South Africa: Lead, Nickel Take the Shine From Gold

South Africa: Lead, Nickel Take the Shine From Gold

BOTH the rand and the dollar gold prices are stagnating at around their current levels, but the demand for industrial resources continues at a brisk pace. Lead, for example has gained 66% since mid-June and nickel almost 200% in the past 12 months. The chart shows that over the past 18 months, the basic minerals index rose at much the same pace as the gold share index and is now outperforming it.

About 77% of Anglo’s profit comes from industrial commodities including base and ferrous metals and industrial minerals. Currently moving down from an overbought level, but with a count to R397, Anglo is worth considering in its next dip. ARM is heavily involved in nickel and ferrous metal and looking a little overbought, but with a count to R86, it’s worth a look. Also moving down from an overbought position is BHP Billiton, whose last quarterly report tells of record production in aluminium and manganese ore, and has a count to R177.

Heavily involved in coal, Metorex with a count to R16, is nudging at an overbought position and is likely to move sideways. Take care in Palamin as it is at its R51 count, is overbought and, while the longer-term outlook remains good, it may ease back in the short term. Mainly involved in iron ore, Kumba is easing back from an overbought position and might be watched for a buying opportunity. With the search on for alternative energy, uranium share SXR is of particular interest. SXR shot past its R70 count to a well-overbought level on news that workers at Rio Tinto’s Rossing plant are on strike, and another competitor, Cameco, is suffering from flooding.

The dollar price of platinum is nudging up from an oversold level, but its rand price remains oversold. However the platinum share index heads upwards to nudge at some tough resistance at around 74000. The index has given a new count to around 89717.

Last week’s front runner was Northam, but, at an overbought position, is likely to move sideways for a while or lose slightly. Angloplats gained well and is not overbought, but might hesitate before it makes its way upwards to its next count to R892. Also well short of an overbought level, Implats heads towards its R1386 count but may also hesitate. Exploration company Weiszwe, put on almost 50% to a massively overbought level on news that drilling results were positive and that a pre-feasibility study will be released early next year.

While its price gave a slight upward kick rather than because oil market, Sasol’s downward tick came from renewed threats of an investment-linked tax. As yet charts continue to generally point upwards, but, until the tax issue is resolved investment, cannot be recommended.

In golds, Anglogold shot skywards. Despite the rise, Anglogold is not yet overbought and has a count to around R365 which may take a while to reach. Harmony is approaching an area of resistance at around R119, which must be broken before it can continue to its next count to around R121. Afgold continues to potter around the R2,50 level and charts warn that it may continue to do so for a while. Having pushed past its R3,15 count, Simmers’ new count is to R4,05.

However, as it’s expecting an 11,08c loss per share, the count may take a while to get there. Simmers is to acquire the infrastructure at Ezulwini from Harmony.

Low-traded Diamcor options shot upwards to 20c, but gamblers may still take a chance on this as well as Diamcor which touched R1,19.

The construction index reached a new high as Aveng pushed past its R30 count. Aveng may pause for a while before heading towards it latest count to R37. Also at a new high and pushing past its R35 count, with an order book of R16,5bn, M&R has given a new count to almost R44.

Not yet at its R11 count, Dawn may ease before continuing upwards. A new high well past its R35 count, Group 5’s next count is to around R47.

In industrial engineering, take a look at Kairos, which is moving up from an oversold position and may come up with a buy signal soon. There was a new high for Bell, which is not yet overbought, but it may not reach its R20 count this time around. The same applies to Hudaco, which is at a new high but may not reach its R58 count just yet.

Perhaps to be delisted, Shoprite moved up, but is not yet overbought and is still far from its next count to R31. Spar is nudging down from an overbought position, while Pick ‘n Pay and Pikwik toddle sideways.

Nuworld has pushed up through its stochastic moving average to give a short-term buy signal. Textile manufacturer, low-traded Seardel, has reached a new high and is overbought, but has given a count to R9,30. Seardel is likely to come into its own next year when locally made items will fill some of the rails currently occupied by Chinese imports. Even lower-traded local garment manufacturer Rex Truform has pushed up through its stochastic moving average.

While almost overbought, Unitrans has given a new count to R51 while CMH is about to confirm a new bull trend. JD Group is racing towards an overbought position but has given a new count to R85. Presently in buy-out talks, Edcon, which has a count to R38, dithers around an overbought level of the R35 and shorter-term charts point downwards. Woolies is overbought and likely to fall. Nuclicks is moving sharply downwards from an overbought level and is likely to lose more.

Computer software rats and mice trampoline from low to high and then back again. Vesta hit 10c while Gijimaast is at an eight month high of 73c. Paracon and BTG are on the way down and will soon reach oversold levels. More trustworthy shares Didata and Datatec continue rising at a steady pace. Datatec has a count to almost R38 and Didata is almost at its R5,85 count.

Jean Temkin is the author of More Charting for Profit, a textbook on technical analysis.

Copyright © 2006 Business Day. All rights reserved.

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