Markets started pulling back a little last week and we’re likely to see that momentum carry for a few more weeks. Next week is likely to be dominated by inflation and interest rates as focus on CPI and PPI reports could influence sentiment.
Bigger picture (Offshore trade ideas)
S&P 500 (SPY)
It seems the pullback is happening, and our poop emoji was right. Let’s see if it breaks back below the trendline or if it finds support there.
Nasdaq (QQQ)
QQQ is also pulling back decently and as is the case with SPY, it looking overbought and ready to pull back. Again, the downward sloping trendline here is the key potential support level.
S&P 500 Volatility Index (VIX)
A bit of a reversal candle on Friday, but overall still looking like it is trying to build a base here and stage a bit of a rally. We think a call option here is a good trade.
Gold
Despite the risks in the macro environment, and overall bearish feeling of headline index charts, Gold is not looking to positive. Currently the price action setup looks rather bearish with a potential move down toward $1676, although momentum wise it looks like it might have gone a little far. That said, the stochastic oscillator does sometimes tend to remain at the extremes for extended periods. That might just be the case here. Riskier momentum traders would likely take longs here, although the safe bet is to rather sit this trade out and wait for a clearer setup.
Brent Crude Oil
Oil is playing some mind games and not really caring too much for our channel. Overall, we are and have been bullish on Oil for a long time. Nothing it our view has changed enough to make us change that view. That said, charts are charts and we’ve highlighted a small channel in white that is worth keeping an eye on. There are two ways to see this; 1. the downward sloping channel has broken, been retested and will confirm the return of the bull trend once the previous high is breached, and 2. the downtrend is still intact, the downward sloping channel has widened, and the white smaller counter-trend channel will provide a good short entry once it breaks. Which one is right? We suspect the new week will show us. Our bias is for option 1 though.
U.S. Dollar Index (DXY)
DXY has bounced well off the 101 level and has now gotten stuck under 103.50. Once above, it’s clear skies for the Dollar and we’ll likely see the greater equities market come under some pressure. We shudder to think what a DXY move back up to 114 is going to do to the poor ZAR.
USDZAR
Here we go! USDZAR has broken the range and is looking like R18.50 is not going to be a strong enough level to hold it back. Do we get to R20? How bearish is too bearish here? Let us know what you think on twitter. We’ll randomly select someone who replies to hang out with us in our community for 6 weeks 🙂
South African trade ideas
JSE Top 40 Index (ALSI)
The trendline draws near. Watch out if/when it breaks!
Coronation Fund Managers (CML)
When good charts go bad! Nothing like a nasty, undisclosed tax liability and cutting the dividend to end a potential bottoming pattern. In the long run, it’s probably not the end of the world, but shareholders are clearly not very happy at the moment. As for the inverse head and shoulders pattern here, very technically, it has not stopped out yet. It will need to take out the lows of the right shoulder before it is fully invalidated. Does that mean there is hope yet for the bulls? Time will tell. Stick to your stops.
Naspers (NPN)
Decent trade setup here on NPN. We are bullish this stock and setup, but be open to the range breaking lower. Either direction will give a decent risk-reward trade with a clear stop loss.
Shoprite Holdings (SHP)
SHP looks like a decent long from here, at least back to R250.
Sibanye-Stillwater (SSW)
The support zone did not hold and it looks like SSW has opened up for a R32 price target.
Transaction Capital (TCP)
TCP chart still doesn’t look very good. A fresh push lower last week opens the stock up for a R27 price target.
Thungela Resources (TGA)
TGA chart also looking pretty nasty to be honest. Looks like the R180 handle on the table. Where too from there though?
Anglo American PLC (AGL)
Well, another broken upward sloping trend line. Our long trade idea here is now off the table. It looks like we’re going to see at least R650 on AGL in the near term.
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.