Markets are about as volatile as they have ever been. It might not look it when you see the VIX still sub-30, although the swings in indices, stocks, bonds and currencies are unlike many have ever experienced. The truth is that there is a great deal of unknowns in the market and that right now, everyone is guessing. How will the Ukraine/Russia war escalate? How much more will interest rates rise? Will UK pension funds eventually collapse? Will China invade Taiwan? Will we ever live life without loadshedding again? Is Kim Jon Ung firing missiles over Japan because he is a mad man, or because he is actually the only person holding back Godzilla? These are all questions that nobody can answer. The point here is that with so much uncertainty about what the near-term future might hold, volatility reigns supreme and markets remain unpredictable. Thus, we place our faith in the charts and let the probabilities fall where they may.

Offshore trade ideas (bigger picture)

S&P 500 (SPY)

So, we’ve not hit the downside target yet and by the looks of this chart, SPY is trying to put in a short-term bottom. All indications are that we see a bit of a bounce from the lows here. It’s been a rough year so far and sentiment has gotten extremely pessimistic. This is evidenced in options positioning as well, with the vast majority of contracts trading being puts. The market being the market, is likely going to push for the ‘max pain’ trade, which is currently higher. Therefore, we believe that we are very likely in for a violent short squeeze. Odds are good that the bulls will get sucked in, chewed up and spat out in the process, but for now, we think markets will be strong at least during the first half of next week.

All Country World Index (ACWI)

The $77.34 level marked on the ACWI chart is in fact well below the pre-covid high (which was around $82). Our target in the $70 to $72 region is based on a chart we did rather long ago and thus the target still lives on our chart. Although the trend is firmly down here, we can see a similar bottoming pattern on ACWI as on SPY. The trick here, and on SPY, is to take out the pattern high (this consolidation we’ve seen over the last two weeks needs to break higher). Let’s see how it goes. We’re not removing our downside target; we are just not expecting it to be hit before a short-term bounce.

U.S. Dollar Index (DXY)

It looks like the trend is being tested here. Technically it’s made a symmetrical triangle, but as we know, they can break either way with about equal probability. Our thinking at present is that it is likely to break lower and likely boost global equities in the process.

USDZAR

The Rand is also seemingly testing its recent trend. Should the tertiary trend line (steepest) break, we think it could retrace as far as R17.25 before finding support.

Brent Crude Oil

We’ve removed our previous annotations from this chart and only added in what we think is a large range in which oil is likely to trade for the foreseeable future. Ironically, this is still a bullish view, not only on oil, but on energy as a whole.

S&P 500 Volatility Index

The VIX is still below 35, so the wheels have not yet completely fallen off the bus. We maintain our view that above 35 things get spicey (for global equities), although we do think that in the short-term we likely see volatility subside somewhat and equities put in a bit of a relief rally.

South African trade ideas

JSE Top 40 Index (ALSI)

The 60000 level has been putting up some staunch resistance, but by the looks of the tails on the two most recent candles, it won’t last too much longer. Perhaps we see 62000 next week?

ABSA Group (ABG)

With all this talk of short-term bounces and relief rallies, ABG looks like it might break out of the top of this consolidation. Once it confirms with a close above R192.52, it should make for a decent risk-reward trade on the long side.

Anglo American Platinum (AMS)

This short trade idea could be in trouble is the DXY breaks lower. If you chased it in, or pre-empted your short entry, remember the stop loss is above the upper end of the small range marked in yellow.

Anheuser-Bush Inbev (ANH)

Still no confirmation of the short here, but still on the radar. A stronger rand might help the short trade here actually.

BID Corporations (BID)

No directional idea or bias here, although a tight range (flat) that will likely present a good entry for a breakout trade once it pops. Keep it on the radar.

Capitec (CPI)

CPI looks to be setting up for another leg down. That said, volatility reigns supreme and should we see a strong start to the week, we could see CPI pop out of this small consolidation to the upside. Therefore, the same view must be taken as is the case on BID. No bias or directional ideas, but rather just a good setup that could trade either way, offers and good risk-reward and should be kept on the watchlist.

Dis-Chem Pharmacies (DCP)

Oh no, everybody hates Dis-Chem now… well, anyway. DCP is holding support in a large range. This could be a good entry for a long trade. Stop below support and target at R35.80.

Glencore (GLN)

GLN is looking like it is going to try break above R102 for the seventh time (maybe this time is the charm?). A weaker DXY and a proper squeeze could see GLN finally shooting for the moon (aka. continuing the uptrend).

MTN (MTN)

MTN might be off the hook to buy TKG, but the chart does not look very pretty. As it stands now, R130 is putting up some stiff resistance and could be used as a stop loss for a short trade to R92.

Naspers (NPN)

Just an update on the NPN trade and a reminder that the good trades usually take some time to work out. It might be wise to trail the stop loss down though.

Traders meetup

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.