Weekly game plan 11 October 2020

Every week in 2020 seems to get stranger and stranger. Last week we saw the death and rebirth of stimulus talks and Trump uses his ‘art of the deal’ tactics to look good for the election. Make no mistake, the election is a big deal and it’s coming closer. Odds are that volatility will pick up a little heading into the election and thus we’re happy to take it very slowly. That said, markets are looking generally strong and confident at the moment.

S&P500 (SPY)

A number of different things happening here all at once. There is a small inverse head and shoulders busy playing out, as well as a return to the primary trend and very likely a push to new highs.

Nasdaq (QQQ)

Very similar picture to the S&P500 above. The support held very well and it’s broken the resistance level rather convincingly.

Philadelphia Semiconductor Index (SOX)

This index can provide a decent lead on tech stocks in general. Interesting to see that SOX has already pushed to new highs. That last candle does not look too terribly bullish though. No real trade here, but just something to keep an eye on.

Dow Jones Industrial Average (IYY)

Once again, a very similar set up as on the S&P500. Inverse head and shoulders playing out and a push to new highs most probably.

USDZAR

We’ve removed all our analysis from this chart in order to clear our minds of any bias. As time went by, our levels started making less sense. Right now, just looking at it from a Dow Theory perspective, we see lower lows and lower highs. Other than that, we expect to take our lead from the Dollar Index (DXY).

Brent Crude Oil

We thought Oil had triggered a short trade last week, although we clearly got it wrong. Oil bounced hard and moved back to the top of the range. Right now, we see no setup and thus no trade. We are watching to see how it holds above the 200 dma. It always interesting to see how charts develop when there are convergences of levels and moving averages as we see on oil at the moment. We are bullish over the longer-term (2021), but acknowledge that this period is usually weak for oil (seasonality). Patience. And potentially a long above the 20 dma.

Anheuser Busch Inbev (ANH)

We hesitated here last week, but the flag seems to be playing out. Needs to get above swing highs (early September) to really get going.

Aspen Pharmacare (APN)

We’d marked out a small bear flag last week, although it never really broke convincingly. Since then we’ve noted a bullish signal line crossover on the MACD. Perhaps we see this little consolidation break higher? We’re setting alerts for a potential long entry above R120.

Discovery (DSY)

The little trend that could! It could also be setting up for a high probability trade. We’ve got alerts at R125 and will be keeping an eye on the price action around that level. If buyers step in and show interest from that level, it would be a great place to jump on the trend. If no buyers arrive and the level does not hold, there is some building divergence here that could see that beautiful trend line break and the stock scrambling for support around R110. Watching how the stock behaves around R125 is key.

FirstRand (FSR)

No real deep insights here other than the R42 level being rejected. The stock is currently in the middle of the range and thus, for us, there is no setup to trade from here. Wait for another opportunity.

Growthpoint Properties (GRT)

The trend line resistance put up a decent fight. All trade ideas in GRT are off the table now.

Nedbank (NED)

NED broke the downward sloping trend line and has spent the whole week testing it (walking the line). We’re still bullish above this trend line and note the 20 dma and 50 dma crossover. Target remains the 200 dma around R128, with a stop loss below R100.

Telkom (TKG)

Telkom is still looking constructive. It’s holding the moving averages well and seems to be on track to test swing highs.

Vodacom (VOD)

Momentum starting to look a little better here, but still no bullish break. Our alerts are set for R125. Above that might be a good long trade.

*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.

For charting, we use TradingView:

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