Well then, that’ll teach us to think that markets can actually come down from time time! Jokes aside, the bearish setups from last week have all be nullified and a fresh set of breakouts have taken place. Guess when it comes to equity market rallies, you really can’t stop a good thing. We’re not entirely convinced from a long-term perspective, but for the short-term traders… well, the job is to follow the market. So if you can’t stop a good thing, you might as well join in the fun.
Offshore trade ideas
S&P 500 Volatility Index
The VIX briefly popped above 20 in the early part of last week, although relentless equity market buyers managed to drive indices higher and thus, the VIX down. Despite all the noise, whipsaw, disbelief and general pandemonium in the overall market, it seems that the VIX is finally settling into a ‘normal’ trading range. We would interpret this as a sign that market will likely remain strong and headed higher, at least for now. We mentioned last week that a daily close above 20 would be a rather strong sell signal. That sell signal did not come as the VIX only spiked above 20 for a short period and never managed to get a daily close (which was our trigger) above 20.
U.S. Dollar Index (DXY)
The bearish flag formation is playing out nicely here. More USD weakness spells more strength in commodities and of course the ZAR.
S&P 500 (SPY)
Come back when there is a bullish setup they said… well, here we are. SPY is giving a proper bullish break. We did not catch this one on the short-term trading accounts and we won’t be chasing it either. It does seem though that the bull market has some kick left in it yet.
Dow Jones Industrial Average (IYY)
IYY has not made a new highs like SPY, although the charts are looking very similar. We might just see a few weeks of low volatility, grinding higher.
Nasdaq (QQQ)
The QQQs look messy, so we’re not going to mess with it this week. If we were forced to make a call though, it would be long.
Philadelphia Semiconductor Index (SOX)
We’re looking at a weekly chart here and note a few things; the hammer candle formation on a support level in the ‘buying zone’ between the 10 and 20 week exponential moving averages. This is the reason we would be bullish if nothing else on the QQQs.
Brent Crude Oil
A bit of a zoomed out view on the daily Brent Crude Oil chart for context. Currently the secondary trend is up. Marked out are some de Mark or Williams points of resistance, that could act as nice long triggers if breached. We would also be buyers if the secondary trend line is tested.
Gold
Not exactly according to our plan, but the level we’ve been eying for a while got pretty close to being tested. We adjusted our tertiary trend line lower, so accommodate the lows from the week before last. Now the key resistance, coinciding with the 200 day moving average, is the level to watch. If Gold can get above that, we could see the primary (bullish) trend return.
USDZAR
This is a good example of how we can all get caught up in the noise and confusion that is short-term markets. That strong resistance (trend) line has been in place for some time gave one fake break, but has been solidly in tact ever since. Many months ago our analysis saw R13.50 as a possibility. Between then and now we’ve swung from bullish the ZAR to bearish the ZAR and back again. It goes to show that a. good trades often take long to work out, and b. in the context of short-term trading, it is easy to get caught up in hype and news flow, but the magic is really in learning to trust your own analysis.
Dogecoin (DOGE)
Weekly chart for context. Just remember guys, this coin is literally a meme. It has no purpose and there is no supply cap whatsoever. This is the true yolo meme coin. Do not get too heavily invested here. It probably goes to the moon because people in general, and specifically people on the internet, are pretty weird creatures. If you feel you must have some Dogecoin to not be left out, then just buy a small amount. Don’t risk more than 0.5% of your capital on this.
Ethereum (ETH)
Almost halfway through 2021, so we think there is more insanity (and higher prices) on the way. not just for ETH, but for most cryptocurrencies. A similar warning to the one above. Treat these like you would any other stock. Do not over invest. There are returns to be had, but do not bet the farm.
Bitcoin (BTC)
Perhaps the best measure of the wholistic crypto space. The weekly (logarithmic scale) chart of BTC gives some context to our base expectation for the cryptocurrencies this year. We’ve widened our small flat top triangle formation and will remain buyers at $35k. It does seem less likely that we’ll get our chance to add on a significant pullback, but we’re also happy to buy a new break higher.
South African trade ideas
JSE Top 40 Index (ALSI)
Head and Shoulders formation? How about frikken no? This chart actually looks fairly constructive. The 89 day moving average held nicely and the second half of the week was really strong. We’ve not drawn it in, but there is a symmetrical triangle (pennant), which could play out to be a decent trend continuation setup. In other words, the bearishness from last week has been nullified (the right shoulder of the formation was breached) and it appears that our market is headed higher.
Anglo American Platinum (AMS)
AMS in the buying zone, as well as solid bullish divergence. We like this stock.
Astral Foods (ARL)
Nice bounce from ARL. Now let’s see if it can get to R160.
Anglo American PLC (AGL)
AGL longs can likely trim some here. At the very least, a trailing stop loss to protect gains made so far.
AngloGold Ashanti (ANG)
ANG seems to be forming a decent base here. With the gold price going and this solid support level, we’ve added some ANG to our long-term equity portfolios.
Aspen Pharmacare (APN)
Can’t stop a good thing? Well, all good things eventually come to an end. When APN gets above R170, we think it might be time to bank.
British American Tobacco (BTI)
Ban on menthol cigarettes? Bwa! BTI is range bound. With a longer-term view, perhaps a break above R590 will prove to be a good buy?
Capitec (CPI)
We closed our long on CPI after it reached our target, although it does look to be breaking higher once more. Given the sheer size of the range (R700) the risk-reward on a long trade here is huge. Just keep in mind that if this does play out as a range break, it will take very many months to reach target.
Dis-Chem Pharmacies (DCP)
Time to lock in some profit here and switch the rest to a trailing stop loss.
Investec (INL)
We closed out INL (and INP) longs last week. It has given another long trigger though. This is a setup for the more aggressive traders. A stop loss below R52.50 and a generally smaller position size should be ok here. Can’t stop a good thing 😛
Shoprite Holdings (SHP)
SHP is ticking all the boxes to initiate a new long position. We like this stock.
We keep the best for our clients
We give our clients many more ideas and insights than what we put out on our blog. Move your account to Herenya and join our community of actively trading clients.
*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.