Weekly game plan 26 April 2020

The world is a wild place at the moment and markets are moving in ways that we, nor anyone else, has ever seen before. We are choosing to ignore the noise and focus on the charts so that we don’t get too swept up in the confusion and irrationality of the market. We do realise though that the economic fallout caused by the COVID-19 pandemic will very likely linger for some time, especially in South Africa. Exactly how this all turns out though, we have no idea. For now, we remain focused on short-term opportunities.

S&P500

We note signs of waning bullish momentum and as was pointed out to us on Twitter by @ReganYoungsta, there is a significant tailing off of volume traded as the market has rallied over recent weeks. Falling volumes in an uptrend is usually an early sign of a potential reversal. Thus our eye will be on the 2723 level for a potential short entry.

USDZAR

For the last few weeks we have been in the camp of ZAR strength. Thus far we have been wrong, but patient and we have not changed our view just yet. A convincing break above the R19.00 resistance zone might change our minds, although failing that we remain of the view that we are likely to see the ZAR strengthening in the coming weeks.

Richemont

We note early signs of a bearish shift in momentum. A MACD confirmation would lend credence to this view as well as a strong push to relative underperformance. It appears that the recent uptrend has already been broken and the setup is almost ready for a short entry.

MTN

MTN is currently a relative underperformer which gives us a strong bearish bias. From a momentum perspective three of four sell signals. We would like to see a MACD confirmation and a break of the R42.75 level on a dialy basis for a short entry.

The Spar Group

Currently SPP is looking and trading rather strong. The stock has traded up to a seemingly strong resistance zone. Although there is no active setup here, we will be keeping our eye on signs of shifting momentum. Not wanting to form to strong of a bias, we remain open to the possibility of a bullish break above the resistance level. This will be an interesting share to watch in the coming week.

Tiger Brands

TBS is still trading in a downtrend, although a body of evidence is building that is supportive of a potential trend change. We note that the stock is a relative outperformer and is showing signs of building bullish momentum. A break above the recent resistance (channel) could be an early long entry, although a clear strong break above the moving average (and R200 level) could potentially be a great entry for a longer-term long position.

*Please note that these trade ideas form 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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