I’ve been a little bearish of late. and well, I still am. Looking at how charts are playing out right now, it’s not looking good captain! In general though, a short update this week. The December feeling is creeping in… even though it’s a bearish one.
Offshore trade ideas (bigger picture)
S&P 500 (SPY)
Roar, roar, the bearish man is bearish. Honestly, I am not really sure what context I can add here. We’ve seen this market test a key level and put in a reversal from that level, then break the secondary (counter) trend line, and now it’s sitting square on support. The high probability trade for me here is lower, once the support is broken. Thus, like a broken clock, I reiterate the downside support at $337.70 (around 3370 index level) as the target price. Watch for a break above the primary (down) trend line above $405 for a stop loss.
S&P 500 Volatility Index (VIX)
This is your friendly reminder to buy protection when you can, not when you need it.
Brent Crude Oil
The bear break is on! Although, nice little short-term reversal candle there on Friday. Maybe we see a bit of a bounce and perhaps another retest of sorts in the week ahead? The greater macro view of Oil is now a little blurry and unpredictable. My gut says that we see OPEC+ and others move to cut production enough over the next few weeks/months to get Oil back up to around $100 a barrel, but there are more forces at play than just the supply dynamic. Right now, Oil is under pressure due to anticipated and feared reductions in demand (inflation, recession, etc.). So, let’s give Oil some time to settle and figure out what it wants to do. In the meantime, the speculative long into the lower 80’s might be a decent short-term trade. Short-term though, don’t get too attached to ideas of what is ‘meant’ to happen next week.
U.S. Dollar Index (DXY)
DXY still holding above that 103 – 104 zone. Maybe, just maybe, we see if bounce here and head to 114 again (maybe higher)?
USDZAR
Well, not really much to say here either. It is that time of year that every journalist in town is looking for views on ‘what is the Rand going to do next year?’… and well, let me tell you dear journalists and other readers, there ain’t nobody that knows! I mean, the game of president-shuffle has only just entered the early phases of part 1, so that outcome is still pretty unclear. Then we have the ‘playing chicken with the Fed’ game, where everyone tries to predict a pivot and never gets it right. There is also the ‘reboot South Africa 50 times a day and see if that helps’ stage of our economic development plan that is currently being really committed too and sadly, ineffectual. So, who knows man? There are rather a lot of different inputs into the Rand equation and right now it is probably just safer and easier to assume that it will get worse and either stay out, or just own some hard offshore currency or gold. Protect your money. For now, the chart argues for stronger ZAR, but that assumes DXY (above) doesn’t bounce and the wheels don’t fall off the macro-economic wagon that is the outside world. Not making calls now is probably the best bet to be honest.
South African trade ideas
JSE Top 40 Index (ALSI)
Last week I called ALSI short and later on during the week put the target zone out on a tweet (being the 64k to 66k zone market on the chart below). This week, I want to reiterate this call and just remind you that the stop loss here would be above the ‘shooting star’ hammer, in this case 70k. Rather a big stop and a large range, but if 64k is tested that would make for a 1:2 risk-reward short trade, with the potential of the market pushing even lower (at which point you would switch to a trailing stop). Give it some time.
Transaction Capital (TCP)
Good old TCP has been a favourite investment stock of mine for a while, but I sold it out the portfolios when the primary trend line broke earlier this year. Now it looks like there is some more downside on the way with TCP resting a key support (R35) for the third time. Depending on how you count, you could say that between September and November the level was being tested as well, so maybe 4, or does it count as 5 (let me know your thoughts)? Either way, it’s not looking good captain! Maybe we see R27?
Sibanye-Stillwater (SSW)
Sibanye! Sibanye-Stillwater, just Sibanye-Stillwater, is all that you need! And if you recognise that tune, I’ll buy you lunch! For real. First come first served.
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.