Well, in our last update around 3 weeks ago we pointed out some bearish divergence setups on some of the major indices. Needless to say, those setups did not work and the market kept squeezing higher. We find ourselves in a strange place right now… sure, the market is up some 23% odd from the lows (U.S. markets), which is basically the average bear market rally historically, but sentiment is still slanting very bearish. This makes us wonder, how much more squeeze is there to come? In fact, we’re starting to wonder if this is in fact a squeeze, or maybe a trend change?
For now we cannot choose sides as we do not have enough evidence to support either view. So we are currently somewhere in the middle between being bearish (which is the nagging bias in the back of our minds) and turning bullish. We mentioned in one of our previous posts that being patient is likely the best course of action and we stand by that for now. Although markets have rallied hard in the last few weeks, we are not convinced that we are out of the woods. There are currently just too many things that have to ‘go right’ in order for the global economy to steam ahead in the next six months. So for now, we sit around and wait and try not make too many changes to our portfolio’s.
Offshore trade ideas
S&P 500 (SPY)
SPY got to 420, and then some. The bearish divergence setup dis not work out as envisioned and for the first time in a long while, SPY made a new high on the daily chart. We’re not yet convinced that it is time to rush in… but there does sure seem to be a lot of desperate buyers out there. Are they short sellers covering and how much more squeeze is left?
S&P 500 Volatility Index (VIX)
The VIX has been crushed in recent months and is trading below 20 once more. Is this a sign of some complacency creeping into markets? A wise trader once said that you should buy protection when you can, not when you need too. Now does seem like a good time to buy some protection in the form of VIX calls, while volatility is cheap. If how much more squeeze turns out to be none at all, the VIX should see the mid 30’s again soon.
Brent Crude Oil
It is no secret that we have been and still are huge energy bulls. Oil has come down rather (drastically) well over the last few months and has come to pay its respects to the longer-term trend line. Although it has not touched it yet (aka. traded $90), it is getting pretty close. Buying around the $90 to $95 region could be a good medium-term entry as a cold winter approaches the northern hemisphere and Russian oil is still sanctioned, not to mention OPEC+ (tiny) temporary production increases are running out of time.
USDZAR
At least one divergence setup played out with the ZAR strengthening massively in recent weeks. How much more squeeze do we need in the U.S. to drive the ZAR to R15.50?
Gold
Gold trading smack in the middle of the range. There is no high probability setup for us here. That said, we do think that it will likely test the top of the range at $1920 before long.
Nasdaq (QQQ)
Another bearish divergence play gone wrong. How much more squeeze will the market give? Surely we must be close to the end?
South African trade ideas
JSE Top 40 Index (ALSI)
We got the break above 62k, but again we wonder how much more squeeze is left here?
Brait SE (BAT)
Looking at an hourly chart here on BAT we can see that there has been a seller around in the last few sessions, moving their offer from 420c to 418c. Did the seller finally run out of ammo late on Friday afternoon?
Life Healthcare (LHC)
The LHC trade is working well so far. A trailing stop loss from here would be advised.
Top Securities Broker Awards
For the first time ever Herenya Capital Advisors is competing in the Intellidex Top Securities Brokers Awards.
Launched in 2010, the Top Securities Brokers survey (formerly Top Stockbrokers) is the Industry’s premier independent assessment of the industry.
The survey is based on a comprehensive survey of securities brokers as well as their clients, with high emphasis placed on client rankings of their firms across an extensive list of categories.
Last year 6,599 clients of brokers completed the online survey, with the high number of respondents enhancing the credibility of the findings.
The online survey to find the top securities brokers in SA is now open, and we would greatly appreciate you taking the time to complete the 2022 online client survey and share your experiences.
To rank Herenya Capital Advisors click here.
The survey will take approximately 20 minutes to complete and the deadline is 26 August 2022.
All participants are automatically entered into a lucky draw and stand a chance to Win R10,000, offered by Intellidex.
In the past year Herenya Capital has grown from strength to strength, not only have we been featured on some of the most revered platforms, but we have also been commended by our peers and our clients for our excellent service and tenacity to stay at the forefront of the finance industry.
Please let us know if you have any queries or require additional information.
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.