Some big moves this last week. There is no doubt that this market is jumpy. Part of the problem here is extremely short-term options trading in massive/historic volumes combined with severely low top of order book liquidity in traditional equities markets. This makes for a volatile cocktail. We are stubbornly holding onto our downside target with most of the charts we usually cover, but it still seems that the pain trade is higher and thus expect markets to rally in the coming week. Anything is possible though and volatility is king at the moment. So, it’s likely best to not keep a view for too long and keep the trading either to a minimum, or very short-term.

Offshore trade ideas (bigger picture)

S&P 500 (SPY)

Although we’ve now seen this tertiary trend line break to the downside, we still think that it is most likely we see the top of the channel before pushing a new low.

Nasdaq (QQQ)

Interesting to see that the tech stocks did not participate in the bounce in the same way that commodities and other ‘hard assets’ did. This fuels our view that commodities and energy still have a lot of upside left, while tech will remain under pressure for some time to come.

All Country World Index (ACWI)

We’ve included the ACWI chart as an indication of how close we are getting to our downside targets. Perhaps hanging onto them (our targets) here is the wrong call, but for now we still think there is more to be had on the downside. Again, this is with the caveat that in the very short-term we do expect the overall market to keep bouncing into the first half of November. Our thinking is that a strong result from the republican camp will be good for markets.

Brent Crude Oil

This large range is in charge on Oil in our view. Not long before we are at the top of it once again. Energy longs are likely to be the best play for the next few months (still).

USDZAR

Stronger markets + stronger commodities = stronger emerging market currencies. This correction seems to be gaining some steam and our sub-R17.50 target remains on the table.

South African trade ideas

JSE Top 40 Index (ALSI)

Friday was an extreme day. For context, we’ve added an ALSI chart from 2020 in which we’ve highlighted some of the largest up (and down) days in recent, well, decades. Friday’s rally shows just how much volatility is king at the moment… From here we could see another 5%+ squeeze, or a 4%+ pullback. It’s really wild out there and we really want to preach caution. It’s been a rough year and just making out the other end will be an achievement. Now, we can hear you saying: “such a big up day, in comparison with March 2020, surely indicates the bottom!” And in truth, that line of reasoning in not wrong. It could well be the bottom. We still think that there is downside to be had in a just generally more volatile regime (after all, volatility is king), but that does not mean we are right. To be clear, our long-term positioning is still around 25% cash / 15% fixed income / 50% equities (with an energy and commodity skew) and we are not looking to change that positioning anytime soon. In the short-term though, it’s been whipsaw city and short-term trading has been really challenging. Patience and resilience are required regardless of which side of the fence you are on at the moment.

ABSA Group (ABG)

The trend is your friend, and surely, it’s looking decent for the banking stocks heading into next week. ABG had a great breakout from a large range and is looking to keep trending higher for the time being. Stop loss below R192.50.

Anglo American PLC (AGL)

AGL, BHP and GLN will soon be the bells of the ball in our view. AGL seems to have broken out of a consolidation pattern but waiting for another day to confirm is probably the wise move here. If China comes back ‘online’ in any meaningful way, commodities are going to fly! So, keep an eye on news from China regarding their Zero Covid policy. Those are most likely to move commodity markets.

Anglo American Platinum (AMS)

We’re just putting this chart up to tell you that we are licking our wounds and very sorry that we ever even tried to short commodities. For real though.

AngloGold Ashanti (ANG)

Breaking the resistance zone, attempt number three! Will it do it this time?

Dis-Chem Pharmacies (DCP)

Make or break support level here. Great high risk-reward entry available on both the long and short trades here. Take your lead from the ALSI before equities open.

FirstRand (FSR)

Decent long setup here with a 1:2 risk-reward.

Glencore (GLN)

GLN got fined for literally flying cash around Africa in private jets to bribe ministers and all the rest. It then looked in its bag of f’s and saw that it had none to give. Up, up and away!

Impala Platinum (IMP)

IMP looks about as good as AGL above. We could be in for a proper breakout here if we can get above resistance.

The Foschini Group (TFG)

TFG is still in the support zone, and we think still likely a good long play. Earnings is coming up though, so odds are that a direction will be chosen once the numbers are known. Patience for now. Maybe best to wait for results before putting on any trades here.

Woolworths (WHL)

We’re probably a bit late to the party here, but a decent bull flag is playing out on WHL here. We’re not going to chase this one, but there might be other bullish setups in the retailers space worth looking out for.

*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.