After strong earnings reports from tech stocks in the U.S. and more rhetoric around continued stimulus, markets closed last week on a strong note. We’re sticking to the good old technicals for this week and highlighting some of the stocks that we have been watching.
We’re still using the SPY ETF as a proxy for our analysis of the S&P500 index. Friday saw a pretty big reversal and a close on the highs. We remain bullish with a view that the market will close the gap and then trend in the direction of the gap close. In other words, we expect new highs.
We’ve not made any changes to out USDZAR chart for some time and note that it seems to be reversing ovv the support zone market out below. We think that there is likely a period of ZAR weakness (USD strength) ahead.
Top 40 Index (ALSI)
The Top 40 Index is still range bound. The range marked out had triggered a long during the last week, although we saw the market move back down to the bottom end of the range. A break lower could trigger a short, although larger developed markets will likely lead our market.
We’ve been watching GLN for a while now and were looking for a daily close above the 200 day moving average as a long trigger. We note two closes above the 200 day moving average over the last week, although we are a little concerned about the long wicks on the candles above the 200 day moving average. For now we are sitting tight and waiting to see how a stronger USD will impact commodity prices before making move.
Bombs away BVT!
We actually closed the short we had on BID for a small profit during the last week. Now we are looking at the current range as a potential trigger for our next trade.
APN was a source of much debate over the last week as not everyone agrees with this setup. We note that it has closed below the trigger level and feel that there is a high probability that it will trade back down to trend line (flag). It looks like it tried to break out of the channel, although could no and has now formed a rounding top.
HYP is as tricky on too. It broke two de Mark or Williams points of support and thus very technically speaking has triggered a short for us. The fact that it is a smaller share with less liquidity makes us cautious, but overall the short is looking good. This trade was also discussed a number of times in our community during the week and the lower of the two support/trigger levels is the one we are more comfortable with using as a trigger.
Using a 4 hour chart, we can more clearly see the break of the support level.
We had our eye on a long in SBK if the resistance level broke as it would then have formed a Cup and Handle. Financials saw a strong reversal though and now our eyes are on the 50 day moving average support. Should SBK fail to bounce off of that level, the long idea will be off the table for now.
What looked like a break out of a flat top triangle on SLM has also not worked out. Once again, the 50 day moving average is the level to watch. This time it coincides with the support of the triangle formation. A break here could lead to a strong bearish move.
*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.