would receive more scrutiny under her presidency which many average Americans have applauded.

But more importantly than regulation of the economy, investors will want to see what action will be taken to help the US economy stray away from the bleakness of growth it's experienced since 2008. If Clinton's policy is anything like Obama's it's fair to say the priority of the economy will inevitably take a backseat although to be frank Clinton's campaign has focused largely on the upliftment of those found in difficult positions within the economy as opposed to sending a message of goodwill.  

Here's your cheat sheet for how markets will react to the #USElections2016 https://t.co/quVQQ678hT via @markets pic.twitter.com/4yCIfOTlCH

— Zoe Schneeweiss (@ZSchneeweiss) November 8, 2016

The outsider and proverbial loud mouth Donald Trump; Having made and lost his fortune several times in real estate, Trump's celebrity status has always been seen as a face of the American Dream of prosperity through hard work and determination. His appearance on the reality TV series, The Apprentice, helped define his character as a no-nonsense, straight talking sharp shooter that's often landed him in hot water on his campaign trail.  

His threat to build a wall between the US and Mexico and insisting on the latter to pay for it created a stir amongst the public with some quarters saying it showed Trump as a racist with a lack of views on foreign diplomacy which proved to be his achilles heel throughout the campaign.

As much as Trump may have accused the media of distorting information, he has continuously failed to lay down concrete policy that'll make less uncertainty. Instead his flip flopping on crucial matters has seen him hire and fire a number of campaign managers in order to inspire the right message, hardly the position any future president would want to find themselves in whilst dealing with defining situations.  

But the true attraction to Trump's campaign to the White House has been his gung-ho approach to dealing with issues that seemingly fall foul to political bureaucracy, a common theme found in the current administration suggesting a growing sense of discord amongst the public.

If elected Trump would likely shake up the US economy by looking to find efficiency rather than kicking the can down the road however his success in doing that will depend on the foundation of how he presents his proposals of change. If we have a repeat of what's been seen in questions over his foreign policy his likely to fail at every turn.

His foreign policy would promote protectionism of US products and services which could cause retaliation from other advanced nations and ultimately dismantle globalisation. If this were to be the case then the debate around Britain's exit from the European Union would have a strong footing to spring from with the US supporting it.

In the News Today

US Elections set for a tight race with Clinton tipped the favourite

Hardly anyone can say that the run up to this year's US Presidential Election hasn't lived up to the lively expectations it promised when candidates from both the Democratic and Republican parties started their campaigns months ago in a race to the White House with the contest reaching it's conclusive end heading into election day tomorrow.

But away from the low blows and side swipes handed to one another, come Wednesday after the results have been announced a victory celebration will be short lived as the real work begins in earnest with the inheritance of the current Obama Administration's issues of difficulty handed over to the next in line.  

Be it as it may the priority of the economy needs to take centre stage as the steadiness of the global outlook looks ever more uncertain in an environment of low to no inflation and negative interest rates coupled with lacklustre growth. The key for either Clinton or Trump will be a revival of confidence in the direction of the world economy which is largely influenced by the policy's set in the US.

How markets will react to the U.S. elections https://t.co/uaBUuzlRKy via @BV pic.twitter.com/e4XAA7xLQe

— Bloomberg (@business) November 7, 2016

Rejection of Chinese Deals raises doubts

As questions begin to mount over the benefits of globalisation, stats showing the rejection of proposed acquisitions of foreign companies by Chinese firms is headed for it's highest level since 2009 helping critics of the system point out another flaw in its uses as an economic regime amongst nations.

The most scrutinising nations include the United States and Germany whose policymakers both handed heavy blows to the aspiration of Chinese investors by stopping big deals dead in their tracks which could imply restrictive access to investing or a protection of sovereignity.

This chart shows the value of rejected Chinese acquisitions overseas https://t.co/f5gwa7BPcz pic.twitter.com/1zUGuHZid4

— Bloomberg (@business) November 7, 2016

Potential stockpile disruption could see oil prices spike

 A 5.0 earthquake in the town of Cushing, Oklahoma has pushed worries over the disruptions of oil supplies in the US as authorities attempt to verify the extent of the damaged caused near one of the world's largest oil storage facilities that has the potential to shut off thousands of gallons of fuel reaching end users.

However fears might be short lived as OPEC continues to battle infighting amongst its members heading into the second and final bi-annual meeting of 2016 due to be held at the end of November in which speculators had hoped would yield a positive outcome for the decline of oil production.

UPDATE: Fears of damage in Oklahoma after earthquake hits near one of world's key oil hubs https://t.co/xtqJEyWmO1 pic.twitter.com/Z7qZWePN8Q

— Bloomberg (@business) November 7, 2016

Egypt joins the party in removing currency peg

The Central Bank of Egypt moved swiftly to implement economic reforms in order to meet the required conditions set out by the International Monetary Fund that could secure a much needed $12 billion in loans from the organisation to ease the nation's woes following a suppressive period of political instability that's brought on interruption in key sectors within the economy, causing the necessitating flow of growth to be halted.  

Perhaps the most notable reform involves the peg on the country's currency, the Egyptian Pound, being scrapped in favour of a floating currency to facilitate the temptation of foreign investors to external funding to it's shores and replenish the gaping hole found in the nation's reserve's that's seemingly making it difficult for government to work around the depletion of funds to pay for essential imports.  

This move follows closer on the back of the Central Bank of Nigeria's decision to remove the peg on it's currency, the Naira, against the US Dollar based similar grounds to their northern neighbours.

Both countries have risen and fallen out the ranks of top African economy a number of times in the past few months with many economists saying the current economic situation is merely temporary and expect to see their respective economies to revive themselves after introducing these measures.  

Egypt jacks up rates by 300 bps and floats the currency. Massive https://t.co/DDIp5lQJRH

— David Ingles (@DavidInglesTV) November 3, 2016

At the time when Nigeria made the transition from a fixed exchange to a floating one I had said the move was a good decision and showed the economic policy maturity needed to accelerate the progression of its economy. I also said that we couldn't expect short term relief from it's implementation and stressed the importance of more being done to attract longer term funding.

My view would stay the same in the case of Egypt and probably any other country that applies a fixed rate exchange rate to it's currency. The interconnectedness of the world as a result of globalisation has meant the flow of capital is allowed the freedom to find its way into economic systems outside its borders.

In saying this, the quickness in expansion of monetary supply from major economies at low interest rates for an extended period has meant capital flight in exchange for return has effectively toppled over a once practical solution to control the trade between countries.

Furthermore its influential nature to promote the free market in economies where large inefficiencies had taken place essentially means the world is moving towards an openness in the dynamics of supply and demand where price is matched up against the scarcity of quantity.

Perhaps there are some advantages to Quantitative Easing ...

The world shipping industry set to shape up in the coming months

Signs of weaker economic outlook continue to remain clear as the announcement of a merger between Japan's three biggest shipping companies highlighted a formative trend within the industry towards finding efficiency in shipments, a marked shift from an inoperative plan of biding time with a "wait and see" approach in the hope it would buy shipping co's time to weather the global trade storm blown in from the turbulent hard landing felt in China.

The move isn't the first in the industry over the last year but it does cement the position of strategy being utilised by shipping & freight companies in response to a poor patch of earnings that have pressed shareholders to push management to shield them from the devastation that's seen container rates drop dramatically due to a surplus of containers coupled with low demand in trade.

This couldn't have come at a worse time for the shipping industry as it faces the huge task of paying down debt loads taken out just a few years earlier when demand was expected to remain healthy and consistent. We saw South Korea's Hanjin Shipping Co file for bankruptcy protection in September saying it was unable to secure the necessary guarantees from banks to see it through, possibly a reason we saw many in the industry applaud the move to merge so as to avoid fresh fears of imminent insolvencies amongst the top shippers.          

Merger of Mitsui O.S.K. Lines Ltd., Nippon Yusen K.K. and Kawasaki Kisen Kaisha Ltd. will create world’s... https://t.co/eyr6t846P7

— Transworld Group (@TransworldTweet) October 31, 2016

However in as much as the merger will create cost benefits as well as spread the debt burden evenly across the company so it's able to cope easier, the next point of departure will involve the process of turning the business into leaner operations that do away with inefficiencies and returns shareholders decent profit. That requires a restructuring program that'll certainly see the labour force reduced in the hordes which won't be welcomed by labour unions.

More importantly the industry is setting the basis from which policymakers might consider changing stance on the way in which policy is being implemented in the overall economy. If the lack of tenacity in economic activity is hindering the prospects for growth then there's a case for a reversion from the status quo into a system that promotes efficiency over expansion especially when caught in stagnancy.