Well, the end of the year approaches and markets find themselves at a rather pivotal point. The moment of truth is upon us, and we will soon learn whether or not the down trend is over, or here for another six months.
Offshore trade ideas (bigger picture)
S&P 500 (SPY)
Moment of truth time. SPY is finally testing the down trend line. If it breaks higher here and makes a new high above $430, it would appear that the down trend is over. If the trend line holds and/or SPY fails to make a new high above $430, it would appear that the down trend is still intact. That’s the nice thing about chart-based biases, when the evidence emerges to change your mind, you can change your mind. Right this very moment though, we do not know which way this market will go. So, we wait for next week to unfold and show us the way forward.
S&P 500 Volatility Index (VIX)
We’ve said it before and we’ll say it again… buy protection when you can, not when you need it. We guided a long VIX call two weeks ago which so far is not working. That said, as shown above, the S&P 500 is pretty much at a pivotal point right now, so the risk-reward for the short trade is about as good as it is going to get, and thus the risk-reward on the long VIX call is similarly at its peak. At least, that’s what we’re thinking.
U.S. Dollar Index (DXY)
Here comes support! We looked at DXY two weeks ago and thought that perhaps it would bounce and rally once more. Turns out, DXY is determined to test the key support at 103.70. From there though, we will have to wait and see. Should DXY break below support and head lower, odds are good that the rally in equities will be on. Honestly, looking at the state of the world it is hard for us to see what markets are so optimistic about, but hey… they are forward looking after all and we’re not here to fight them. The week ahead though, is one to take the really high risk-reward trades, of sit on your hands and watch how the pivotal levels play out.
Bitcoin (BTC)
As usual, a weekly, logarithmic chart on BTC. We will think that it is a buy around these levels. Perhaps some more downside on the cards, but the way we see it, we’re close to the low of the four-year cycle here and are happy to buy and hold until Q4 2025.
Brent Crude Oil
Sigh… old oil, why can’t you make up your mind buddy? It’s ‘walking the line’ around the bottom support of the large range and probably a short trade from here. It’s given some whipsaw over the last few weeks though as it breaks below and above the key level. It looks like a break and retest of the bottom range support for now, so speculative shorts here would make for very high risk-reward trades.
USDZAR
Nothing like a good game of ‘presidential musical chairs’ to get the ZAR really going! It seems the Ramaphosa is challenging the Phala Phala report though and that he is, at least trying to not go anywhere. How the market takes that, we don’t know. There aren’t many favourable alternatives in terms of the next president though, but since Ramaphosa is likely to be around for at least another week, it might be seen as good? Honestly, we don’t know. It’s the wild west, trade with caution.
South African trade ideas
JSE Top 40 Index (ALSI)
It looks a little toppish with that candle formation over the last three trading days. Momentum also seems to be waning. The short trade is probably fairly safe here.
Discovery (DSY)
Nice little range here on DSY. We’re thinking it breaks lower. Decent risk-reward here also if you’re aiming for R100.
FirstRand (FSR)
Welp! Thanks to a couch stuffed full of cash, our FSR long idea has stopped out.
Investec (INL)
This trend has gotten a little steep in our books. A break lower here would make a good short trade.
Sibanye-Stillwater (SSW)
What’s this? Is SSW actually holding above the resistance zone? Can it take out R52 and put in a trend change and a proper rally? Just maybe it is! We like the long here, both short-term and long-term. Blue horseshoe loves SSW.
Joining HCA trading
Come find out why we ranked as number one for traditional investors in South Africa. 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.
