Weekly game plan 20 September 2020

Over the last few weeks we’ve shared some thoughts about the fundamental picture we are seeing, and thus fired off a few warnings about the sustainability of the tech rally. This week we’ll keep things simple and only consider the charts, without having the fundamentals interfere with our thinking.

S&P500 (SPY)

Key close below the lows of last week, as well as, below the 50 day moving average. A retest of the (black) trendline is becoming increasingly more probable. Horizontal support levels marked in red.

Nasdaq (QQQ)

Similar to the S&P500 in the sense that it has broken below the 50 day moving average and that the 20 day moving average is starting to slope down. The uptrend (blue) was broken and thoroughly tested. High probability of testing the 200 day moving average in the weeks to come.

Dollar Index (DXY)

Although the downtrend has seemingly been broken, the DXY is still rather range bound. We await a break of the range before changing any major views. Further Dollar weakness will be good for emerging markets and commodities and visa versa if we see Dollar strength. Patience is required here for clear direction. As things stand now, we think that the current status quo (stronger ZAR and industrial commodities) remains in tact as long as the DXY remains in that range.

USDZAR

The range in which the USDZAR has been trading seems to have broken. We’ve marked out support for the USDZAR at around the R15.50 level. Lack of Dollar strength, which could be interpreted as the DXY remaining range bound (chart above), would likely see the USDZAR trade to that support level.

Palladium

The uptrend seems to be in tact here. The purple uptrend line would be the one to watch for a potential reversal, but for now all seems well and positive.

Gold

We’ve widened the triangle a little to accommodate the last week’s worth of directionless trading. Generally though, no real change in the setup.

AngloGold (AU – NYSE listing)

Friday’s close triggers a short trade to that target zone.

Glencore (GLN)

The resistance zone is putting up a decent fight, but the stock is also holding both the 89 day and 200 day moving averages very well. Unless we can get a clear decisive push beneath the longer-term moving averages in the next week or so, our conviction on a short trade here is fading. That said, stop losses have not been triggered either. Patience.

Tiger Brands (TBS)

The long trade was triggered here. A long wait lies ahead to see how the inverse head and shoulders works out. It is encouraging that TBS managed to get above and hold the 200 day moving average.

Old Mutual (OMU)

The short trade worked well here. The first target was tagged on Friday, but the second target is still some way down. We note though that the Friday candle was a hammer, on a key support level and wil higher than usual volume traded. Trailing stop losses are recommended from here on out, to lock in profit made if this stock bounces.

Anheuser Busch Inbev (ANH)

Some time ago we looked at ANH testing the 200 day moving average. It appears to be ‘walking the line’ rather well and has just made a golden cross. We like this for a longer-term entry as we think it could be the start of a new primary (bullish) trend.

Aspen Pharmacare (APN)

Short trade identified on 2 August 2020 still in tact. Trailing stop loss from here with a target around the R105 level.

Blue Label Telecoms (BLU)

This trade unfortunately stopped us out at the worst possible time (there is a lesson for us in there). Currently there is a lot of interest in this stock with many inverse head and shoulders charts making the rounds. We note the range marked in purple and would use it to potentially trigger a new long trade in BLU.

British American Tobacco (BTI)

This flat bottom triangle setup seems rather bearish at this stage. Remember that triangles are generally bilateral formations, which means they are not indicative of a predetermined directional break, but only reliably useful in the determination of price targets once a break has occurred. This is a setup to watch though.

Capitec Bank (CPI)

CPI is forming a nice, almost year-long range. Above R1000 would likely have us looking for longs, although we marked out a smaller support (R950-ish) that could offer a great short entry to the bottom of the larger range if price manages to close below it.

MTN Group (MTN)

MTN needs to break the marked support levels in order for the downtrend to completely establish itself.

Top 40 Index (ALSI)

It’s not looking good for the bulls here. Lower highs and lower lows and two bearish candles around a resistance level. It’s going to be an interesting week.

*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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