Trading Mr. Price

Research Notes For 16 to 20 June > https://www.unum.capital/post/r1620june

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Overall Trading Considerations

Here's a breakdown of the current price action for Mr. Price (MRP): The 7-day trend is indicated as "Oversold," while the 14-day trend is "Very Bearish."

Comparison: The short-term (7-day) "Oversold" condition suggests the price may have fallen too quickly and could be due for a pause or a minor bounce. However, the slightly longer short-term (14-day) trend is "Very Bearish," indicating significant and sustained selling pressure. This suggests that any short-term strength or stabilization might be temporary within a broader, more powerful downtrend.

Potential Trading Approach:

Short Term (Approximately Next 1 to 10 Trading Days):

• Model Note: "Sellers In Control Wait For Stabilization Before Considering A Buy."

• Approach: The dominant force is clearly sellers. The recommended approach is to remain on the sidelines and wait for the price to show signs of stabilizing (i.e., the selling pressure eases and the price stops falling) before even considering a purchase. This is a cautious, "wait-and-see" strategy.

Medium Term (Approximately Next 2 to 4 Weeks):

• Model Note: "Has Been Sold Aggressively-Look For A Continued Dip Before Minor Rebound."

• Approach: The outlook for the medium term continues to be bearish. The model anticipates that the aggressive selling will continue, pushing the price lower. It suggests looking for this final dip to complete before a small, corrective rebound might occur. This implies that the primary trend remains downward.

Long Term (Approximately Next 5 to 8 Weeks):

• Model Note: "The Share Has Been Weak, With Selling Pressure However There is a Probability of a Small Rebound."

• Approach: The long-term perspective confirms a weak trend dominated by selling pressure. However, it introduces the possibility of a "small rebound." This suggests that while the overall environment is negative, the persistent weakness could eventually lead to a minor relief rally, but it does not yet indicate a major trend reversal.

Summary of Trading Considerations:

• Consistent Bearish Momentum: Both the 7-day and 14-day trends point to significant weakness and selling pressure.

• Short-Term Patience Required: The immediate advice is to avoid buying and wait for the price to find a floor and stabilize.

• Medium-Term Weakness Expected: The trend of aggressive selling is likely to continue in the coming weeks, suggesting further downside before any notable rebound.

• Long-Term Weakness with Rebound Potential: The overarching trend is weak, but the potential for a minor rebound exists. This is not a signal of a long-term bottom but rather a potential short-lived price increase against the primary trend.

In summary, the current view for Mr. Price (MRP) is bearish across all timeframes. The model suggests that sellers are firmly in control, and any buying considerations should be delayed until clear signs of price stabilization emerge. The potential for a "rebound" is mentioned but appears to be minor and corrective in nature, rather than a significant shift in the overall downward trend.

Lester Davids

Senior Investment Analyst: Unum Capital