Trade Idea: Richemont (CFR)

I've always viewed Richemont as a bull market stock. What do I mean? Well, when the ultra-wealthy look at their portfolio and see green, what better way is there to spend those after-tax gains on a fancy piece of jewelry? Similarly, red on their screen could see them refrain from stepping out and making a luxury purchase. This is where luxury stocks fit in. Over the last few months, the sector has been under pressure due to a drop-off in equity markets, not to mention the fact that the individual names (on JSE and in Europe) appear relatively expensive. On the back of a strong Rand, Richemont has been under pressure, declining from a peak of R135 in September to it's most recent lows of R88.74. Over the medium term I believe that lower levels are warranted however the short term technical setup may represent an opportunity to play to a potential short term 'bounce'. Both the RSI and MACD is signaling bullish divergence while the price is attempting to breach a 5/10MA cross. On this basis, I believe traders could look to take a buy/long position.

What about the out GDP figures and rand strength you may ask? Well, we have come off a low base and country's electricity supply is erratic. Q4 GDP? That could be a shocker. CFR could be a nice short term hedge.

These are the levels:

Buy/Long CFR at current levels 9112c
Stop-loss: 8850c
Take Profit Target: 9850c

Trade closed: target reached

LD_Perspectives

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LD_Perspectives