MTN
The MTN stock has had a strong run up post the COVID-19 crash in 2020. Smoothly making higher highs and higher lows. The MTN March 2020 lows can’t only be put on the heels of the COVID-19 crash. They had other issues they were battling with, particularly with the Nigerian government. That relationship seems to be behind them now, the listing of MTN nigeria seems to have certainly been helpful.
MTN in my portfolio
I have been holding MTN in my portfolio for just under a year now. Benefiting from the base breakout rally. The stock is currently 25% of my portfolio at the moment, contributing more than half of my profits. I picked up the stock at R88. Here was my view on MTN then.
Looking at the long term technical picture
Markets and memory
Markets have memory, they turn to remember prices they rejected before. Old resistance levels turn to hold up especially in the longer time frames. MTN in its rally showed no respect for market memory, at least not in any significant manner. R178 had been that the market respected fairly regularly before the stock went for a nose dive.
Market remembered this level and held the stock off for 2 months. It took MTN Nigeria results to break this level. Market has tested R178 from the other since the breakout. Held it nice with a combination of a doji reversal candle and a bullish engulfing candle as it was approaching the 50 day EMA.
I’m currently waiting for the stock to take the current relative 52 week high.. The company has results coming in 3 weeks, perhaps there lies in a catalyst that will propel the stock higher. If we get a new high close on the daily chart above R192. I will increase my holding in the position.
Wind at the back
Tensions between Russia and Ukraine have escalated to military war. Commodity prices rallied as the tension heightened. Brent crude made all high hitting $102.09. MTN’s largest market is Nigeria which also happens to be a large supply of oil and gas. Largest in our continent & ranks 11th in the world on oil production. As NIgeria benefits from high commodity prices amid the war, so does MTN, through it’s Nigerian exposure.
Because MTN is an indirect play in the war story, as it’s neither a supplier nor consumer of oil. It’s a much better risk reward opportunity. As it stands to have much less volatility compared to the more direct plays like commodity stocks such as miners & petroleum stocks.
It’s currently in a nice strong up trend, came close to the 50 day EMA and repelled as Russia invaded Ukraine with military action. Now I have to wait for confirmation of this “dip” & close through R191.80, a relative new high close. With a stop loss at R173.40, raising it as it continues to run higher.
MTN has had quite a run in the past year, and may seem counterintuitive to buy a stock that ran hard. It’s usually a profitable strategy to buy at new highs, because as O’neil puts it quite correctly “ what seems high, usually goes higher”.