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Trade insight example

Aspen Pharmcare Holdings Ltd

30 June 2014 

Aspen dropped by 6.19% on Friday, its largest in over five years after a guidance by the firm for softer second half earnings attributable to lower than anticipated government tender volumes around ARV’s and issues pertaining to supply problems around recently acquired products from Merck in South America. According to SENS there was a pre-closed period conference with the investment community that seemed to rub some the wrong way, or according to management had been misconstrued.

They maintain that the update was in fact in line with previously projected earnings for both the local and offshore operations as stipulated in the company’s previous interim presentation for 2014. The knee jerk reaction to the above would not have been helped by a strengthening of the Rand on Friday by more than 5c, where a Rand-hedge stock such as Aspens offshore earnings help deliver stronger local returns. – Leigh Riley, Premium Client Manager

Technical analysis

Technically the share opened with a bounce this morning following this sharp move lower on Friday. Aspen share price continues to trade well above its 200 day moving average and the primary long term trend remains bullish. I would like to see a move back above resistance level B. which will then offer further support to the upside.

There was a rising wedge pattern (A&B) which is a reversal or bearish pattern, the price moves upwards and highs and lows converge toward a single point known as the apex. This pattern failed and recently we saw a break out to the upside. A break of support line A. will be a reversal of any bullish move.  – Travis Robson, Head of Premium Client Management

Source: Trading Central

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