Things change quick in this market, that’s for sure. Last week we’d harped on about how the bear is here and things were looking really dire. We did add the caveat that ‘”Should we see a bounce off the medium-term downward sloping trendline, well good times are here again“, although we did not think that was the most likely outcome. It seems that we got that one wrong. From what we can see now, the market, lead by the S&P 500, did in fact manage to hold the trendline and did in fact manage to put in a bounce. So, does that mean the bull is back? Perhaps it does… we’d have to see the market print a new high to confirm, although, given our trading rules, we did buy into the bounce at the end of last week. Let’s look at some charts and see why.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

Well, well, well… the downtrend line held like a champ and the market bounce something furious. As much as we opine about the market and have all sorts of strong views about what we ‘believe’, we are essentially just trend followers. The market takes the lead and we do not try to fight it. If we see SPY get higher than $420 (lol), then according to the simplest of the simple and clean, good ‘ol Dow Theory, we have a bull trend. The market leads the economic cycle by 6 to 9 months. Perhaps it knows something we don’t? [spoiler alert: it does]

Nasdaq (QQQ)

QQQ snapped back as well and broke right back above the key $297.25 level we indicated a while back. The same applies here as above. A new swing high would indicate a trend change.

All Country World Index (ACWI)

ACWI having a go at making a new high too it would seem.

Brent Crude Oil

Bullish equities = bullish oil! This chart is also a slow motion trend change in the making. There were some rumours that some countries might be leaving OPEC, but they were nullified rather quickly and oil caught a big bid on Friday. If equities are leading the economic cycle, then we can assume energy demand will keep growing and thus, so will the price of oil. We remain bullish energy in a big way.

Gold

Even ‘ol gold is looking like it wants to put in a new swing high.

U.S. Dollar Index (DXY)

Momentum wise, DXY is looking like it wants to soften a little. This would be good for equities and commodities in general. We have to admit, we did think this chart would go on to make a new high, and yet, here we are starting at it like a deer in the headlights not sure what to make of it all. We should probably leave it alone, but for now we are going to call it lower during the week ahead.

USDZAR

R18.50 held strong, and truth be told, we still think that over time the ZAR will keep working its way to R20 and above. In the short-term though, which is probably why most of you guys read this blog, it seems very likely that we’ll see the ZAR test the R17.60 level as equity markets rally somewhat in coming weeks.

South African trade ideas

JSE Top 40 Index (ALSI)

Well, the trendline break gave us a short and sharp sell off… which was fun while it lasted. Given all the bullishness in the international arena, does this mean the bull is back locally as well? Momentum shows bullish divergence and the trend has been fairly strong. There was some bad news on Naspers over the weekend (well, Tencent), but will it be enough to completely ruin the party here? We don’t know to be honest, so let the week unfold and remember that risk management is king.

Aspen Pharmacare (APN)

Weekly chart here on APN. We waited rather a long time for this bullish break, so you can bet that we are in. Shorter-term traders might not want to chase too hard here, but for those who are willing to take a smaller bite and wait a bit longer, we still like this stock.

Reinet (RNI)

We’re really just putting this one up as a bit of bragging rights. We hope that some of you took this trade when we pointed it out a few weeks ago. Let us know on twitter if you did. Also, bank your money.

Sanlam (SLM)

We hereby formally retract our bearish stance on SLM and move it to ‘neutral’. If this stock can open above (and hold above) R59.05, buy it for an intraday trade.

Old Mutual (OMU)

OMU leads the way. Trend followers can comfortably be long here we think.

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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.