Wowzers! What a week that was. I’ll keep the post brief this week as there really isn’t much in the way of positivity on my radar, so the overall message is really just trade small, be careful, stick to stop losses or maybe just take the next few weeks off. Don’t be a hero in this market. So many people are trying to catch the bounce and ‘use this volatility to make the big bucks’, but trust me, for every 10 that enter, 1 will leave. So best stay out of the market until the culling is over. That said, many charts are in the weekly timeframe this week as some longer-term perspective is often helpful.
Offshore trade ideas
S&P 500 (SPY)
Alright then, target reached it seems. Where to from here? To me this looks like it could keep heading lower to test the pre-covid highs around 3380 on the index ($338.00 on the ETF). I’ve looked at two charts here, being both the daily and the weekly. The daily shows that the anticipated move to to around this $365 level has now been completed, although when looking at the weekly chart is does seem that there is likely to be more downside. On both the daily and the weekly there are breakaway gaps, which does not bode well for the bulls. That said, expect the market to remain volatile and produce large, fast swings. My bias here is still short, but be careful not to chase and get ripped to pieces on the bounces. 3% up days are not too uncommon in current conditions, so whatever you do, trade smaller than usual.
All Country Wold Index (ACWI)
Looks like the first support level for ACWI comes in around $77.34, but note that it is already back at pre-covid highs, so we will have to see how well this $82 level does at defending. My view is still that we see ACWI trade closer to $72 in due course, but that is still a long way down and perhaps a few weeks away.
Gold
Gold is still feeling a bit directionless right now, although this setup continues to be bullish in my view. If $1800 breaks down though, all bets are off.
Bitcoin (BTC)
BTC dropping like its hot! It broke into the buying zone, although I have not acted at yet. Many are trying to catch the bounce now and I am not sure that is a wise course of action just yet. I do think that we see it test the primary trend line, so prices closer to $15k, to me at least, are still on the cards.
Ethereum (ETH)
Cheers previous all-time high. Now for a few standard deviations under the 126 week trend line, and then in a few weeks/months the correction will be over. Nothing for me to do here just yet but wait and see if I can buy some under $500.
South African trade ideas
Sasol (SOL)
If you look at this chart long enough you can actually see me crying. You’ve been a real winner SOL, but you’ve broken your trend line and perhaps its time to start reconsidering my position. Oil had a large fall last week on the back of recession fears, so oil related stocks are going to feel some heat. To be clear, from a long-term investment perspective I see no reason to sell SOL. Even in a crash/recession scenario, I think structurally the energy and oil markets will remain in short supply, thus I remain bullish on energy (coal, oil and uranium). In the short-term though, panic might grip the oil market (like all others) and we could see a brief, violent dump lower (which we could argue has already begun). My thinking here is to get out of the way of this stock in the short-term, but maybe use further downside to buy some more for longer-term holdings.
Thungela Resources (TGA)
The symmetrical triangle broke down… The question now is, does it bounce higher to retest and give another chance at the short, or does it drop like a stone to R180? Keep in mind, despite panic and fears of recession, many, many, many countries need coal to run power plants. Regardless of recessions or not, people need electricity. I think this stock will be volatile, but I think that buying if we see lower prices (and I mean sub-R200) might well be worth it.
Astral Foods (ARL)
ARL is giving a chance to those who did not get short last week. Stop loss above R196, target R140.
Old Mutual (OMU)
I don’t want to alarm anyone, but the R11.50 – R11.40 zone is a key support level and if it fails, we might see sub-R10 fairly soon.
Steinhoff (SNH)
And controversial chart of the week goes to SNH, which shows a strong primary trend line support being tested and a very decent long trade setup. Easy to see stop loss (below R2.40) with a sky-high target. This is a great risk-reward setup. Just remember that this is now technically a penny stock, so trade a bit smaller and expect wilder moves. Mind you… indexes are swinging 3%+ a day and crypto’s are doing 6%+, so you could say, expect what has become sort of normal over the last few weeks. Either way, I like the look of this chart and will be happy to get long in the new week.
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 |
| Forex | 0.40% | 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.