Weekly game plan 19 January 2020

Well, well, well, trends do persist. We are seeing some of the setups from last week starting to work. The Rand has still not broken above R14.50, although if the trading session on Friday is used as a show of intent, we’d imagine that the probability of that break above R14.50 is rather high. Given that assumption, we not only feel that the setups from last week are still likely to work out, we also feel that backing primary trends and bullish move on resources stocks would be the wisest approach to the coming week.

ALSI

The ALSI has finally broken the range it’s been in for some time. We’ve noticed a few rather bullish Inverse Head and Shoulders (IHS) charts making the rounds on Twitter and thought that maybe it would be useful to show some potential de Mark or Williams points of resistance. At this stage it is likely too early to tell if that very large IHS is going to work out (here’s hoping though!), but we are confident enough to get behind a bullish move on the ALSI in the coming weeks on the back of a resources rally and a weaker Rand.

Weekly game plan 19 Jan 2020 ALSI

Anglo American

We looked at AGL some time ago and had some conflicting thoughts around it forming either a breakaway gap, or a potential shooting star. As it turned out, it formed neither. Since then it entered a rather tight range and on Friday made a push for the recent highs. Really splitting hairs here, it closed above the point of resistance and we see momentum starting to return to the upside, thus we believe that it will continue its upward trend.

Weekly game plan 19 Jan 2020 AGL

Anglo American Platinum

There are great setups on Sibanye Stillwater (SGL) and Impala Platinum (IMP) at the moment which should not be overlooked. We want to point out the setup on AMS as well, as AMS is seemingly a lagger in the sector at the moment. Generally the best course of action is to trade the leaders, although should AMS give us a long trigger, we we believe that it will provide a rather safe trade. For now the platinum (and palladium) market fundamentals are still very supportive of this sector and we are believers of backing the trend. Thus, we are looking for longs.

Weekly game plan 19 Jan 2020 AMS

Kumba Iron Ore

KIO is an interesting setup. For the most part, fundamentally, we expect it to be supported by the resolution of the trade war (partial at least). We also note the presence of an Inverse Head and Shoulders (IHS) setup, a bull flag (not shown), a positive shift in momentum, potentially a currency tailwind and becoming a recent outperformer. Naturally we need a clear trigger to enter into a long position here, although indicated on the chart are some potential points of resistance (and targets) for any validated long trades that are taken here.

Weekly game plan 19 Jan 2020 KIO

Reinet

We’ve mentioned before that we wanted to get out of short positions. We note now that RNI has been underperforming British American Tobacco (BTI) [not shown] for quite some time and are of the opinion that conditions might be right for RNI to play ‘catch up’ in the coming weeks. We further note that momentum is currently bullish and the immediate trend is up, thus we feel this trade offers a decent risk-reward.

Weekly game plan 19 Jan 2020 RNI

*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.

Phase One trade agreement

The U.S. and China have agreed to Phase One trade deal. For those who are truly interested in reading all the details (which is recommended for active and serious traders), you can download the official document released on the 15th of January here.

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