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Technical Trade Note Clicks [JSE:CLS]

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Barry Dumas
Clicks-Technical-Trade-Note

UPDATE - Clicks Group Limited (CLS)

We have seen the share price surge this morning over 3% due to the inclusion of the stock into the MSCI Indices and as a result was stopped out of our trade on Clicks Group Limited (CLS) for a loss.

Sentiment: My sentiment is still with a P/E ratio of 38.97 the stock is overvalued and is due for a correction at some stage but hey that is just my opinion and clearly not what the market is expecting. On to the next one…..

Screen Shot 2018-05-15 at 12.36.29


Original Trade idea on Clicks Group Limited (CLS)

Clicks Group Limited (CLS) has had a great run over the last 12 months but seems to be turning lower from it’s high of 21706c. As seen in the chart there is a channel forming and the price needs to break and close below 20694c to trigger our short trade.

With the selloff in Dis-Chem Pharmacies Limited (DCP) last week clients might start to purchase Clicks Group Limited (CLS) shares as an attractive alternative in this sector which in turn might push the price action higher.

Note: EX-Dividend date is 27 June 2018.

Trade: Clicks Group Limited (CLS)

  • Entry (Sell): 20694c
  • Stop loss: 21706c
  • Target price: 19142c

Screen Shot 2018-05-08 at 11.24.49

Source: Bloomberg

Divergence: There is also divergence developing on the RSI that supports the move lower at this stage shown by the white dotted lines on the chart and RSI indicator.

Educational: USING DIVERGENCE 

Screen Shot 2018-05-08 at 11.30.12

Source: Bloomberg

 

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