Just this Wednesday I spoke about being happy to sit on the sidelines and wait for the market to give me a clear indication before taking any more trades. I also spoke about the possibility of buying Imperial Holdings Ltd (IPL) as I believe that it will react positively when the transportation sector strike comes to an end.
This strike has now come to an end and I have now bought IPL. The news broke early this morning (click here for the article on Fin24.co.za) which prompted me to buy IPL in the opening auction at R182.05.
So, lets have a look at why I want to be in IPL. First of all, the valuation calculated in the Rock Capital office for the stock is around the R230.00 level thus, even with it currently trading close to R185.00, it is still trading at an approximate discount of 24%.
 |
| IPL - Weekly Chart |
Above is a weekly chart of IPL that indicates a very strong historic level that has now been tested. You might notice that there is a volume spike in the last week. This becomes more clear in the daily chart below.
 |
| IPL - Daily Chart |
As you can see from the daily chart, when the price dipped below the R176.00 historic level, the volume traded per day increased significantly. This indicates to me that there was accumulation that has taken at this level, which is a bullish signal for me. Further, there is bullish divergence present between the Stochastic Oscillator and the Price. In other words, the price is making lower lows, yet the stochastic has not done the same. This is also a bullish signal to me.
No comments:
Post a Comment