BROKERS’ NOTES: Buy Steinhoff, sell Old Mutual

Petri Redelinghuys, trader and founder of Herenya Capital Advisors

BUY: Steinhoff

The controversial chart of the week goes to Steinhoff International, which shows a strong primary trend line support being tested and a decent long trade setup. It is easy to see a stop loss (below R2.40) with a sky-high target. Trend-following traders could employ a trailing stop loss to maximise the potential reward from this trade. This is a great risk-reward setup. Just remember that Steinhoff is now technically a penny stock, so trade a bit smaller and expect wilder moves. Steinhoff has had more than its fair share of troubles, but perhaps it is time to once again start paying attention to it as it is making progress with its recovery. Either way, I like the look of this chart and will be happy to get long in the new week.

SELL: Old Mutual

We are all familiar with the struggles Old Mutual has had with ex-CEO Peter Moyo. While it looks as if everything has gone in Old Mutual’s favour recently in this regard, we can never be sure the drama is completely over. Furthermore, while in its most recent operational update Old Mutual indicated that things were looking slightly better for it as a group (after a long and hard Covid period that did so much damage to so many), we saw BlackRock, the world’s biggest asset manager (and probably the real “smart money”) sell down a significant portion of its holdings in the stock. Combine all this  with a rather poor-looking chart and we get two price targets at R9.84 and R9.24. Keep in mind that this is a short-term trade, so stop loss at R11.46 and be sure to stick to it.