Like we said last week, it doesn’t need to make sense to work. The little bull that could is doing all it can to get up and rallying, and we’re not about to stand in its way.
Bigger picture (offshore trade ideas)
S&P 500 (SPY)
Good ‘ol SPY had us second guessing ourselves on Tuesday in a big way. Even more so on Wednesday. But the little bull that could did not give up, and it stomped onwards and upwards and closed on a new high on Friday. Plus, there was some positive news around the debt ceiling this past weekend, so we think that we’re in for one glorious squeeze on Monday. SPY needs to clear $430 to confirm a new bullish trend. So far, so good though.
Nasdaq (QQQ)
If there ever was a little bull that could, QQQ is it! Fresh highs on the back of NVDA and the entire A.I. hype train. We know A.I. is a bubble, just like Cannabis, and Work From Home, and GameStop… but hey, while the ducks are quacking, we may as well join the fun. Just be sure to dance close to the door. That said, an A.I. bubble fuelled rally to make some money off, sure, I’ll take two thanks!
All Country World Index (ACWI)
ACWI is next up for a break out. Easy long trade here with a tight stop and a decent amount of upside.
Gold
Gold making its way lower. We think the bottom of the range, but note that we do also think that it will take many months to get there. For now though, it looks like the gold rush is over.
Brent Crude Oil
Oil is still trading in this range. Nothing exciting for now, we’re just putting this here so that you keep an eye on it as not to lose focus on the macro picture.
USDZAR
So we share our weekly chart again. We warned some time ago that the weekly picture is not looking good and that 21-ish is on the cards at some point. We did not see the Russian weapons scandal and an interest rate hike as potential catalysts though. Nobody did. Although, we do find it more than a little ironic that somehow there always seems to be a fundamental ‘reason’ that appears almost exactly when the chart needs it too. Wishy-washy stuff aside, we stick to our view of the large upward sloping channel and the upper channel band being the near-term target. Yes, it’s undervalued. No, the market does not care.
South African trade ideas
JSE Top 40 Index (ALSI)
Are we just allowed to say that we don’t know? Because we don’t. The market will likely start the week strong… CFR is no longer so important. Anything can happen here. Probably higher.
Sibanye-Stillwater (SSW)
SSW is not looking good at all. The support zone has broken and it seems that R31.70 is next up (or, down in this case). We’re letting go of speculative longs (aka. stopping out) and waiting for a new opportunity.
Aspen Pharmacare (APN)
APN is showing some nice bullish divergence and with the weaker ZAR as a tailwind we think it should do well. Speculative long here with a decent risk-reward. Stop below R165, target price of R190. From there set a trailing stop and let it run.
City Lodge Hotels (CLH)
Thanks for the money CLH! And well done to those who took this trade. R5.00 has been reached. It likely has a bit more to go, so a trailing stop might not be the worst idea.
Naspers (NPN)
NPN is range bound for now, so range trading rules apply. Taking a long around here is a high probability trade, so we endorse it.
British American Tobacco (BTI)
BTI is still floating around mid-channel support. Again, range trading rules apply and we’re biased to the long side.
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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.