Steinhoff continues to make news headlines with the amount of irregularities and fraudulent activities. Earlier this week it was reported that Steinhoff bought forest plantations in 2001 that were linked to executives and sold them three years later to the retailer for more than five times their original value. The forestry deal is similar to car dealership transactions Steinhoff carried out in 2007 where it bought properties from companies linked to Markus Jooste at a multiple of their initial value.

  • The amount of shares (241 million) that traded around R1-28 / R1-35 caught the eye. The jump was only possible through willing buyers and willing sellers.
  • An inverse head and shoulder formation was visible and also played out. An inverse head and shoulder is seen as a turn-around pattern after a share experienced a lot of pressure.
  • The 26 and 9day moving averages have crossed one another to the upside which confirms the mediumterm strength in the share price.
  • For traders - if you already own the shares, hold on as long as the share consolidates above line A (R2-65). If you want to chase the momentum buy as close as possible to line A but use R2-24 as stop loss to protect capital. If the share can consolidate above R3 we can see the share at R3-40 in time to come.
  • For medium to longterm investors - If you already own the share, do the same as traders above, but keep in mind, it is still an extremely risky share considering that there are many uncertainties to still resolve.

Don't hesitate to ask if anything is unclear.

Kind regards

Frans & Christelle