During the last week we started seeing some signs of distress in the Nasdaq, with some heavyweights beginning to show a little bit of weakness. Our strategists put up two posts on the current outlook on the Nasdaq on the International Outlook blog, which showed some key support levels being tested and broken. With those in mind we are slightly more cautious this week.
S&P500
Once again using the SPY ETF as our basis of analysis, we note that the breakout from resistance has lost a bit of momentum. Although there are still more reasons on our list to be long rather than short, we will be watching how the index performs around that support zone rather closely. The risk at this stage is that a potential pullback on the Nasdaq could push the index below the resistance trendline again. For now we remain bullish and expect that the market will trade lower to test that support zone thoroughly before pushing higher again. Should that support zone break though, we might have to change our view.
Looking at the SPX futures chart we note that there could be a little more downside for that triangle breakout to be tested. Again, should the formation hold, we will remain bullish on this instrument/index. Should it fail, we will adjust our view accordingly.
ALSI – Top 40 Index
Crazy perspective… V-shaped recovery done and dusted. A potential bearish reversal candle on a key resistance level. We’re watching the range for a potential signal. Our bias is short.
Gold
Gold hit the range target and seems set to test the all time high at $1923.70. The real question is; where to from here?
Using a monthly chart to get a sense of history, we think that it will likely break through the previous all time high level with ease, followed by a multi-month bear-trap and if history repeats itself, significantly higher prices in the years to come.
Side note: This is inflation as a result of printing trillions of Dollars. Free money has a price.
Palladium
Palladium is looking very strong as well. From a momentum perspective it looks like this move is just getting started. There are some de Mark or Williams points of resistance marked out on the chart below to be aware of. We’ve also marked out what could turn out as a golden cross. A few more trading sessions is needed to confirm though.
Goldfields
GFI target reached. Likely more upside to come though. We urge traders and investors not to chase this stock though. There will be an opportunity to enter with a high risk:reward setup at some point in future. Patience.
AngloGold Ashanti
ANG is well on it’s way to target.
African Rainbow Minerals
ARI has not really gotten going just yet, but is still looking constructive.
Jubilee Metals Group
Using a weekly chart here, we note that the range between 40c and 92c has been broken. We’ve also marked out the R1.00 level as it has been significant resistance in the past. Very long-term trend change for JBL starting here?
Glencore
In truth, most resources counters are looking very strong. GLN though, seems to be finding some resistance beneath the 200 day moving average. We will turn bullish once price can hold above the 200 day moving average.
Kumba Iron Ore
KIO has broken a significant resistance level. A trailing stop loss for long positions here is recommended.
MTN
MTN seems well on its way to test the 200 day moving average and complete the move started with the breakout from the triangle formation.
Blue Label Telecoms
Perhaps a fake breakout here? Watch the 200 day moving average for a stop loss. In the longer-term the golden cross is a buy signal, although in the shorter-term we’re not willing to stay in trades that are not working in the timeframe in which we planned them.
Bid Corp
Not much has changed for BID since last week.
Bidvest
It looks like the support level has broken (bear flag). There is a horizontal support level not shown in the BVT chart below which remains in tact. Assuming the bear flag takes preference, we’re cautious of the long tails on the candles for the last two trading sessions. They show that buyers have been stepping in to take stock around the horizontal support. We’ll be watching how strong the buyers are in the coming week.
Imperial Holdings
IPL closed the week on the lows, below the support level. High probability short setup.
FirstRand
Initially we’d thought that we would see FSR bounce off the bottom of the channel support and move toward the 200 day moving average. We are now concerned that the channel support breaks and that we see another leg down.
Mr Price
MRP bear flag broken.
Truworths
TRU holding below the 200 day moving average and channel (bear flag) support. 200 day moving average being used as a stop loss for short positions.
*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.
