Trading Naspers: Retreating From Sell Re-Entry Range + Considerations Updated With Current Model Data

Research Notes For 02 to 06 June > https://www.unum.capital/post/r0206june

Trade Local & Global Financial Markets with Unum Capital.

To get started, email tradingdesk@unum.co.za

Overall Trading Considerations

Naspers is currently unwinding from overbought conditions following a strong run since Q1. This context is critical for understanding the current price action, which shows signs of a short-term pullback within a broader upward trend.

Here's a breakdown of the current price action: The 7-day trend is indicated as "Weak," while the 14-day trend is "Rangebound."

Comparison: The short-term (7-day) trend has turned "Weak," while the slightly longer short-term (14-day) trend has shifted to "Rangebound." This indicates that the strong upward momentum seen previously has stalled. The immediate trend is negative, suggesting profit-taking or a pause in buying pressure, leading the stock into a consolidation or sideways pattern over a two-week period.

Potential Trading Approach for Naspers (NPN):

Short Term (Approximately Next 1 to 10 Trading Days): The model notes, "Very Weak Wait Until It Stabilizes On The Lower Time Frame."

• Approach: The immediate outlook is weak, and the recommended approach is one of patience. Traders should avoid entering new long positions and wait for the price to show signs of stabilization on lower time frames (e.g., hourly, 4-hour charts). This suggests waiting for the selling pressure to subside and a potential base to form before considering any action.

Medium Term (Approximately Next 2 to 4 Weeks): The model indicates, "Steady Upward Trend But Weaker On Lower Time Frame Look For Support At or Just Below 50-EMA Followed By A Reclaim To Trigger Rebound Buy."

• Approach: The underlying medium-term trend remains upward, but it's being challenged by the current short-term weakness. The strategy here is to identify key support levels, specifically at or just below the 50-period Exponential Moving Average (EMA). A "rebound buy" would be triggered if the price finds support at this level and then reclaims it decisively, confirming that buyers are stepping back in.

Long Term (Approximately Next 5 to 8 Weeks): The model states, "Consolidating In An Upward Trend-If 8-EMA Is Breached Then Use The 21-EMA As An Accumulation Range."

• Approach: The long-term perspective views the current price action as a consolidation phase within a larger uptrend. This is a constructive outlook. If the shorter-term moving average (8-EMA) is breached (which is likely given the "Weak" 7-day trend), traders should view the area around the 21-EMA as a potential zone for accumulation or adding to long positions, anticipating the resumption of the primary uptrend.

Overall Trading Considerations for Naspers (NPN):

• Short-term weakness vs. longer-term strength: There is a clear divergence between the immediate bearish sentiment and the underlying medium-to-long-term bullish trend.

• Patience is key: The model advises against immediate action, emphasizing the need to wait for price stabilization and confirmation signals.

• Key support levels: The 50-EMA (medium term) and 21-EMA (long term) are identified as crucial levels for potential rebound and accumulation opportunities.

• Buying the dip strategy: The overall approach is not to sell into weakness but to strategically look for buying opportunities at lower levels once the current pullback shows signs of ending.

In summary, for Naspers (NPN), the current view is that the stock is undergoing a necessary short-term correction within a broader bullish structure. Traders should be patient, avoid chasing the price lower, and look for signs of stabilization at key technical support levels to position for a potential resumption of the upward trend.

The model points to a corrective phase within a general upward trend for the price of Naspers (NPN).

---

Here's a breakdown of the current price action for NASPERS:

• The 7-day trend is indicated as "Neutral," while the 14-day trend is "Rangebound."

• Comparison: The short-term (7-day) trend is neutral, suggesting a lack of clear directional momentum in the very recent past. The slightly longer short-term (14-day) trend is rangebound, indicating that the price has been fluctuating within a specific high and low without a sustained upward or downward movement. This suggests that while there isn't a strong directional bias in either timeframe, the 14-day view shows a period of consolidation rather than a clear trend.

  
  

• Potential Trading Approach for NASPERS:

  • [Short Term] Expected Time Period To Unfold: Approximately Within The Next 1 to 10 Trading Days: The model notes, "Upward Trend But Has Turned Weaker, However Use Rebounds Into The 8, 21 or 50-EMA As A Potential Sell Short Range."

    • Approach: While there might have been an upward trend, it's now showing weakness. Consider using bounces up to the 8, 21, or 50-period Exponential Moving Averages (EMAs) as potential opportunities to sell short within the current range.

  • [Medium Term] Expected Time Period To Unfold: Approximately Within The Next 2 to 4 Weeks | Apply Daily/Weekly Moving Averages Where Applicable: The model indicates, "Bullish Momentum Is Slowing On Lower Time Frames-Look For Minor Support On 8, 21 or 50-Day EMA As A Buy Range For A Rebound."

    • Approach: Bullish momentum is weakening in the shorter timeframes. Look for potential buying opportunities (buy range) around the 8, 21, or 50-day EMAs for a possible rebound.

  • [Long Term] Expected Time Period To Unfold: Approximately Within The Next 5 to 8 Weeks | Apply Weekly Moving Averages & Time Frames (i.e. In Some Cases, Daily): The model states, "Buyers In Control But Weakness On Lower Time Frame-Look For Pullback To 8 or 21-EMA (Buy Range) Before Next Move Higher."

    • Approach: Buyers are generally in control, but there's short-term weakness. Look for potential pullbacks to the 8 or 21-period EMAs as buying opportunities before the price potentially moves higher.

      
      

• Overall Trading Considerations for NASPERS:

  • Conflicting signals: The short-term is neutral to bearish (looking for shorts on rebounds), while the medium and long terms suggest bullish control but with opportunities to buy on weakness (pullbacks).

  • Short-term strategy: Focus on selling short on bounces within the range.

  • Medium-term strategy: Look for buying opportunities on dips to support levels (EMAs) for a potential rebound.

  • Long-term strategy: Maintain a bullish bias, anticipating buying opportunities on pullbacks before a further upward move.

In summary, for NASPERS, the current view suggests a short-term rangebound market with opportunities to sell short on strength, while the medium and long terms lean bullish, favoring buying on weakness.

Lester Davids

Senior Investment Analyst: Unum Capital