Volatility is subsiding and markets are feeling more confident than they have for some time. We can debate about logic and valuations and inflation for days on end. In the end though, it will boil down to “yes, nothing makes sense” and “don’t fight the FED”. The money printer is going brrrr and all we can do is hold tight while the bulls give another run.
Offshore trade ideas
S&P 500 (SPY)
The momentum oscillators have both given nice buy signals and the SPY has pushed to new highs. Our upside target is currently $420.69. The dashed blue resistance line (larger of the two rising wedges) might put up some resistance, although given the picture painted by the momentum oscillators, the market does not look too concerned with theoretical resistance levels at this stage. Hold tight, we’re probably headed higher.
Russell 2000 (IWM)
Small caps (IWM) has been outperforming large caps (SPY and QQQ) for some time now. Perhaps that is finally starting to come to an end? The view below on IWM is probably too pessimistic as a Head and Shoulders formation is always easy to spot, but is often spotted from our own bias rather than from the actual price action itself. Either way, it would be interesting to see how the large caps trade in the event that we see small caps (IWM) pull back to test the longer-term trend. There could be a pair trade in here as well, long SPY vs short IWM… Could be a decent trade.
Keep it simple. Buy the break to new highs and hold tight.
Dow Jones Industrial Average (IYY)
Took long enough, with a few false signals in between, but eventually ‘target reached’. Long bias for now, but not real reason to make any new trades. The trend following trade here is to buy the break to new highs with a trailing stop loss. Just remember, don’t carry too much gearing when the market is at record highs. Try gear into pullbacks bigger than 5% or 10%. Now is not the time to be sitting with 5x leverage. Be long, yes, but don’t be reckless.
S&P 500 Volatility Index (VIX)
U.S. Dollar Index (DXY)
DXY is still trading in the bear flag formation and has once again dipped below the 200 day moving average. Our view is still one of larger scale DXY weakness driven by brrrr. Time will tell though. For now we do not see any clear trades here and will refrain from making any moves before we can either see the DXY holding well above the 200 dma, or a clear break from the flag formation. Be patient and sit (hold) tight.
The USDZAR seems to be holding the R14.50. We like the long trade here back to the top of the range at R15.55.
Brent Crude Oil
Oil might not reach the trendline support just yet. For now, it looks like it is setting up for a really nice buying opportunity with the downward sloping trendline about to break and momentum starting to give early bullish indications.
A few different perspectives to be had on Gold right now. The first is that the downward sloping channel has been broken, which is bullish and could see the Gold price trading up to around $1850. The second is that Gold is range bound between $1680 and $1765. For now we will have to hold tight and see if that range breaks or not.
Nice little flat top triangle here on the weekly (logarithmic) BTC chart. The time for the next push higher is upon us it would seem. Remember not to put all your eggs in one basket. Rather buy small and hold tight for the rest of the year. We are still of the view that cryptocurrencies in general will have a great 2021.
ETH has broken the highs and like BTC, seems set to print a number of mind-boggling new highs from here.
South African trade ideas
JSE Top 40 Index (ALSI)
There is still some bullish divergence on the ALSI and now the MACD has given a buy signal as well. Seems that the strength of developed market equities is spilling over into emerging market equities. There is also a very high risk-reward long trade to be had if you can get long under 62000 on the ALSI. If you can get a decent long entry, hold tight and allow the market the time it needs to make new highs.
If you are into trend following and don’t mind a few nicks and cuts from trying to catch falling knives, AFE might be a decent long entry here.
Anglo American (AGL)
If you got some AGL on the trendline break, hold tight for new highs. By the close of Monday, you can use a 3-day low trailing stop loss to protect gains.
BHP Billiton (BHP)
BHP is lagging behind AGL somewhat. It sort of makes sense, considering that they have a different commodity mix and thus are moved by different inputs. Nonetheless, we think that BHP will likely play some catch-up with AGL soon. So for those who missed the bus on AGL, BHP is another long opportunity.
BID Corporation (BID)
Resistance becomes support… Moreover, the momentum oscillators might trigger a decent long entry within a few days. We like a long trade here with a stop below R280 and a first target of R320. Thereafter, trailing stop loss and hold tight.
Compagnie Financiere Richemont (CFR)
CFR has been range bound for some time. With a weaker USDZAR and general global risk-on sentiment, a bullish break of this range on CFR could be a very good long entry point. The MACD has also produced a long trigger. We really like CFR for a long trade once it can maintain a daily close above R148.
The prospect of a weaker USDZAR does cause some concern for long trades in the Financials sector, although a bullish break from this small range on DSY could be a decent buy. The setup ticks most of the boxes for a trade you want to take long, although it needs to get and hold above the red and orange moving averages. Those are the 50 day (red) and 89 day (orange) moving averages. A break above those should coincide with a break out of the small consolidation as well. Some caution is advised here. This is a great long setup, but if the USDZAR loses a ton of ground during this coming week, Financials in general might fall on their swords.
We took the long here a little while ago and are currently on the verge of stopping out. Not all trades are winners. The weaker USDZAR narrative is a concern here as well. We’ll hold tight until we’re stopped out or otherwise.
GLN is looking fairly interesting for a long trade as well. The MACD is rounding out nicely and on the verge of generating a buy signal (also note the bullish divergence). As for price, it’s holding above the 50 day moving average rather well. Long positions can be taken here with a stop loss below Friday’s close (for the ultra aggressive traders) or below R55 (for the not-so-aggressive traders who prefer smaller positions).
The MTN chart is looking very constructive indeed! A nice little trend following play is on the table. Buy a break above R89.35 with a stop loss below R83.60, then hold tight and allow the trend (and the catalytic good news over the weekend) to do it’s thing.
Sibanye Stillwater (SSW)
We’ve not looked at any other gold (or precious metals) stocks this week as there are not as many attractive setups to be found. SSW does get a mention though for a few reasons. First, it is in the buying zone for trend followers. Second, it has broken and retested a bull flag. Third, the momentum oscillators are gearing up for a buy signal. Lastly, SSW has been lagging behind peers for a little while now and could attempt to play some catch-up. Also, a weaker USDZAR would likely be supportive of SSW. Hold tight.
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.