Very often we overcomplicate things for ourselves. The easy truth is that trend following it often the best way to interact with markets. Since the trend is currently very firmly up, we’re happy to toe the trend following line for as long as the trend stays in tact.
Offshore trade ideas
S&P 500 (SPY)
After all those ups and downs last week, the market didn’t really move all that much in the end. The SPY has made a nice clear range though that could be traded once broken out.
Russell 2000 (IWM)
Our initial attempt at going long on IWM did not go so well, although IWM has set up again for another attempt at the long trade. A break above $225.76 would trigger a trend following long trade.
QQQ momentum seems to be fading a little, although it still managed to close above last week’s key level. We still favour the long trade here, with a three-day low as the stop loss.
Dow Jones Industrial Average (IYY)
The IYY setup looks very similar to that on SPY. Once again a simple range break will be the trigger, most likely for a trend following trade.
Philadelphia Semiconductor Index (SOX)
That little range break last week (to the downside) played out and reached its target. The 50 day moving average held up well and now SOX is looking to break back into last week’s range. There is some bullish divergence as well. Overall our thinking here is that a break above 3208 could probably be bought.
Dow Jones Transportation Average (DTX)
The trend is strong with this one! A warning sign here for us is how steep this trend has become over recent months. That said, as long as the bottom channel holds (can be used as a trailing stop loss), we’re happy to take a new long position here in the coming week.
S&P 500 Volatility Index (VIX)
US Dollar Index (DXY)
The flag formation we’ve been watching on the DXY has finally given a clear bearish break. It seems that the fear created by talk of higher capital gains taxed in the US were short lived and that the power of the brrr is overwhelming. With all those new Dollars in circulation it’s hard to imagine any other outcome, other than a weaker USD. This break should be supportive of precious metals, commodities in general and emerging markets.
Well, after trying to fight it for a while, it seems that the USDZAR wants to continue to strengthen and fighting the trend is unwise. In fact, as stated earlier, trend following is often the easiest way. On the weekly chart a major support has been broken and it looks like the USDZAR is heading down to that historic large range support. On the daily, we can see that a small triangle pattern has formed. Looking at that triangle more closely on the 4 hour chart, it seems like a decent trend continuation setup. A break below R14.20 would likely see the USDZAR move closer to that much coveted R13.20 level.
The gold bounce is underway. Although, the 89 day moving average put up a bit of a fight. We remain bullish Gold, unless the $1765 level is broken.
Brent Crude Oil
So much for the bullish break above the previous high. That goes to show why these crypto’s need to be traded on weekly charts. We remain bullish and hope that this is a deep enough dip to buy. Around $35k would be a really strong buy in our view.
ETH has also not followed through as we would have thought. Nonetheless, we remain bullish for the remainder of the year and will use a pullback as a chance to add to longs. If we could see $1420 again, that would be a strong buy for us.
South African trade ideas
JSE Top 40 Index (ALSI)
Oh to be a trend following trader… the ALSI is making a symmetrical triangle and has found support in the ‘buying zone’. Given some risk-on context, our thinking is that we see the ALSI break higher in the coming week and trade to new highs.
FSR is back to being nowhere. As long as R49.55 holds, we remain long and patient.
R3337 is the last line of defence for our long NPN trade. Interestingly, it is also a potential double bottom with some early signs of a bullish momentum shift.
AFE is almost ready to start pushing new highs. We’re switching to a trailing stop loss from here.
NED broke out of its big range and has pulled back to test it. Once again, this setup is looking really attractive to us. The risk-reward here is very good.
DRD Gold (DRD)
We’re moving our stop loss to entry and letting DRD run.
Compagnie Financiere Richemont (CFR)
Anheuser Busch Inbev (ANH)
The 89 day moving average was broken and it seems the move to R1100 is on it’s way.
Blue Label Telecoms (BLU)
Decent opportunity to trade against the trend on BLU here. We’ll have to keep an eye on it to see how it behaves around R3.95. It might be a nice buy down there, although right now it is too early to tell. If you’re not brave (or stupid) enough to short it, the wise thing to do would be to wait for R3.95 and re-evaluate when it gets there.
Dis-Chem Pharmacies (DCP)
DCP trend following long trade. It spent some time in the ‘buying zone’ and has now broken out of a flat top triangle price pattern. Momentum is in the middle of nowhere, but could swing bullish if DCP sees another few up days.
SLM is trying hard to change its trend. It is currently testing the bottom of the rectangle it has been trading in for a good few months. Taking a long here would offer an extremely high risk-reward opportunity. The stop loss would be a daily close below the rectangle low, with potential upside targets at the upper end of the rectangle (range) and potentially all the way up to R74 if the rectangle breaks higher.
We like SOL above the R234 level because the trend has been really strong and it keeps making new highs. It is our feeling that the new highs can be bought into. For context, the weekly chart shows how significant the R234 level is. SOL is a buy here with a target price of R300. If this truly is a longer-term trend change, do not be surprised if SOL is back in the R400 zone within the next 3 years.
Tiger Brands (TBS)
TBS has been range bound for some time now and much like BVT, it has made a hammer candle on a key support level. It is also showing early signs on a bullish momentum shift. This could be a decent long trade to the top of the range.
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.