In today’s Daily Analysis I am going to change things up slightly. I am also going to ignore all the fundamental noise that is happening right now and base my analysis on technicals alone.
As I am passionate about the use of code to help identify potential trades, I have employed the use of a custom stock screener to identify a potential stock breakout.
I will first define the rules for the stock breakout, then we can analyse the chart.
- Close is above 50 day EMA (Marked by red dotted line on chart)
- Close is above 20 day EMA (Marked by green dotted line on chart)
- The 20 day EMA is above the 50 day EMA (we ensure that the trend is bullish, as we have a fast EMA above the 50 day EMA)
- Current Price is within 5% of the 52 week high.
SAPPI was one stock that was identified by my screener. As you can see by the chart this stock is adhering to the rules listed above and it is approaching the 52 week high as indicated by the blue solid line.
This stock has the potential to break out past the 52 day high and reach new highs.
It is testing the trend resistance line at 9,035 if it closes above that line, it then could be heading to the next major trend resistance area at 9,400 and then 9,800 in extension.
The custom screener also identified the following stocks adhering to the same rules:
Nedbank, Discovery, Foschini Group, Grindrod and Shoprite. You can investigate these stocks on your own as all have a potential to break out.
As you can see, the power of technology is no longer confined to institutions. Now retail traders can also take advantage of automated systems like this stock screener, allowing you to scan multiple markets simultaneously for potential trade setups.
Should you wish to set up your own stock screener, click here to contact us.
*All information in this article is the authors opinion and is for educational purposes only. It does not constitute investment advice or a solicitation to buy or sell any financial instrument. Trading may expose you to risk of loss greater than your deposits and is only suitable for experienced investors who have sufficient financial means to bear such risk.