Over the weekend we saw some positive news flow around the trade war between the U.S. and China. We saw some positive comments on Thursday and Friday last week as well, which led to a rather strong recovery in global equity markets. Not only that, some data was released over the weekend that indicated that Chinese imports grew by 6%. We believe that this will be interpreted as positive by the market. Thus we have some bullish setups for the week ahead.
The ALSI has come down to test support and managed to bounce off it rather well. Currently we see evidence of a tertiary trend change as well as some bullish divergence. We are looking for upside targets at 49,660 (gap close), 50,000 (De Mark point of support/resistance) and 51,000 – 51,335 (De Mark resistance zone).
NTC seems to be trading higher out of a Cup and Handle bullish reversal pattern. The stock pulled back to test the break out and in doing so has formed a Bull Flag formation, which triggered a long trade on Friday’s close. We have an upside target of R22.41, which is a De Mark point of support/resistance and coincides with the Bull Flag target price.
Absa Bank Group
Banks for the most part have traded down to the bottom of recent trading ranges. Currently ABG is showing early signs of a change in directional momentum and has formed a small consolidation around key support. We are biased to the long side, but will be watching that small consolidation (indicated in yellow) for a break out. Should the breakout be bullish, we expect that ABG could trade back up to previous resistance at around R165.
FSR looks very similar to ABG and here again our bias is to the upside.
Given the positive trade war news, we expect resources to trade strong in the week to come. We have been tracking AGL for a while and pointed out last week that there is a brewing Bull Flag formation. Friday’s close triggered the long on AGL and we expect to see the stock trade up to the R430 – R440 zone.
*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.
Just showing off a little…
A few weeks ago, while the weekly game plan was still hosted on inceconnect.co.za, we pointed out a potential short trade on VOD. It worked like a charm!
We have added a new page to our website! Have a look at the Twitter feeds page. One easy place to see the latest and market moving news, as well as macroeconomic insights and tweets from some of the professional traders that we know in the market. Hope you enjoy!
PS. This page will be very helpful to stay on top of potentially market moving data releases like Non-Farm Payrolls etc.
Herenya is often invited to make presentations at public events. We have created a page where you can download our presentations if you would like to go through them in your own time. Go have a look, you might find something useful!