The exuberance of markets can never be underestimated. “Stonks only go up” has become a meme. But we know that memes have the power to influence millions of people. As long as the market is trading from vaccine headline to vaccine headline, we can expect that markets will probably keep pushing higher and people will likely keep chanting “stonks only go up”.
From where we stand, it appears as if some of the crazy “fat tail” risks are mostly behind us now. Trump is not getting anywhere with his recount, central banks are signalling lower for longer interest rates and potentially even more stimulus. OPEC didn’t cut as much oil production as was expected and commodities stocks have started to come alive on the realisation that eventually the world will come out of lockdown and demand for commodities will return. In truth, the way things look right now, even we’re starting to think that stonks only go up…
Offshore trade ideas
The consolidation has broken and the SPY is looking rather strong from here.
Philadelphia Semiconductor Index (SOX)
SOX has put in a wild run, but is reaching the upper end of the channel it has been trading in sine March. We’re not calling the short here, but we are advising caution around the upper resistance and note the high probability of a pull back to the middle of the channel.
Dow Jones Industrial Average (IYY)
It won’t happen in a straight line (and a retest of the breakout would not surprise us), but the range break targets $196.89.
Russell 2000 (IWM)
Small caps tend to outperform large caps during this time of the year. It would be nice to see IWM test the upper resistance barrier of this large channel.
Bull flag breakout and a new record high. Again, things don’t move in straight lines, although it does look like there if much upside still to be had.
The previous ATH is still providing some resistance. We’d still like the opportunity to buy between the $11k and $16k levels. It is a big buying zone, although given the volatility of BTC in general, a 30% to 50% correction before a parabolic push is not that far outside of what can be expected. Note also that a break above the ATH ($20k) would also be a buy.
Gold bounced nicely off the 200 day moving average, much as it did the last time it tested the moving average in March. For now there is some resistance around $1850. Probabilistically we’ll see Gold test the 200 day moving average again. As long as it does not take out the lows made on the 30th of November, buying off the 200 day moving average could be a good entry.
Brent Crude Oil
We’ve spoken much of the down trend line that has broken, although this week we want to point out the multi-month consolidation that was broken and retested. Oil is looking very strong over the medium-term.
Dollar Index (DXY)
Weekly chart once more on the DXY. The 91 level was taken out, so DXY now opens for 89 in the coming weeks.
Flat bottom triangle targeting that R14.50 level.
Harmony Gold Mining (HMY)
We would not be too surprised to see HMY test the recent lows sub-$4 before starting it’s next major leg higher. Obviously this depends on how Gold interacts with its 200 day moving average (above).
South African trade ideas
RMB Holdings (RMH)
R1.32 is still the line in the sand. Above that and things start to get interesting.
Growthpoint Properties (GRT)
GRT is still looking fairly solid. Would like to see it break above the R13.00 level and really get going.
Anheuser Busch Inbev (ANH)
ANH is still in the range shown last week. We’re looking for a bullish break of this range for a good risk-reward long setup.
Aspen Pharmacare (APN)
APN as set up really nicely for a trade back to the top of the channel. Stop loss below R120.
SOL looking good for the R158.40 target.
Kumba Iron Ore (KIO)
Up, up and away! KIO breaks the right shoulder and invalidates the previous Head and Shoulders setup. Spurred on by record high Iron Ore prices, KIO probably has some legs here.
We like the long if WHL can get and hold above Friday’s close.
VOD has been a bit frustrating for us over the last few month as it just couldn’t break the range. Has it now formed a Head and Shoulders pattern? Maybe leave a comment below and let us know what you think?
Not too much to say here. TKG made a nice bullish engulfing candle and the up trend is looking pretty solid. Sit tight and let the market grind toward target.
Standard Bank (SBK)
SBK is also looking great in the medium-to-longer-term. In the short-term though, a breakout of the bull flag could be another nice opportunity to get long.
Sibanye Stillwater (SSW)
SSW has been range bound for a few months now. Watch for a break higher out of this consolidation.
SLM is looking strong. Short-term moving averages have signalled a buy, price just recently made it above the 200 day moving average, flat top triangle targeting higher and a potentially strong ZAR (weak USD) as a tailwind.
Coronation Fund Managers (CML)
The R45 level has been a strong resistance level for CML for rather a long time. A break above it makes for a very attractive long trade in our view.
*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.