theodorepauw

Nedbank - Breakout from Bearish Pennant

Short
JSE:NED   NEDBANK GROUP LTD
South African banks are bearing the brunt of the economic impact of COVID-19 and lockdown.

Fundamentals:
  • Prior & ongoing recession
  • Weak ZAR
  • Low interest rates (limited profitability)
  • Decreased business activity
  • Pervasive credit losses & impairments

Technicals:
  • Breakout from bearish pennant
  • Decreasing RSI (not oversold yet)
  • Share price below 6SMA & 20SMA
  • 6SMA crossed 20SMA to the downside

A retest of the March lows is possible.

Target 1: 78.00
Target 2: 67.30
Stop Loss: 113.51

Our banks are robust and well-positioned to weather the current economic storm. Their price-to-book ratios are currently incredibly low and make for an attractive long-term play. The short-term outlook, however, is bleak.

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