Shoprite is the largest supermarket retailer on the African continent. Their latest quarterly update for the period ending in September 2019 reported the following: turnover increased by 7.3%, Supermarkets RSA grew sales by 10.3% during the quarter. The Group’s other operating segments, which include the OK Franchise, Computicket, MediRite pharmacies and Checkers Food Services, reported a 6.4% increase in sales. The OK Franchise division grew sales by 8.6%.
The stochastic indicator confirms the oversold situation of the share and the positive divergence implies that the probability for more upside is more likely.
The share is caught within a descending channel (positive) between line A (R105-73) and line B. The optimism of the formation was confirmed when line A changed into a support. The possible target of the formation is R118-59 should it play out.
The 3 & 8 day moving average are still pointing downwards and only when the shorter 3 day moving average (R106-47 – green line) break upwards through the longer 8 day moving average (R108-52 - red line) will the short term sentiment towards the share change to positive.
A tweezer bottom (positive) was confirmed above line C (R107).
For traders – Buy or consider a long above R107-20 but use R102-50 as stop loss to protect capital. The possible targets towards the top are: R109-20, R110-50, R111-55, R112-60, R114-15 and R116-05.
For medium to long term investors – The 40 week moving average (R123-17) on the weekly graph is still a resistance which means the long term sentiment towards the share is still negative.