Markets bounced hard in the second half of last week. It’s almost hard to believe how fast things are changing in the current landscape. Although there are so very many reasons to be cautious, if not flat out bearish, the market is just pulling its ears back and making its way higher despite the conditions of the world around it. Thus, given the strong footing the market ended on last week, and of course the charts, we think that we’ll likely see new highs in the week ahead.
Offshore trade ideas
S&P 500 Volatility Index (VIX)
We’ve been keeping our eyes on the 20 level on the VIX for a while now. Our thinking is that once the VIX can get and hold below that 20 level, we should see a rather strong rally developing in the equity markets. Over the last two weeks, the VIX has been spending more and more time beneath the 20 level and even closed out the week below it. This leads us to believe that we are in for a rather strong push in equity markets in the weeks to come.
S&P 500 (SPY)
Once again the support held. Price action, however, is consolidating tighter and tighter. The bearish divergence has not yet been invalidated, although a break above the $400 mark will not only print a new high, but also likely see the MACD break the trendline (divergence) as well as price trade above the (pink) divergence resistance. A potential buy signal could be the MACD breaking its own down trend resistance line.
Russell 2000 (IWM)
The ABC setup on QQQ is still present, although if price breaks above the high’s of B, the setup will be invalidated. We’d thought that a close below the blue support (at $312.11) would likely lead to a larger scale correction. It seems that the level has held though. We’d still be sellers around $320, although the risk-reward on offer from that level is really very high. In other words, we like that we can take 1 risk for 20 reward, which means we don’t really have to risk very much at all to have a stab at the short trade. That said, if the high’s of B are broken the trade will likely switch long.
Dow Jones Industrial Average (IYY)
Looking at this chart makes us wonder why we ever doubted the Fibonacci projection in the first place. The $103.04 level, as projected by the Fibonacci retracement (measuring the COVID-crash) has been the target for many months now. By the looks of the things, the trend is strong and the target is in reach.
U.S. Dollar Index (DXY)
So the DXY eventually hit (and broke above) its 200 day moving average, which was our base expectation once the falling wedge had broken. From here, many things are possible. At this stage we cannot discern a clear path forward, other than the channel it is currently trading in. We need to sit back and allow the market to show us where to from here.
Once again we use two charts on the USDZAR. On the left, we see a fake break out of the strong resistance downtrend line that has been in place for a long time. Another push above the downtrend resistance could be a strong buy signal for a longer-term trade on ZAR weakness. On the right, we see the USDZAR ranging between R14.50 and R15.55. We also see that it is now, for the third time, trying to get above the 89 day moving average. Usually the 89 day moving average is a decent trend indicator. In other words, once we see price establish itself above the 89 DMA, we tend to see price trend upward (with the converse being true in bear trends). We think in the short-term, we probably see USDZAR trade in this range (on the right) for a little while still to come. Our first call is that we’ll see the USDZAR trade towards R15.50 in the coming weeks.
Brent Crude Oil
Although we would like to see Brent Crude Oil test the longer-term trend line, it does seem that this consolidation around the 50 day moving average is rather bullish. Besides… there’s nothing like a container ship being wedged in the Suez Canal and blocking 16% of global trade from taking place to really get oil prices pumping… The world is a ridiculous place, but here we are.
Gold held the $1680 support level and seems to be breaking out of a bearish channel. This setup looks rather bullish to us.
We’d be buyers of BTC once it breaks the highs from three weeks ago (trades to new highs).
ETH would also be a buy once the previous high is broken.
South African trade ideas
JSE Top 40 Index (ALSI)
The ALSI bounced hard on Friday, engulfing about four red days in the process. There is also bullish divergence and what looks to be a developing buy signal on the MACD. We think that the ALSI could be trading at new highs by the end of the coming week.
Anglo American PLC (AGL)
AGL is bouncing from the buy zone. It also broke its tertiary (down) trend line. We like this setup for new highs on the AGL chart.
AngloGold Ashanti (ANG)
ANG has traded down to a rather significant support level. We like the long from here for a very high risk reward trade.
Aspen Pharmaceuticals (APN)
APN is still in the large upward sloping channel. During the last week though, APN had sold off pretty hard. Our current long position will stop out below R132, although that R132 level could offer a great long entry for those who are not currently in this trade. R132 at this stage, represents both a historic horizontal support / resistance level, as well as, the 200 day moving average. Below R132 and all bets are off.
BHP Billiton (BHP)
BHP is looking really good. The 89 day moving average held and BHP has bounced very well off the support. It’s also broken its short-term downtrend. We’d like to see new highs on this chart.
BID Corporation (BID)
BID broke above the resistance zone and put in a good rally. It has now pulled back into what was the selling zone and seems to have found support on both the 89 and 50 day moving averages (with the 200 day just a little lower). The selling zone now turns into a buying zone. With the break of the short-term downtrend, we like BID for a long trade.
BVT has made a nice little consolidation over the last three sessions. A break higher out of the consolidation could see BVT trading to new highs.
The trend line we’ve been eying on CPI has broken and triggered a high probability long trade.
DSY has made a nice consolidation during recent weeks. A bullish break of the consolidation will likely lead to new highs.
FSR has a similar setup to DSY and BVT. This time though, it is bouncing off the 89 day moving average. We like FSR for a long trade to new highs.
Gold Fields (GFI)
GFI is ‘walking the line’ with both the 89 and 50 day moving averages, with early signs of a bullish momentum shift. If Gold can catch a bit of a bid and GFI can clear the resistance around these moving averages, we could see a decent rally.
Growthpoint Properties (GRT)
GRT spent four sessions consolidating on the 200 (and 89) day moving average. This opens for a long trade with stop below the consolidation, which we can switch to a trailing stop loss once the trade is in the money. We think that there will be many new highs on the cards for GRT in the year to come.
Harmony Gold (HAR)
Similar to GFI, HAR is on a significant support level which seems to be holding. Once up and clear of the 89 day moving average, HAR is in trend changing territory. We like the high risk-reward long trade on offer here.
Impala Platinum (IMP)
Only one chart on INL this week. We can see that INL held the breakout level very well, even making two hammer candles on the level. A long trade to new highs and a stop loss below the 89 day moving average.
Imperial Logistics (IPL)
IPL closed above a key resistance level on Friday, triggering a long trade looking for new highs.
Jubilee Metals Group (JBL)
JBL is in a solid up trend and there are a host of fundamental reasons to be long of this stock with a very long-term outlook. Those aside, JBL made a proper hammer candle formation off the 50 day moving average and then bounced back higher. We like JBL for a long trade. Since we are bullish JBL over a very long timeframe, we are hesitant to give a target price on a short-term trade as new highs are almost guaranteed here. We’d rather use a trailing stop loss (ATRx2) when taking new long positions in JBL.
Liberty Holdings (LBH)
LBH bounced well off a longer term horizontal support level. It also made two hammer candles in the process. We like the LBH long trade, with a hard stop below the swing lows. The first target would be the 200 day moving average, but once LBH gets above that we could se R72, or even new highs.
Patience finally paying off on MNP. We’ve been holding this long trade for a while. Finally it looks as if MNP is going to start making new highs.
Old Mutual (OMU)
OMU has bounced off the 200 day moving average, which we have seen in the past can be a rather significant buy signal. To be extra safe, it might be wise to wait for OMU to clear the downtrend line indicated on the chart below. The brave and the disciplined could enter a long now with a stop loss below the swing lows.
Redefine Properties (RDF)
RDF is holding both a trend line and the 89 moving average. The momentum oscillators are also starting to show early signs of a bullish shift. We like the high risk-reward on offer to the long traders here.
Resilient REIT (RES)
RMB Holdings (RMH)
RMH cleared the resistance at R1.35 and is now testing the R1.70 level. We think it wise to wait for a break above R1.70 and to buy into that strength.
Nice bullish engulfing candle off the 50 day moving average on SAP. We like the tight risk-reward trade to new highs here.
Standard Bank (SBK)
SBK putting in a bounce off the 200 day moving average, as well as, a significant historic horizontal support level. There is also decent bullish divergence between the stochastic oscillator and price. Once again, a high risk-reward trade that could see the stock price making new highs (in the context of its current trend).
We’ve widened the rectangle (consolidation) that we had on the SLM chart to take the new highs it made into account. We note now that price has bounced off the 200 day moving average, which is supportive of the ‘changing trend’ narrative. We like the long trade here with a stop below the 200 day moving average.
Sibanye Stillwater (SSW)
SSW is looking good for a long trade. It found support in the zone between the 50 and 89 day moving averages and looks set to break the short-term downtrend that it has been in for the last few weeks. We’d be buyers once the downtrend line is broken, with our eyes on new highs and a stop just below the 89 day moving average. Also worth noting is that Platinum Group Metals are looking really good (and have had a strong past week or so) and contextually, SSW is lagging behind other PGM stocks. So it might have some catching up to do.
WHL has also broken its short-term downtrend. Although the MACD is not lined up just yet, the stochastic is starting to fire off some buy signals. Once again, the long trade here offers a tight and clear stop loss with a target in the region of new highs. Once the trade is in the money, a trailing stop loss would probably be the best way to manage it.
Joining HCA trading
HCA trading offers a number of different trading accounts to suit different types of traders. Our offshore trading accounts allow traders to buy shares, ETFs, CFDs and even fractional shares in the United States for only $2 a trade. Locally, we offer shares, ETFs and CFDs at good rates with robust and reliable trading platforms. All our trading, including CFDs, is done on a Direct Market Access basis and thus our clients are able to interact directly with the real equity market and not have to worry about excessive counterparty or liquidity risk. Our prime broker locally is a big four bank and offshore we make use of one of the largest non-bank prime brokers in the world.
Local stockbroking rates
|Trading instrument||Brokerage rate||Margin rate||Minimum trade charge|
|JSE listed equities and ETFs||0.30%||100%||R150|
|CFDs on JSE listed equities||0.20%||10% – 25%||R50|
|SAFEX listed index futures (ALSI)||R20||6% – 8%||R20 per contract|
Offshore stockbroking rates
|Trading instrument||Brokerage rate||Margin rate||Minimum trade charge|
|U.S. listed equities and ETFs||USD 1 cents per share||100%||USD 2|
|Canada listed equities and ETFs||CAD 2 cents per share||100%||CAD 2|
|U.K. listed equities and ETFs||GBP 12 + 0.1%||100%||GBP 12|
|Germany listed equities and ETFs||0.20%||100%||EUR 8|
*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.