Independence day!

It’s the 4th of July on Monday and the day that the US celebrates independence day! Which means two things… the US markets are closed (and it will be a bit of a rudderless day for us on Monday) and that we can probably show you the most accurate picture of how markets have been trading so far this year.

independence day

Not a pretty sight…

In all seriousness though, it has been a difficult year so far and odds are that it is not going to get much easier any time soon. This week we will look at a few ideas, but take them with a pinch of salt because the market is rather wild and unpredictable at the moment.

Offshore trade ideas
S&P 500 (SPY)

We never saw the early week strength we expected last week, but instead had almost one-way traffic lower until Friday. This week we are not willing to make a weekly opening call, but we will say that we still expect that the headline US index trades lower in the coming weeks. Our target currently is the 3400 index level ($340 on the SPY ETF). This level was the all-time high before covid derailed the world in 2020.

Independence day
MSCI China ETF (MCHI)

We still favour MCHI over SPY at this stage and it seems that we are starting to see a trend reversal here. We saw some good fundamental news coming form the textile manufacturing industry in China over the weekend as well. This strengthens our view that long-term investors should start to allocate capital to eastward facing investments.

Independence day
Brent Crude Oil

We moved our tertiary trend line just a little lower, although this chart is still ‘make or break’. Recession fears will put some downward pressure on oil, although supply constraints exert force in the other direction. Our base view is that energy in general still has some way to go before it peaks, although a multi-month correction before the trend continues is not outside of possibility. For now we are sitting tight and allowing time and price to lead us.

Independence day
Gold

Honestly, we can’t really wrap our heads around why gold is not trading higher. We saw a pretty mean hammer formation right on a key support level on Friday… so perhaps this week is the one?

Independence day
Bitcoin (BTC)

BTC is now trading below the previous all-time high and looks set to test the long-term trend line around $15k. Hold onto your hats if you’re already long, and if you’re not, maybe a buy at $15k is not a bad idea.

Independence day
Ethereum (ETH)

ETH will take its lead from BTC, although it is starting to look like the time to buy is approaching. As is the case with BTC above, DO NOT USE LEVERAGE with these crypto’s. You are welcome to start nibbling at them, but it is not yet time to buy big. Much more panic and pain has to come before we can really get involved here.

Independence day
Northrop Grumman (NOC)

Forgive our cynicism, but war is good business for weapons manufacturers. NOC is making its second attempt at a break out higher. It looks like this time it has legs.

Independence day
South African trade ideas
JSE Top 40 Index (ALSI)

The pressure is on and our view is bearish. We think that there could still be rather a lot of downside in our market over the coming weeks and months (rest of the year) and have a target around 53000.

Sasol (SOL)

This chart will only get worse if oil does not manager to hold its tertiary trend line. We flagged this trend line break a few weeks ago and sincerely hope that you managed to take action in time.

Steinhoff (SNH)

SNH starting to look a little ‘make or break’ here. Remember that the stop loss for this trade is below the long-term trend line.

The Foschini Group (TFG)

TFG is looking like a great short trade once this R118 support level fails.

Shoprite (SHP)

We didn’t draw it, but you can see the Head and Shoulders, right? R191 might put up a fight (and possibly a bounce), but realistically we could see R170 in the coming weeks.

Truworths (TRU)

It’s not looking good for TRU either. High probability setup with a really tight stop on the short trade here.

ABSA Group (ABG)

No doubt there will be those who see the Head and Shoulders on ABG. We think this stock can trade to R136 in the coming weeks. Decent high probability short setup here.

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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