Last week we pondered the idea of hedging longer-term portfolios for some downside protection. We also looked at a few instruments that could easily be added to your portfolio in order to provide that protection. This week we do not really have much to add, other than to reiterate the warning given last week. We think that it might get a little bumpy over the coming weeks. Thus we are happy to sit with some short protection and wait for better setups.
Offshore trade ideas
S&P 500 (SPY)
Alright, the rising wedge has broken. We note also that the SPY closed below the 50 day moving average on Friday. Next support levels come in at the 89 day moving average. Historically this zone between the 50 and 89 day moving averages has been a good ‘buying zone’. Will the buy-the-dippers win again, or will the macro headwinds actually lead to a larger scale correction this time?
Russell 2000 (IWM)
Range bound and going nowhere. At risk of sounding like a broken record… there is nothing to do here until this range breaks.
Dow Jones Transportation Index (DTX)
DTX is thoroughly testing the 200 day moving average. Often the DTX has been a leading indicator to other global markets. Things might get very spicy if the moving average support fails.
U.S. Dollar Index (DXY)
It seems that the DXY is going to have another crack at breaking the $93.50 level. As mentioned before, once DXY gets (and holds) above $93.50, we could see some turbulence in equity markets. A strong move here from the Dollar would put pressure on Emerging Market currencies and commodities.
USDZAR
Long-term trends take a long time to change. The USDZAR has once again made it above the 200 day moving average and the long-term trend change scenario is looking like it is firmly back on the table. As always the USDZAR will take its lead from the DXY, but as things look right now, we’re headed for R15.50.
Brent Crude Oil
The weekly oil chart still looks very constructive to us. Overall energy prices are looking very bullish heading into what is expected to be a cold winter in the northern hemisphere.
South African trade ideas
JSE Top 40 Index (ALSI)
The range break trade is off to a good start. We see support around 55500, 54650 and 53000.
Aspen Pharmacare (APN)
We’ve closed our APN CFD long trade. Perhaps a bit early, but we had a great run on this stock so we were happy to bank. We are still happy holders in the long-term equity portfolio.
Brait SE (BAT)
Higher risk play here, but BAT finally broken higher. As more and more people around the world are getting the vaccine, it appears that we are one step closer to that ever illusive ‘back to normal’. Keep an eye on global mobility tracking data. As people more around more, they will eventually end up back at the gym and then finally BAT might have its moment in the sun.
We’re talking to Ghosts!
We will be having a series of chats with The Finance Ghost and Mohammad Nalla during the month of September. Our goal is to educate the listeners and to let people out there know about what we do, and how we do it.
We only managed to cover about half of your questions last week, so we will be doing part 2 this coming week. Again, if there is anything that you would like to learn about, please feel free to retweet and ask!
Here's a link to the full #podcast for Ep43, the second in the @HerenyaCapital series and the first where @TraderPetri answers YOUR questions. Remember to submit your questions for Pt2 using the #HerenyaSeptember hashtag:https://t.co/2genDkru93
— Mohammed Nalla, CFA (@MohammedNalla) September 17, 2021
Want ideas, insights and research?
*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.