Medium term
Trade view / 25 May 2016 at 5:20 GMT

Hennes & Mauritz due for a bounce

Instrument: HMb:xome
Price target:
Market price:

The stock of Swedish multinational clothing company Hennes & Mauritz (HMb:xome) has been a real weight on the Swedish stock market of late and may continue to be so. Short term, however, this stock is looking stretched and appears due for a bounce.

Technically H&M has once again touched the downward tilted trendline that has been containing most of the price action since the peak set in March last year.

At the same time, we are starting to see a positive divergence build on the daily oscillators and even more so on the weekly relative strength indicator (RSI).

This stock has longer-term support at the SEK 340 area, but the downward sloping trendline that got hit yesterday should also manage to support this stock along with the now closed gap from September 2013 which are both located at the SEK 250 area.

Management and risk description

The plan is to buy H&M above SEK 250 for a bounce towards SEK 265 and SEK 275 in the coming weeks. The stop could initially be placed upon a daily close below SEK 250.

The risk to this setup is broader stock market weakness.


Entry: Buy at market above SEK 250

Stop: Daily close below SEK 250

Target: SEK 265 and SEK 275

Time horizon: One to three weeks

HMb daily chart
HMb:xome daily chart
HMb weekly chart
HMb:xome weekly chart
Source: Both charts, Saxo Bank - create your own charts with SaxoTrader. Click here to learn more 

— Edited by Adam Courtenay

For more on equities click here         

Non-independent investment research disclaimer applies. Read more
Johan Berntorp Johan Berntorp
I seem to have mixed up the daily oscillators here, the divergence is on the RSI obviously as shown in the chart, not the STOC-S.


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