Woolworths
WHL for possible Long positionJSE:WHL had a tough time last week with it's poor results, but it is lining up nicely for a recovery upwards.
Last week ended by it forming a bullish harami which is a strong reversal signal. This level is also a support/resistance level from the recent past which solidifies the signal.
If we were to enter a long position, I would wait for it to break into the gap formed last week at around the 5225 level with a target up at around 5465.
WHL...will we see a bullish break following trade updateWoolworth's once a defensive play on the higher SA LSM, failed to hold there ground following the acquisition of David Jones....
Given the various write-downs on the David Jones division, not to mention the various changes to management, the share price declined and found support around the R 48.00 handle, and most recently, found some legs to set an area of consolidation around the R 52.00-56.00 levels.
Next week (14th Jan) the stock reports first half earnings with the market expectations c. R 2.30 (down -9.00% to the comparable previous period).
I'm of the view that anything remotely inline or better could possibly result in a break above the resistance recorded at R 58.50 level!
With FY earnings estimated at R 3.64 this puts the stock on a forward PE of 15x earnings ...
Comparing other Food and Apparel retailers
Not really that expensive compared to a blend of MRP(clothing) trading at x21 and a SHP (food) trading at x19.
WOOLWORTHS ; JSEThe right shoulder of the Head And Shoulder pattern has formed a triangle as consolidating, the triangle is now broken out, we can either wait for the retest and enter on the retest or we can enter at the breakout of the neckline at the area around 5845 and aim to take profits at the most recent previous high/swing high around 6557.
