Well then, alright. This week we’re doing things a little differently. @TraderPetri asked twitter what they wanted us to have a look at and we’ve obliged. In no particular order, here are the twitter chart requests for the week ahead.
Twitter chart requests
Harmony Gold Mining (HAR)
HAR seems to be forming a fairly solid base. We’d have to wait until the 200 day moving average (green) is broken before we can confidently say that the trend has once against turned upward. For now though, the rounding bottom seems to be forming well with the R62.40 zone being the key support. Overall we are bullish on gold stocks in the short-to-medium-term. We hold ANG in the long-term portfolios, although HAR is looking fairly decent for a smallish long position with the view of the trend potentially changing and HAR headed back to previous highs.
Iron Ore Futures (FEF1!)
Iron Ore has been on a bit of a tear lately. The last two days of last week saw it pull back rather violently from the recent highs. For now we don’t really see a tradeable setup here, unless FEF1! falls into that support zone (indicated by the blue circle). Overall, commodities are rallying on the back of the post-pandemic (printer driven) recovery. What is important to note here is that the primary driver for FEF1! demand is Chinese manufacturing and construction. China seems to be on a good footing at present and in our view, are likely to continue to recover (and grow) faster than the rest of the world. If you can get long between the 50 day and 89 day moving average, you might be in for a decent trend following swing trade.
Kumba Iron Ore (KIO)
KIO can be tricky, although it seems to have broken out of, retested and held the range. You could take a long here with a tight stop (below Friday’s lows). Should the R680 level fail, the play would be to try get long again around the R550 mark.
S&P 500 Volatility Index (VIX)
Things got a little choppy last week, but the VIX managed to end the week below 20 (again). It seems that ‘things are returning to normal’. Lower volatility, unlimited ink in the printer, post-pandemic economic recovery… we hate to say it, but things are looking fairly good right now.
NPN has gone a little far here in our view. We can see that in recent history, whenever it has gotten this far below the longer-term (200 day) moving averages, while making exhaustion gaps, it has provided good entries for long positions.
Disclaimer: we used this opportunity to add NPN to long-term equity accounts.
Dis-Chem Pharmacies (DCP)
DCP has had a great run. We would not be shorting it here, although we would definitely be taking some profits off the table.
SSW made a nice little hammed right below a key support zone. Momentum wise it is in the middle of nowhere, but a small long with a stop below Thursday’s low could be a good trade here.
Standard Bank (SBK)
4 hour chart.
We are watching the inverse head and shoulders formation here and are currently long on CFD. Short-term trade target would be the 200 day moving average, with a trailing stop once reached. Hard stop below the right shoulder.
Disclaimer: we added SBK to long-term equity accounts last week.
GND is tough to read… so we’re going to sidestep this stock for now. We are watching that falling wedge on the stochastic oscillator though. If that breaks higher, it could offer a long trade. We need to wait for confirmation though. If GND trades as low as R4.25, we think it would be a decent buy at those levels.
NTC is not providing a high probability setup at the moment. There is a nice range to watch though. We’ll need some patience to see what it does around the R15.50 level.
Technically, FSR broke out of the range and held above it by the end of the week, so you could take a long here with a stop in the middle of the range.
We got stopped out of a good long trade on INL for a loss last week. Our stop was just too tight and the few trades below R52.50 triggered out stop loss. This would have been a good long trade in our view and it is unfortunate that we were stopped out. Can’t win them all.
City Lodge Hotels (CLH)
CLH is a bit of a tricky chart. It looks like it is getting ready to take off. We would like the chance to buy for long-term accounts if it once again tests the zone between the 89 day and 200 day moving averages (between R3.30 and R3.70), although by the look of this chart, that seems rather unlikely. We might just have to pay up for this one.
JSE Top 40 Index (ALSI)
By the looks of things, there are around 3000 or so points on the table for the longs (for the range trade). Nice solid up trend in place. Overall macro risk-on sentiment and South Africa’s present deep undervaluation should see the ALSI break through the 64k level and keep trending higher.
Another inverse head and shoulders pattern in the making. As requested, we added stop and take profit levels for a long trade here. What we like most here is how SHP has been holding the support/buy zone over the last few weeks (green shaded area between 50 and 89 moving averages).
Disclaimer: we added SHP to long-term portfolios last week.
Gold has reached the resistance level. Now the waiting game begins. Once the 200 day moving average is broken to the upside, we could be looking at a proper medium-term trend change (and a return of the bullish trend). Inflation caused by enormous monetary stimulus will likely be a strong driver of the gold price in the coming months. Be patient though, $1848 is a strong level, wait for it to break.
Silver is not really presenting us with anything that we would consider a setup. That said, the trend is up. If we could see it get back above $28 (and hold above it this time), we might have reason to get involved here.
Bid Corp (BID)
BID has given us a fake signal here and there over the last few months, although largely our longer-term view on this stock has not changed. BID managed to get above the longer-term moving averages, which is indicative of a bullish trend change. We’d be happy to hold longs here with a stop below R270.
DRD Gold (DRD)
The trend change here is starting to look better and better. We did take a CFD long here and get stopped out at break even in the last few weeks, although the break and close above the previous de Mark or Williams point of resistance might see us taking a new long in the coming week. IF DRD can get above the 200 day moving average, things are going to get really interesting. What we really like about this setup is the interaction with the 89 day moving average. It’s been tested a few times, and finally looks like DRD has broken free of it. We like this stock.
PPC Ltd. (PPC)
Well hasn’t this one been the talk of the town? Looking at the weekly chart here, the safest way to play this would be to wait for the (blue) downtrend to be broken. Yes there is a decent rounding bottom there, but remember, things do not move in straight lines. A short-term, against the trend trade could be a break above the 200 week moving average and a run toward the downtrend line. From a Dow Theory / trend perspective though, the trend is down and has shown no signs of turning just yet. The brave longs will be rewarded here… possibly. Just don’t bet the farm.
Old Mutual (OMU)
OMU is looking rather interesting. It’s held the retest of the 200 day moving average and looks to be forming a bull flag price pattern. In a SA Inc. rally situation, we think OMU could do really well. Our view would be to wait for the break of the bull flag before making any moves.
Bit a wishy-washy chart on BVT right now. The one thing it has going for it is that it looks like it is managing to put in a trend change. There is no high probability setup in our view, but we would rather be long than short. It is encouraging to see such long tails on the daily candles as it shows that there is interest from buyers. You could take a small long here with a target of R190 and a stop just below R170. It’s not the world’s best setup, but in the context of a strong market next week, it could be a decent trade.
Alibaba Group (BABA)
BABA looks interesting. It’s trading at support that has been a significant level since 2018 and unlike many other tech stocks, BABA makes a huge amount of cash. If you go long here, stop below $190 (to give it some room) and a whole lot of patience for it to get back to the previous highs. This could make an interesting addition to long-term holdings at these levels as well. We like this stock.
WHL has held its tertiary trend rather well and manage to break above the 200 week moving average. It would not be unreasonable to expect WHL to shoot higher now that it has managed to break, test and hold the 200 week. The last two weeks saw bulls fighting back hard and snapping up whatever they could get in the buying zone. First target R60, second target R70, stop loss R46.
Pan African Resources (PAN)
PAN is making a large bull flag by the looks of things. It is also trading in the long-term buying zone and momentum is starting to look bullish. The safest play would be to wait for the flag formation to break and give us a signal, although buying in the shaded green zone (with a stop below R3) will likely prove to be a good entry.
Jubilee Metals Group (JBL)
Solid up trend. Waiting for a chance to buy in the buying zone is probably the wisest course of action. For those who are not in already, perhaps phase in a little now, with a view to buy more if/when JBL gives us a pullback. Those already long… enjoy the ride.
Copper Futures (HG1!)
This chart does not really do justice to the rally since the pandemic lows last year. Yes, it is almost straight up, but what is not shown here is that this has pushed to a record high. The question is really just ‘how long will this keep going?’. We do not know the answer to that to be honest. We suspect though, on the back of the post-pandemic recovery narrative, that there is more rally to be had in this.
BHP Billiton (BHP)
As long as the 89 day moving average holds, we think BHP should keep trending higher. As it stands right now, this is about the highest probability entry that we can get for any new long positions in this stock. If the 89 day fails, we’d look to buy again around the R420 level.
Much the same as NPN above, PRX looks to be offering a very nice long entry.
Alaris Holdings Limited (ALH)
This stock is just too illiquid for us to be able to have any informed technical view on it. It’s not really a stock that we track, but note that it is in the radio frequency (RF) technology sector. This could be an interesting and exciting space over the next decade, so it is worth doing a little bit of homework on.
Randgold & Exploration Company (RNG)
Liquidity… we just hope that you have a good fundamental reason for owning this if you do. This stock is not really on our radar, but we’ll spend some time looking into it. Generally though, we know that it is tempting to buy penny stocks in the search of the mythical ten-bagger, just make sure that if/when you do, you’re not putting too much capital behind it. Best to do some homework though.
MTN is stepping higher nicely. It looks like R110 is on the cards in the short-term.
Mediclinic International (MEI)
MEI is not showing us a high probability setup at the moment, but we’d expect that it trades back to the top of the range. From a longer-term perspective, MEI is trying to establish a base for a new bullish trend. For now though, it’s trading sideways. In our view, the best opportunities are at the top and bottom ends of the range. In no man’s land, there is no trade for us.
Brait SE (BAT)
We like BAT, although it has not played out exactly how we thought it would. Nevertheless, we are happy to hold this for now and think in a year or so from now, accumulating at these prices will be handsomely rewarded. The double bottom only comes into play once the R4.25 is broken. We’re looking at a R6.50 target within the next 18 months.
EXX left a pretty big gap… but in context, that was thanks for a massive dividend. Since then the stock has tested the 200 day moving average and looks to be setting up to once again trade towards the R180 level. Any new longs entered here can stop a few Rand below Thursday’s lows with a R180 target.
TKG gave us a fake short signal not so long ago. Since then though, the R38 level has been holding strong. We think now that TKG is ‘walking the line’ around the uptrend line (purple) and that we could see a decent long entry once it gets above R40.
SPOT looks a little oversold here, and also like it has completed an ABC correction move with terminated on a key support zone. This actually offers a very high risk-reward long trade. Well spotted (lol, we got jokes)!
A bit of a trendless situation happening here… It looks like momentum is shifting to bullish and we might see a very short-term downtrend break, so a long trade back to $520 might be worth a punt (with a stop below Wednesday’s lows).
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*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.