Ok, ok, spring just started here in South Africa… but in the northern hemisphere winter is fast approaching and looking at all the charts, economic indicators and just general happenings in the conflict with Russia… let’s just say that things are looking pretty dire. Welcome to winter northern hemisphere, I hope you are ready for a cold one.
Offshore trade ideas
S&P 500 (SPY)
Well then… it looked for a short while that the week would end on a high note, but alas, for the Russians came to spoil the party and close markets on the lows. I’m not going to lie, this market looks toast! I’ve been saying this for some time now to be honest, so this is not new messaging from me. Sure, the market does not move in straight lines and sometimes you get caught on the wrong side of a move because you were either early or just plain wrong, but from where I sit, I think this market is going to head a lot lower. Remember that 3380-ish on the S&P 500 Index is the pre-covid high, so going back to test that is rather probable in my view. The real question is: does the pull-back stop at 3380, or are we in for a proper recession here?
Nasdaq (QQQ)
I guess this reads the same as above… pre-covid highs is now support and acting like a magnet for QQQ.
Philadelphia Semiconductor Index (SOX)
SOX also looking pretty smoked to be honest. I’ve highlighted the pre-covid highs here too.
Deutsche Boerse DAX Index (DAX)
DAX is on a very important level here. If it fails here, we could see it trade all the way down to the covid-lows. Honestly, given the energy situation in Europe (Russia turning off the gas again) and how dependant German manufacturing is on, now inaccessible, energy from Russia… it is hard to imagine a scenario where Germany escapes a bad recession. Make no mistake, this is an energy crisis and the impact on the German, European and Global economies should not be underestimated. Also, this chart offers a decent risk-reward on the short here. It’s going to be a cold winter in Europe.
U.S. Dollar Index (DXY)
No real new comments on DXY, other than a general update and one of these. Overall, the message DXY is sending is clear. Get out of Europe and into safety. The problem is, the stronger the Dollar gets, the fewer places there are to hide.
USDZAR
I use a weekly chart here to illustrate the power of trends. Some are calling for the ZAR to trade back to ‘fair value’ around R15. Truth be told, I don’t see that happening in the short-term. For now the trend is too strong to fight. I think the petrol price cut coming this week is going to be rather short-lived. Enjoy it while you can I suppose.
Gold
Gold is once again near the channel low and probably worth taking an interest in. In truth, I am not sure why Gold has not run ultra-hard on the back of all the ‘risky’ happenings around the world. Maybe Gold is just being a bit of a late bloomer?
Brent Crude Oil
Oil is holding on for dear life here, but even I have to admit that this trend is starting to look a little fragile. There is no doubt that a global recession scenario is going to be bad for oil demand, so there is a strong argument to be made for lower oil prices. That said, I think we are likely to see some production cuts from OPEC+, so for now I am hanging on here and saying that buying off this trend line with a fairly tight stop is the play. Although, be warned, if no cut comes from OPEC+, this trend line might just crack, and we could see oil come off a bunch. It’s probably better (if you have no position currently) to wait for OPEC+ before taking any trades here.
South African trade ideas
JSE Top 40 Index (ALSI)
Well, Friday was nice and cheery, but I am not sure that Monday will be. The downside target is still 53k. Trail your stop losses.
Quilter (QLT)
Rumours of a buy-out, support on an important level. Seems we have a very high risk-reward setup here for a long trade.
Naspers (NPN)
NPN once again flirting with death. We have already seen once before how significant this R2350 support zone is and again NPN is testing it repeatedly. If this level breaks to the downside (again), I think NPN is going to test the lows (again). Let’s see though, no point in pre-empting it.
Thungela Resources (TGA)
I don’t want to be ‘that guy’, but the energy situation isn’t exactly getting much easier in Europe and TGA is rather well positioned to make some (more) profit from selling coal. That, and a decent bullish reversal candle pattern. Maybe we push even higher than what anyone thinks is possible? In my experience, that’s generally how markets work.
Blue Label Telecoms (BLU)
We pointed out the BLU short last week. Trailing stop losses from here.
Mediclinic International (MEI)
MEI stock has been doing really well, and for good reason too. Although, once again I get that ‘gravity is calling’ feeling. MEI has put in a decent range between R90 and R100. A downside break of that range (sub-R90) might see a rather wild correction. Something to keep on the radar I think.
Steinhoff International (SNH)
SNH is dying… I thought that it stood a chance if this trend line held, but alas! The trend line did not hold and given the overall market mood, without a clear, loud new catalyst, I must abandon hope for SNH.
Sasol (SOL)
Similar to Brent Crude Oil, SOL is flirting with death. Watch the trend line on Oil and watch the R320 level on SOL. Below there (on both) and things get messy. If Oil bounces off its trend line and SOL can get through R365 to the upside the good days will be here again. Well, maybe not for basically everyone at the petrol pump, but good for SOL shareholders at least.
Telkom (TKG)
Bull flag looking like it might be almost ready to break, plus the buy-out story… I think TKG pulls one of these.
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 |
Subscribe for post updates
If you enjoy reading our blog and would like to get email updates each time we post, please subscribe below.
*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 resource