Performance review of Capitec share price

Some basic information about Capitec

Capitec Bank, short code CPI, is the third largest bank by market cap in South Africa. We will look to review the Capitec share price from a fundamental and technical standpoint.

Combining the quote from Leonardo da Vinci, the bank uses the strapline ‘When it comes to banking, simplicity is the ultimate sophistication.

Figure 1 Trading View South Africa Market Cap 08/09/2022

The rise of Capitec share price

The bank share price has witnessed an extremely strong performance, increasing in value by 343% from  the March 2020 low of 53986 to the high of 239273 in April 2022. This is despite falling short of earnings  expectations in four of the last five reports*.  The next earnings and revenue review is due on the 29^thSeptember 2022.

It should be noted that the bank'sperformance is broadly in line with the South African Banking sector.

Capitec Share Price Monthly Chart

Figure 2 Trading View CPI shares and earnings

*Please note on the Trading View Chart the Red and Green E. This stands for earnings. Red falls short of expectations, green is higher than expectations.

A look from a technical perspective  

There are technical warning signs that a top could be in place for the Capitec share price. Let us break down the charts.

Let us first discuss the rally from an Elliott Wave perspective. The Elliott Wave theory looks for a 5-wave move in one direction, followed by a corrective 3-wave move in the opposite direction.

In the first chart we can clearly see a 5-wave pattern stalling close to the 261.8% extension level of 222582 (from 53986 to 118431). This would suggest that a correction lower is underway.

Capitec Share Price Weekly Chart

Figure 3 Trading View CPI share Elliott Wave

If we look closer to the chart, we can see a topping formation. This is a three-candle formation known as an Evening Doji Star.

This completed after the last report, with earnings falling short by -2.24%.

Capitec Share Price Weekly Chart

Figure 4 Trading View CPI Evening Doji Star

Price action looks to have formed a technical pattern known as a Bearish Head and Shoulders, breaking the neckline of the formation as we write.

The technical measured move target for the formation is located at 146400.

Figure 5 Trading View CPI shares Bearish Head and Shoulders