Investec: The Zebra Keeps Galloping
When managing your own money or that of clients, I'm sure there must be no better feeling than seeing a position continue to advance week after week, month after month. If you know me, you'd know that there isn't a more important question I'd ask than what your time horizon is. Over the last few years, it feels as if nearly every conversation has either started, or ended with the phrase, "it depends on your time horizon". You see, some guys are looking for 50c intraday on Firstrand while others are looking to catch the next R30 or R100 on Sasol. Both of these will happen over different time horizons, thus, the tools used to analyze the opportunity will be different.
What do I mean?
Well, you wouldn't really analyze a monthly chart if you're trading intraday nor would you analyze a 15-min chart if you expect to hold your position over many months or years.
Take for example Investec (INL), an idea which I published in February 2021 at price of R41.09. Utilizing the weekly chart, I noted the price emerging from a multi-month base and testing overhead resistance (not a bad thing). What also motivated my call was the monthly RSI trading at 44 (not even bullish yet) while the weekly RSI trade around 57. Notice how the spread between the two is widening?
Using weekly and monthly indicators offer one: sustainability.
If I can avoid switching in and out of positions every third day and have my positions continue to act well, then I would rather have that.
For short term trading, one requires a different mindset than for medium to long term portfolio management.
Also, you have to ask yourself: Is this a mean reversion trade, or is it a momentum/trend following trade?
One rule? Stay with names above the 200-day moving average. Of course there are caveats to that and additional filters which I like to apply.
For more information on how to incorporate long term, momentum-driven strategies, get in touch today.
What do I mean?
Well, you wouldn't really analyze a monthly chart if you're trading intraday nor would you analyze a 15-min chart if you expect to hold your position over many months or years.
Take for example Investec (INL), an idea which I published in February 2021 at price of R41.09. Utilizing the weekly chart, I noted the price emerging from a multi-month base and testing overhead resistance (not a bad thing). What also motivated my call was the monthly RSI trading at 44 (not even bullish yet) while the weekly RSI trade around 57. Notice how the spread between the two is widening?
Using weekly and monthly indicators offer one: sustainability.
If I can avoid switching in and out of positions every third day and have my positions continue to act well, then I would rather have that.
For short term trading, one requires a different mindset than for medium to long term portfolio management.
Also, you have to ask yourself: Is this a mean reversion trade, or is it a momentum/trend following trade?
One rule? Stay with names above the 200-day moving average. Of course there are caveats to that and additional filters which I like to apply.
For more information on how to incorporate long term, momentum-driven strategies, get in touch today.
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