Short

TFG - Trade Idea

Since it's swing low on 10 July, TFG has been one of the strongest name within the SA Inc group, surging from a low of 52.81 to it's recent highs of 107.06. Was the move justified? It may have been, as market participants gave management it's due for navigating the 2020 crisis and while also producing results that was better than the market had expected. Although we have seen the stock trade at it's best levels since March, the weakness in the Rand over the last 2 days has started to out some pressure on local stocks. TFG , which operates in the discretionary retail space, may not be immune to any local economic weakness. For one, SA is in the midst of a hard lock-down until 15 January and not only will there be uncertainty with regards to the arrival of the vaccines, we note some European regions going into hard lock-downs (UK where TFG has operations), while Germany extends the lock-down as it daily death toll mounts. As mentioned, TFG operates in the discretionary retail space which may take a back seat to essential purchases over the short to medium term. Technically, the share has over the last few trading sessions breached two incline support levels, with the candle structure reflective of emerging selling pressure. We also note the 14-day RSI starting to drift below the 50 level while the near term 7-day RSI is further along the realm of weakness as it prints 38 while trending lower. We also note the price starting to lose it's current pivot as well as the 8 and 20-day exponential moving averages. On this basis, we think TFG is poised to roll over, thus traders could look to short/sell with the following levels:

Short/Sell TFG at current levels (R99.26) or higher
Stop-loss: 105.70
Targets: R93.80, R90.21

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