Weekly game plan 11 November 2019

Now that the Moody’s news is out of the system and we can once again place our trust in the charts, there are some interesting opportunities brewing for the week ahead.

USD/ZAR

First off, the USD/ZAR exchange rate has been trading in a range between R14.88 and R14.67 for the last week. A directional break out of this range will likely dictate the direction for the remainder of the week. It would seem that momentum is changing in favour of weakness, although we will wait for the range to break before we are willing to back this view. Therefore our eyes will be glued to the Rand in the coming week as a directional break from the current range is likely to dictate the overall performance of our market in the next week.

Anglo American

Anglo has managed to break free of that resistance level and put in a good rally. From a momentum perspective, it appears that a short-term pull back is likely. We would expect Anglo to trade back to the R372 level in the coming weeks. It if finds support there, another bullish push beyond R405 is possible.

Aspen

The trade that was on nobody’s radar that is suddenly on everybody’s radar… Aspen. It seems to have taken out key resistance levels. Market off in our chart are three De Mark or Williams points of resistance. Aspen has managed to close the week above all of these levels, if only by 10c. A few possibilities exist here… one, everybody is seeing the same setup so it is doomed to fail, or two, because this stock has suddenly popped back onto everyone’s radar there might be a bit of a ‘gold rush’ on it and we could see it get well clear of the current resistance level is just managed to close the week above. We will definitely be on the lookout for buyers in this stock and if the market rushes in to buy it, we want to be on the train.

Sappi

We looked at Sappi a few weeks back with the expectation that it would trade lower as it breaks out of a bear flag. As it turns out, it never broke out of the bear flag formation and it still trading in it. We have not made any changes to our original chart and levels, but once again Sappi is starting to look like it could make a bearish break from the bear flag and potentially trade lower.

Truworths

It’s been a confusing week for Truworths. The results on Thursday last week initially rallied the stock, but after a few hours it ended near the lows of the day. Friday say it trading to the lowest level it’s been in many years. In a weaker Rand scenario, with signs of downward momentum building, Truworths could be a decent short during the next week.

Vodacom

Vodacom has been trading in a large range for the last year or so. The stock finds itself at the top of the range with early signs of bearish momentum (building). There is therefore a very high risk-reward trading opportunity on the short side of this stock. A break above R137.00 could mean a bullish reversal, therefore that would negate the short trade and serve as a stop loss. The potential for the stock price to come down to R110 over the next few weeks or months is evident. We will be watching to see how this setup unfolds.

*Please note that these trade ideas for part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.

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