As equity valuations reach closer and closer to the stratosphere, trading Gold has become a little more tricky than what it was when all the stimulus was just announced. In fact, Gold has been fading ever since August last year. Now, after all is said and done, we’re finally starting to see Bond Yields start to rise and the Dollar start to strengthen. These two forces might be enough to catch some the bulls trading Gold offside. Things are looking fairly bleak for the shiny yellow metal.
The fast paced world out there always tries to get us to take action immediately. There is a sense of urgency that is ever pressing. You have to buy this useless trinked right now! You have to act now to make money on the stock market! Cryptocurrencies are exploding and you must act immediately lest you want to ‘enjoy staying poor’. This is all garbage. The reality is that there is a lot of patience needed if you want to make any sustainable, long-term progress. The same is true with trading. The patience needed to wait for the right trades, at the right levels is something that almost never talked about. So although there are a few decent setups this week, there are a few markets on which we have to respect the patience needed and wait for a more clear setup.
This week I am keeping things a little less ‘opinion’ and focusing just on technical trade ideas. Well, trying to keep opinion out of it at least and just following what the chart says. So let’s get into it.
The weather in the northern parts of South Africa is likely to be a little wild in the week ahead. We just hope that the hurricane that has made landfall in Mozambique does not cause large scale damage. Spending the week indoors, sadly, is nothing new thanks to lockdown. Now we just have to hope that the coal stays dry so that we don’t have electricity disruptions. These are strange times to be living in to be sure. At least we have markets to look at and keep us busy while a hurricane and a virus rage outside.
Very often it’s better to not listen to the news, or the hype of all the mad things happening in the world around us. Most of the time, it’s better to just sit down and focus on the things that we can measure. So to a large extend we try to do that this week, although we must admit the the blue wave in the U.S. is probably the primary driver behind the strength we saw last week. It’s very likely going to be the source of a whole lot more strength in the week ahead.
Markets open for trading on Monday and our thinking is that the major theme for the week ahead is going to be stimulus, gold and Bitcoin.
There are a lot of different cryptocurrencies out there, although how can you tell which cryptocurrency to buy in 2021? We’ve made a lot of commentary around the four year halving cycle and how it drives the Bitcoin price. Here is the first article we wrote for Finweek on the topic. Perhaps it would be …
The week that lies ahead though is usually the ‘Santa rally’ week, so perhaps our caution and maybe even slight bearishness might again be off the mark. Nonetheless there are some good trading setups out there. Furthermore, we thought that this week we would share our 2021 roadmap for Bitcoin. Next year, we think, is going to be wild!
The exuberance of markets can never be underestimated. “Stonks only go up” has become a meme. But we know that memes have the power to influence millions of people. As long as the market is trading from vaccine headline to vaccine headline, we can expect that markets will probably keep pushing higher and people will likely keep chanting “stonks only go up”.
Last week, after a strong start to the week, we saw the moves fade and the rest of the week resolve in directionless action on the major indices. Locally our banks popped well, although started pulling back a little in the second half of the week. For the coming week, we see opportunities in Gold miners for high risk-reward long positions at the start of the week. With some luck we’ll see decent pullbacks in the banks for good long setups in the second half of the week.