Look out below!

The markets got smashed last week and even managed to close the US session on the lows. Strangely, sentiment is not at an extreme and it seems that through all of this, retail investors and traders have been net buyers. To us, this sounds like more pain is on the way. So without too much pontification, let’s look at some charts and see what we can find (other than ‘look out below! signs nailed to pretty much everything).

Offshore trade ideas
All Country World Index (ACWI)

We use the ACWI as our benchmark for the Managed Offshore Portfolio, thus we track it rather closely. Some time ago we indicated a potential downside target that frankly, would amount to what most would call a crash. With recent market action and macro drivers in mind, we still think that this downside target is a fairly probable outcome. We note now thought that the ACWI is approaching a key support level. This key support level will set up a high probability trading setup in both directions, although our bias is bearish. Below $84 and it’s look out below!

S&P 500 (SPY)

Well, this chart seems to be working out according to plan. There might be some violent buying (and volatility) here as the market tries to defend a key support level, but we are feeling very confident about our downside target of $370 – $360 being reached. At some point we will be presented with a fantastic buying opportunity, although there is likely much pain to come before bargain hunting can begin.

look out below
Nasdaq (QQQ)

By now our sentiments are pretty clear, so there is not too much to add about the QQQ chart. As is the case with the indices (and ETFs) above, most of the volume is still trading to the downside. If the $285 level fails, look out below!

look out below
U.S. Dollar Index (DXY)

We’ve included both a weekly and daily chart of the DXY in order to contextualise the recent move. When last we posted about the DXY it was looking to break out of the small symmetrical triangle formation shown on the daily chart. That move has now taken place and the DXY has now reached what seems to be a rather significant horizontal resistance level. It is interesting to note that the only other times that the DXY has been above this level ($104 – $105) was during the 1980’s recession and the dot comm bubble… interesting times surely do lie ahead.

Gold

We use a weekly chart on gold here, most likely because it is the one that most suits our bias (just a disclaimer). Also because we have had this symmetrical triangle formation setup on the chart for many months now. It would appear that the formation has had a break out and has now completed the retest of that break out. We expect that gold will make a run for a price target in excess of $2100 in the coming months.

Brent Crude Oil

As you are probably sick of hearing now, we’ve been very bullish oil and energy for some time. Nothing has changed. Aggressive traders could probably use $121 as a stop loss and $130 as a target for new longs entered into under $123.

Bitcoin (BTC)

It’s not looking good hodlers… the break of the 126 week moving average has historically been met with some violent downside in the short-term. We mark the zone between the previous all-time high ($20k), and the primary trend line (+-$15k) as a target zone for the current bearish market action. Hodlers… look out below!

look out below
Ethereum (ETH)

ETH is presenting a very similar as BTC (no surprises there), with the key difference being that ETH is already testing the previous all-tine high level as support. A failure here would likely see price drop as low as $800.

look out below
USDZAR

Well, ok then. The events of last week has sent USDZAR straight up. R16.40 seems to be the most logical target at this stage. Let’s see how this week goes.

South African trade ideas
JSE Top 40 Index (ALSI)

The retest of the channel has led to a sharp move lower. Now the ALSI is sitting just below what looks like a last ditch flag support. We think this level has broken and downside is definitely coming. Look out below!

look out below
Naspers (NPN)

We flagged NPN as a short last week and then very promptly changed our mind (in this tweet) on Monday after some news from China. It does seem that much of that explosively positive sentiment faded in the last two days of last week. That said, NPN does have earnings coming up and shareholders are keenly focused on managements plans to ‘unlock value’. We are now cautiously long of this stock with an eye on results later this month and how management communicates their plans to unlock value for shareholders (as the Tencent discount is pretty massive).

Jubilee Metals Group (JBL)

JBL is one of those stocks that we love to own, but has been going sideways and lower for about a year now. We’re keeping an eye on the R2.70 level and would add to long-term portfolios there, although below R2.70 and (at least in the short-term) we could see some pain. Fundamentally though, we still really like this stock over the long-term, so a sudden low volume selloff would be welcomed as we would use it as an opportunity to add to our position.

Sasol (SOL)

The trend is your friend! It’s worth trying to pick some up on a retest of the trend line, although be careful of that trend line breaking as that would likely be used as a trailing stop for most traders (and other participants) who have been long for some time now.

Anheuser-Busch Inbev (ANH)

ANH was recently flagged as one of the most undervalued stocks globally by a large investment bank. We’re not so sure about that, but we do note that is is trading on/near key support. For the braver traders out there willing to take longs in the current environment, ANH offers a great risk-reward trade to the top of the range.

Aspen Pharmacare (APN)

The trend is once again your friend! Unless you’re long APN, then you’re in trouble. The range we showed last week has broken and APN is grinding lower as expected. Trailing stops from here for those who are short.

Astral Foods (ARL)

The ARL reversal seems to be underway and it looks like the bottom of the range is calling! Look out below!

look out below
Life Healthcare (LHC)

Another long for the brave souls. LHC seems to be offering a great risk-reward trade off the R18 historic support. Just make sure to keep a tight stop loss.

Mondi PLC (MNP)

MNP has broken the flag (and wedge) formation we showed last week and seems to be headed lower. A trailing stop loss would probably be the best way to manage this trade.

look out below
Transaction Capital (TCP)

As we said last week, TCP is long-standing one of our favourite stocks, but these (hips) charts don’t lie and TCP is starting to feel the (bearish) vibe. In truth, given the economic conditions currently present and the difficulties on the horizon, TCP might experience a bit of a slowdown in revenues. Not because they don’t have a great business, but rather because the environment in which that great business operates is likely to become more strained. From a trade perspective, last week was the time to get short for this break and retest, so it might not be worth chasing now. Perhaps if the R38 support fails there will be another chance to enter into a high probability trade. Patience.

Herenya Managed Portfolios

We’ve not made too much noise about this (yet), but Herenya now has three portfolios that clients can invest in. Our performance has been rather good (if we must say so ourselves). In time we will build a dedicated page on our website for our managed portfolios, although for now we would just like to make our latest fact sheets available for download. Below are some details about our managed portfolios, as well as the latest fact sheets for each. Please contact us if you would like to invest in one or more of our portfolios.

Herenya Offshore Long-Term Equity Portfolio
Herenya South Africa Long-Term Equity Portfolio
Herenya Active Trading Portfolio
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 instrumentBrokerage rateMargin rateMinimum trade charge
JSE listed equities and ETFs0.30%100%R150
CFDs on JSE listed equities0.20%10% – 25%R50
SAFEX listed index futures (ALSI)R206% – 8%R20 per contract
Offshore stockbroking rates
Trading instrumentBrokerage rateMargin rateMinimum trade charge
U.S. listed equities and ETFsUSD 1 cents per share100%USD 2
Canada listed equities and ETFsCAD 2 cents per share100%CAD 2
U.K. listed equities and ETFsGBP 12 + 0.1%100%GBP 12
Germany listed equities and ETFs0.20%100%EUR 8
Forex0.40%100%USD 4
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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.

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Every week needs a new plan!

Markets change all the time. New fundamental drivers emerge, technical setups mature or fail and our trading plan must adjust in order to keep up with the ever changing environment. Every week we highlight some of the trade ideas that are generated within our client community so that you can stay on top of what we're looking out for and planning to trade at the beginning of each week. 

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