OUT trade ideas
$JSEOUT - OUTsurance: Bulls Take A Much Needed BreatherSee link below for previous analysis.
The bulls proved to be more dominant than i anticipated and took the stock to new all time highs.
This has prompted an update of the five wave impulse move from March 2020 to 4600 cps.
The bulls appear to be taking a breather for wave which has been a shallow correction thus far, further indicating that they are still in charge.
Though hard to say where the low will be at this stage, the outlook is still bullish.
Our opinion on the current state of OUTOUTsurance (OUT) assumed the listing of Rand Merchant Insurance (RMI) effective from 7th December 2022. Following this transition, RMI divested its interests in Discovery (DSY) and Momentum (MTM), and divested its 30% stake in Hastings Plc for R14.6 billion. By March 2023, the insurance business of OUTsurance remained as the sole focus of RMI.
In its financial results for the six months ending 31st December 2023, OUTsurance reported a 22.5% increase in gross written premiums and a notable 38.8% rise in the annualised new business premium. The company attributed the increase in the claims ratio, from 54.4% to 59.1%, to R678 million in higher natural perils claims incurred by Youi. However, it noted that Youi's working loss ratio, excluding natural perils, improved from 51.9% to 50.8%, indicating that the deterioration was entirely accounted for by the higher natural perils.
From a technical standpoint, while currently at a cycle low, OUTsurance's share price has been steadily climbing since the unbundling, and the outlook suggests continued positive performance ahead.
OUTOutsurance Group (OUT) | The share has been in a gradual upward trend, with a multi-month consolidation at/near 52-week/all-time highs. The price action and specifically the candle structure has been negative however has started to show (very) early signs of improvement. Two additional positives to note: (1) the development of a falling wedge candle formation and (2) the 14-day RSI clearing it's downward trend which extends back to 14 November. Positive momentum above 4320c opens up the 4850c range as a medium term target.
JSEOUT - Bulls BewareThe stock has had a solid run up but it now displaying signs of increased selling pressure at these levels.
RSi+MACD divergence
A close of 20ema below the 50ema will increase the odds of a pullback to the rising 200ema.
SL and TP on the chart
How does OUTsurance have Data from 2013?“How is it possible for Outsurance to have data on my charting platform, as far back as 2013 while it was just listed on the JSE.”
A. The data that you see from 2013, came from the parent company Rand Merchant Investment Holdings (RMI).
They then changed the name to OUTsurance Group Holdings Limited (OUT).
And they have been in the process of transitioning and rebranding from RMI to
OUT following the unbundling of its investments in Discovery1.
And now, the Centurion-based insurer has officially swapped places with its parent company, Rand Merchant Investment Holdings (RMI), which is no longer listed on the exchange.
Our opinion on the current state of OUTOutsurance (OUT) took over the listing of Rand Merchant Insurance (RMI) with effect from 7th December 2022. RMI unbundled its stakes in Discovery (DSY), and Mommet (MTM) and sold its 30% stake in Hastings Plc for R14,6bn. By March 2023, all that was left was the insurance business of Outsurance. In its results for the year to 30th June 2023 the company reported a 62,1% increase in normalised earnings per share (EPS) from continuing operations. The company said, "On an aggregated basis, Youi delivered strong gross written premium growth of 31.4% and 21.5% measured in Rand and Australian Dollar terms respectively". Technically the share has been climbing steadily since the unbundling and we believe it will continue to perform.
TARGET REACHED: Outsurance to R39.10 - Watch outMy first target reached at R39.10.
A Cup and Handle formation revealed and broke out on 10 July 2023. It's been a bit of a hold, but the price continued to make higher lows and higher highs.
This is the best case scenario for a long buying trade. The thing is, what's next?
We could get a bit of a retracement here in a consolidation manner. This is where retail traders sell off their profits and other traders start prepping for the next upside.
Once the pattern forms, breaks out - I'll let you know.
$JSEOUT - OUTsurance: Should Have Stayed InThe stock is again proving its resilience.
I was expecting and a fairly large correction after the five wave advance from 939 to 3759.
Based on current price action, the correction looks complete at 3075.
I have updated the wave count to show the full trading history.
Buy the dips above 3075
OUT - Sell/Short Reward-To-Risk Appealing?For more research insights, including trade ideas, get in touch today.
Early today, at 12:06pm (at 3723c), I published the following idea for our clients:
Speculative Trading Opportunity. The short term price trend is strong hence the share could trade higher before starting to develop a topping structure followed by a bearish reversal. While currently 'strong', the following factors may point to the current upside reward-to-risk being unattractive, opening up a sell/short trade, with the following as key drivers: (1) Trading at 2x standard deviation (2SD) over 50 days (2) the 7-day and a 14-day RSI are at 92 and 81 respectively (3) the overbought conditions are occurring at a prior resistance level, following a significant short term price advance. The yellow price candles represent a best probability price action scenario over the short term, which a trader could consider. The probabilities are based on several factors which may include: short term rating, medium term regime, momentum, support/resistance, candle structure, moving averages and standard deviation among others. These are short term views and may be in contrast to medium and long term outlooks which are based on the weekly and monthly charts. These scenarios are subject to change based on sentiment, subsequent price action and company specific or macro news flows. Time Stop: 19 September 2023
TRADING LEVELS:
Entry: 3723c
Target: 3495c
Stop-loss: 3880c
OUT - 1DPrice has broken out of downward channel which is bullish. Stochastic Macd and EMA'S have crossed over to the top. Today a very bullish candle is forming. It has also broken out off a cup and handle, All positive bullish signs.
Outsurance OUTperfoming JSE - Target R38.88Cup and Handle has formed on this volatile stock.
The price has broken above the brim level and it looks like, it wants to rally.
Other indicators confirm upside momentum
7>21>200
RSI>50 - Higher lows
Target 1 will be at R38.88. We can expect higher, but I'm happy with a 1:1.78 R:R.
CONCERNS:
The JSE ALSI 40 just broke below the Symmetrical Triangle. This is bearish for the top 40 companies. And usually the BITs follow (Banks, Insurance and Telecomms). However, the must be a reason for the buying with Outsurance, maybe because of the new listing and investors are excited.
ABOUT THE COMPANY
Outsurance is a leading insurance company based in South Africa.
Founding:
Outsurance was founded in 1998 as a part of the Rand Merchant Investment Holdings Group (RMIH).
Pioneer:
It was the first South African insurer to offer a cash OUTbonus, a cashback bonus system, to policyholders who remain claim-free for a period of time.
Services:
The company offers various insurance products including car, home, life, and business insurance.
Geographical Presence:
In addition to its South African operations, Outsurance also has a presence in Australia, where it operates under the name "Youi."
Innovative App:
Outsurance has a mobile app that allows customers to manage their policies, submit claims, and track emergency assistance when needed.
JSEOUT - Channel Price has been well supported off the the 200dma and channel bottom and is reaching an area of interest.
The recent cup and handle may bode well for the bulls to attempt a break out through R35-36 else a fade trade may result.
The cup and handle pattern is a bullish continuation pattern that looks like a cup and handle where the cup is in the shape of a “U” and the handle has a slight downward drift. It usually occurs when there is a decline in the price of an asset, followed by a stabilizing trading period, and finally, a rally that is approximately equal to the earlier decline. The price of the asset moves sideways or drifts downwards within a set channel.
OUT: fifth wave?A price action above 3370 supports a bullish trend direction.
Further bullish confirmation for a break above 3450.
The target price is set at 3580.
The stop-loss price is set at 3240.
It will appear that the price action is busy with wave 5 out of the Elliott wave analysis.
OUTOutsurance Group (OUT) | Portfolio View | Early signs of potential weakness. Previously highlighted bearish MACD cross. Now, the 14-wee RSI has breached support. Caution.
$JSEOUT - OUTsurance: To Stay In Or Get Out?**Changed from RMI to OUT from 07/12/2022.
The group released its first trading update as OUT for the six months ended 31/12/2022 and it is a must read for anyone looking at OUT as an investment or trade.
The technical outlook though contains a warning that a long overdue correction is imminent.
The share has enjoyed a stellar run, gaining over 290% from the March 2020 low of 938 zac and has shown defensive qualities with very shallow consolidation and wave (2) and a very brief pullback in wave (4).
The Elliott Wave structure though shows that the stock is currently trading in the fifth and final wave of the five wave sequence labelled wave (1) to (5).
Once wave (5) is complete, which is impossible to say at this juncture, we can expect a more sizeable correction in three waves.
A further trading statement will be released on SENS as soon as OGL has reasonable certainty on the ranges of the expected EPS, headline earnings per share and NEPS for the current period.
OGL’s financial results for the six months ended 31 December 2022 are expected to be released on SENS on Wednesday, 22 March 2023.
Until then, I sit on my hands on this one.
Trade Idea: SELL OUTsuranceTrading more than 2x std dev over 200 days + candle structure suggests potential exhaustion at the tail end of an excess phase.
Entry: Around 3151c
Stop-loss: 3290c
Target: 2940c
For more research insights, including trade ideas, get in touch today.
JSE:RMI soon to be OUTsuranceDon't be dismayed by the fact that Momentum and Discovery have unbundled leaving RMI trading ex, reflecting the price as of 2022/04/22. RMI will soon be OUTsurance, which is a very good company with good management.
1. Wayne McCurrie & David Shapriro weights in their 2cents. Check it out in Youtube:
www.youtube.com
2. Further research:
www.news24.com
3. Further research:
www.moneyweb.co.za
Bought my shares this morning and going to hold long
RMI - Long opportunityAfter yesterday's move, JSE:RMI is looking good for a long position if the upward momentum continues.
RMI - ShortJSE:RMI is looking good for a short position. I will enter into this position if it continues lower.
$JSERMI Channel playRMI has been trading in a defined channel for 255+ trading days. Bottom of the range is roughly around the 2900 level and top of the range at around 3360. Top of the range has been reached, and overhead resistance could be difficult to be breached. Short position could potentially be attempted if resistance levels can't be breached.
Long idea on RMIRMI is one too watch here as it moves above the Weekly 200EMA, perhaps breaking out of the range its been trading in. A close above 3355 on the weekly chart will be continued bullish momentum for price.
