The American market took a downward turn on Friday, with the most significant movement happening in the tech sector. Meanwhile, Mr Price (MRP) saw a 15% growth in the same timeframe. Is that just a coincidence? Is Mr Price on its way to becoming the new market powerhouse? Or is there more to it?

Nasdaq and Mr Price movements in the same time frame.

Nasdaq

Friday’s market drop can be attributed to a few intertwined factors. Chiefly among them are: the narrow concentration of the market rally, the overextension of the semiconductor and A.I. trend, as well as the upcoming SpaceX IPO. The S&P 500’s recent growth has been heavily concentrated in roughly a dozen tech stocks, which makes the market very susceptible to massive drops in value if those tech stocks experience a significant correction.

In this case, a combination of interest hikes, new technology, and the arrival of SpaceX, with the highest recorded IPO, has -at least for the moment- led to a shift away from A.I. and semis, and towards SpaceX and value sectors.

Mr Price

Mr Price’s growth is almost entirely independent of the Nasdaq. It’s largely a result of poor performance in retail and precious metals, which has created an atmosphere where the winners get it all. In this case, it’s apparel retailers. Like Mr Price and Foschini (TFG), which have been performing well, which in turn has led to a significant market rally following their earnings reports on Friday.

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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.

The post Nasdaq: The Drop appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P500 (SPY)

There is no new trade setup here, although the breakout from both the big and small consolidations is feeling good. Add some US Fed stimulus as a tailwind, and we have a recipe for Santa’s favourite… green candle cake.

Nasdaq (QQQ)

A nice breakout and retest of this pennant. Also a break to new record highs. The central channel line (very light grey) might put up some resistance. Looking at the way the market is trading though, at least in the very short-term, the extreme optimism and stimulus will likely keep pushing this market during the festive season.

Russell 2000 (IWM)

No much further to go before we reach the top of the channel.

Dow Jones Industrial Average (IYY)

The Fibonacci extension targets rather a lot higher. We don’t expect that the market will move in a straight line up, although should monetary policy remain as supportive as it currently is, we think that this index (ETF in this case) could rally another 10% or so from here.

Gold

Gold is still trading in the large bull flag formation. We think it likely to break higher on the back of more US Fed stimulus. Wait for the breakout before getting involved though.

Brent Crude Oil

We can’t add too much commentary over what we’ve been sharing about Oil over the last few months. So far this setup (complimented by a solid fundamental backdrop) is working out according to our expectation.

Dollar Index (DXY)

Looking at a weekly chart here on the DXY. Our full target has not yet been reached, although additional Fed stimulus will very likely drive it all the way to 89 over the next few weeks.

USDZAR

USDZAR has reached our target. From here it could overextend a little and possibly trade as low as R14.00. Once the Santa rally is done and the market comes off the ‘high’ of more US Fed stimulus action, we could see a proper reversal. We’re thinking that now is a good time to buy some USD to send offshore.

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South African trade ideas

Anheuser Busch Inbev (ANH)

No trade just yet, although this setup is looking very solid. Our bias is toward the long side, but we need to wait for a breakout of this consolidation.

ABSA Group (ABG)

A little messy, but ABG seems to be heading to R135. A healthy dose of patience and a trailing stop loss is recommended.

Aspen Pharmacare (APN)

APN is looking good for a move to the top of the channel. The safest way to play this would be to wait for the break of R135 to trigger a long entry, with a stop loss below R121. If you are already in this trade, patience and risk management are key. Stop loss below R121 and an ATRx2 trailing stop once it gets moving.

FirstRand (FSR)

Don’t chase it if you are not already in it. There are other setups on other banks that are looking really good. FSR seems to be the leader of the pack at the moment (if you ignore Capitec). Short-term target here is R57.57, although equity investors who bought the break of the 200 day moving average might want to just hold this for a few years (or at least until there is a large enough body of evidence to sell it).

Growthpoint Properties (GRT)

Huston, we have lift off! GRT finally breaks above the 200 day moving average. Once above R14, we’re looking for targets at R15 and R16 in the short-term.

Nedbank (NED)

Very nice setup here on NED. Solid bull flag break. The stars seem to be aligned for the local banks. Targets here are R160 and then R170, with a stop loss below the swing lows.

Woolworths (WHL)

Another decent looking setup, this time on a local retailer. Once again, the stronger ZAR and Santa spirit (in the form of US Fed stimulus this year) will likely drive WHL higher. Our targets are R43.33 and R47.30, with a stop loss below R35.

Kumba Iron Ore (KIO)

The upper resistance of the 5 day consolidation that KIO has been in was at R607.50. KIO managed to close above that on Friday. Those who did not buy the break of R550 can go long here with a stop loss below R590. Although be careful, this stock is not very liquid and can be very volatile. Rather use a daily closing price to confirm before stopping out as the spread can be pretty big when the market opens. For those already long, moving your stop higher to R590 is advised. Full target for this trade is R680.

Impala Platinum (IMP)

IMP was a great setup. Broke the consolidation, retested it and boom! Trailing stop loss from here.

Truworths (TRU)

This TRU setup is looking very good as well. Easy to identify stop loss and a good risk-reward ratio. An A+ setup in our playbook.

The Foschini Group (TFG)

TFG is also looking very good in our books at the moment. Blue Santa shoe loves local retailers (and banks).

Sibanye-Stillwater (SSW)

Blue Santa shoe also loves gold and platinum producers. Especially those that can do both, and also those that can make the shiny stuff by recycling the not-so-shiny stuff. SSW breakout looks like a very solid play.

Sanlam (SLM)

This setup on SLM has not broken out just yet, although is definitely worth preparing for.

RMB Holdings (RMH)

The level breaks and the skies look clear! RMH initial targets around R1.70.

Netcare (NTC)

Local hospitals are starting to turn away non-critical patients again as they are reaching capacity of COVID patients. The second wave and now potentially more potent strain of COVID-19 could once again wreck havoc, which in turn will negatively affect local healthcare stocks. The chart is looking fairly good though and in this case, we’re following what the chart tells us. The small consolidation has broken higher and momentum has shifted in favour of the bulls. We have targets at R13 (medium-term moving average resistance) and R14 (long-term moving average resistance).

Mediclinic (MEI)

The MEI setup we pointed out last week is offering a very high risk-reward on the long trade.

Life Healthcare (LHC)

LHC also looking like a very decent long from here.

Liberty Holdings (LBH)

No triggers just yet, but this pennant on LBH is looking like a good long trade in the making.

Harmony Gold Mining Company (HAR)

HAR looks to have bounce off a double bottom. We’d like to see if break this bear flag, but it will have to get through converged moving average resistance around R76 first. Overall though, we like the long with a stop loss below R60 (we are long HMY, listed on NYSE).

Goldfields (GFI)

GFI is looking for a long once this consolidation breaks.

AngloGold Ashanti (ANG)

Similar to both GFI and HAR, ANG has made a double bottom / rectable consolidation. Here though we can clearly see the downtrend line coincides with the breakout of the rectangle. We really like this for an A+ long trade setup.

*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.

A new year, a new trading account!

We are setting the standard for stockbroking service and fees. You can open your account and transfer all your current open positions and cash before the new year starts. It’s holiday time and you can’t go to the beach, so you might as well use the time to move your account over and join our team.

The post Santa loves US Fed stimulus appeared first on Herenya Capital Advisors.

That said, we expect the market to start slowing down and becoming slightly thinner (less volume trading) as the festive season starts to settle in. This quiet time in market can sometimes create ‘fun’ volatile moves on the back of lower liquidity, but can be rather dangerous. Thus, trading smaller positions with wider stops over the next few weeks

Offshore trade ideas

S&P500 (SPY)

Interesting re-test of the consolidation here, although the SPY (and broader market) seems to be in a confusing place at the moment. The bull case is that both the larger and smaller consolidations have broken to the upside and are in the process of being re-tested. From a trend following perspective, we could be buyers off these breakout levels as they are re-tested. Further monetary stimulus from central banks in response to the COVID pandemic is certainly supportive of this narrative. On the other hand though, momentum oscillators are starting to fire off some sell signals. Although we need to see another two signals from the Stochastic Oscillator and another one from the MACD for the signals to be confirmed and thus tradable, they are starting to warn of waning bullish momentum. Thus we are approaching the coming weeks and any hopes of a Santa Rally with some caution. For now we do not have enough evidence of shifting momentum to prevent new long positions, provided that the long trades offer clear stop losses and good risk-reward ratios.

Nasdaq (QQQ)

The (blue) pennant formation was re-tested and seemingly held. A break above the $303.50 level (which was also the previous all time high) could be a decent long entry, with a stop loss below $298 and a first target at the middle of the (light grey) channel. The second (full) target would the measured target from the (blue) pennant formation.

Russell 2000 (IWM)

Small caps have been outperforming their larger counterparts (as is usually the case this time of year – we mentioned seasonality here). Our target remains the upper extreme of the channel that IWM is currently trading in, although note that the current quartile has been putting up some resistance. We would be buyers sub-$188 with a stop loss below the middle of the channel.

Dow Jones Industrial Average (IYY)

Forgetting about momentum for a bit, another way to look at the market is by making use of Fibonacci retracements. From this perspective, a Fibonacci retracement measured on the market sell-off between February and March this year (from an all time high into a 36% correction) can be used to make a number of forecasts. The first is a 127% extension, which as we can see if currently proving to be a somewhat significant level. A further extension to the 168% level could drive IYY to $103.05. Again, there are a number of different ways of looking at this. Just a regular breakout of the rectangle consolidation targets $98.55 (approximately). Thus we can plan a trade here with an entry or below $93 and a stop loss below $88, a first target at $98.55 and a second target at $103.50.

Philadelphia Semiconductor Index (SOX)

SOX reversed nicely off the top of the channel. We expect to see support in the middle of the channel.

Dollar Index (DXY)

Our first level of 91 has been reached. From here we would like to see a move down to 89. This would likely be driven by further stimulus rhetoric. We note that the small consolidation (in light blue) could break higher to form a short-term counter-trend rally back to to 92. That could provide a nice high probability entry point into a trend following trade (short). This is currently not the most likely outcome in our view though, as we think that with additional lockdowns in Europe (Germany), more stimulus is almost guaranteed at this point and it’s very likely that we’ll see some central bank commentary around this in the coming week.

USDZAR

The ZAR will likely take its lead from the DXY, although it does look like the flat bottom triangle has broken and has now been re-tested. Our target of R14.50 to the USD remains.

Gold

Gold is still trading in the channel (flag) it has been stuck in since September. At this stage it seems to have found some resistance at the middle of the channel. Recency bias dictates that it should dip below the 200 day moving average again as it stays in this channel. Our thinking though is that further stimulus will drive the gold price higher to eventually break out of this flag formation and trade markedly higher. For now though, gold will first have to reclaim that $1850 level if the bulls hope to build a case for longs.

South African trade ideas

Kumba Iron Ore (KIO)

KIO, the slow motion train crash that turned into a good trade. Failed Head and Shoulders breakout targets around the R680 level. We pointed this out as a buy last week, so if you’re not already in this trade, don’t chase it.

RMB Holdings (RMH)

Oh we live with hopes of Santa Rally… if only we could see a close above R1.32 (now R1.35 as this has formed a resistance zone), then we could see RMH put in a decent rally. The longer this takes to build, the more power we would imagine there to be behind a breakout.

Woolworths (WHL)

We’re also patiently waiting for a breakout on WHL. Provided that markets remain robust next week, this stock is looking fairly solid. Locally, president Ramaphosa is expected to address the nation on Sunday evening. Another hard lockdown should be good to food retailers as holiday makers will become food-makers-at-home. Should another hard lockdown be announced, we’d suspect that a short-term shock could be used as a buying opportunity.

Truworths (TRU)

A rather nice bull flag setup here on TRU, with a clear trigger line. Interestingly, the bull flag doubles as a re-test of a pennant formation breakout, and a push above the 200 day moving average. A breakout of this small flag could prove to be a great long-term entry.

The Foschini Group (TFG)

TFG offers a nice example of a long-term trend following strategy in action. The buying zone is the area between the 20 day and 50 day moving averages. Everytime that price dips into this zone, you can add to the position and move your stop loss up to the previous low. Moreover, we see a very clear entry signal line that can be used to initiate new long positions in this stock.

Standard Bank (SBK)

SBK is managing to hold above the previous resistance (now support). There is also a very clear trigger line for a long entry and stop loss present.

Sasol (SOL)

We’ve adjusted some of the levels on our SOL charts for a bit more accuracy. Specifically the R158 level that we’ve been referring to over the last few weeks, which we’ve lowered to R157.12 to mark the gap left on the 9th of March 2020. Below we show both the daily and weekly timeframes and note that a break above this R157.12 level would be very bullish indeed for SOL. Our first target would be around R234.

Sanlam (SLM)

SLM is looking very good for a break higher out of this flat top triangle formation. It is also worth taking note of the fact that it is holding above the 200 day moving average. Once again, this could be a great longer-term entry for equities traders and investors.

Netcare (NTC)

We’ve been looking to buy NTC over the last few weeks, but so far have not managed to find the bottom. The hopes of a Santa Rally are strong with this one though. We note that NTC has been finding some support on the de Mark or Williams point of support made on the 24th of March 2020. This has been happening in conjunction with early signs (although not confirmed) of a bullish momentum shift. Looking more closely at the chart, we note a small consolidation on the support level. Our thinking is that a bullish break of that consolidation could be used a a long entry for a counter-trend trade.

Mediclinic (MEI)

MEI is another stock living in hopes of a Santa Rally. A break of the (3) standard deviation channel can be used as an entry.

Nedbank (NED)

NED showing a decent setup with clear trigger line for a long trade. Wait for the break of resistance before making a move.

MTN Group (MTN)

Oh no, the wheels fell off! Support comes in around the 200 day moving average (and below that at R53). It might be worth waiting for the support to be tested before getting involved here. A buy anywhere between R53 and R57 could be a nice entry for a longer-term holder.

Harmony Gold (HAR)

Most of the gold shares look the same at the moment. In the case of HAR, a break below R60 would stop out our long trades.

*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.

Want to trade with us? Open your account today.

The post Hopes of a Santa Rally appeared first on Herenya Capital Advisors.

From where we stand, it appears as if some of the crazy “fat tail” risks are mostly behind us now. Trump is not getting anywhere with his recount, central banks are signalling lower for longer interest rates and potentially even more stimulus. OPEC didn’t cut as much oil production as was expected and commodities stocks have started to come alive on the realisation that eventually the world will come out of lockdown and demand for commodities will return. In truth, the way things look right now, even we’re starting to think that stonks only go up…

Offshore trade ideas

S&P500 (SPY)

The consolidation has broken and the SPY is looking rather strong from here.

Philadelphia Semiconductor Index (SOX)

SOX has put in a wild run, but is reaching the upper end of the channel it has been trading in sine March. We’re not calling the short here, but we are advising caution around the upper resistance and note the high probability of a pull back to the middle of the channel.

Dow Jones Industrial Average (IYY)

It won’t happen in a straight line (and a retest of the breakout would not surprise us), but the range break targets $196.89.

Russell 2000 (IWM)

Small caps tend to outperform large caps during this time of the year. It would be nice to see IWM test the upper resistance barrier of this large channel.

Nasdaq (QQQ)

Bull flag breakout and a new record high. Again, things don’t move in straight lines, although it does look like there if much upside still to be had.

Bitcoin (BTC)

The previous ATH is still providing some resistance. We’d still like the opportunity to buy between the $11k and $16k levels. It is a big buying zone, although given the volatility of BTC in general, a 30% to 50% correction before a parabolic push is not that far outside of what can be expected. Note also that a break above the ATH ($20k) would also be a buy.

Gold

Gold bounced nicely off the 200 day moving average, much as it did the last time it tested the moving average in March. For now there is some resistance around $1850. Probabilistically we’ll see Gold test the 200 day moving average again. As long as it does not take out the lows made on the 30th of November, buying off the 200 day moving average could be a good entry.

Brent Crude Oil

We’ve spoken much of the down trend line that has broken, although this week we want to point out the multi-month consolidation that was broken and retested. Oil is looking very strong over the medium-term.

Dollar Index (DXY)

Weekly chart once more on the DXY. The 91 level was taken out, so DXY now opens for 89 in the coming weeks.

USDZAR

Flat bottom triangle targeting that R14.50 level.

Tesla (TSLA)

TSLA short idea from last week not looking so hot. A break above $600 stops this trade out. Don’t fight the trend. I mean, stonks only go up, right?

Harmony Gold Mining (HMY)

We would not be too surprised to see HMY test the recent lows sub-$4 before starting it’s next major leg higher. Obviously this depends on how Gold interacts with its 200 day moving average (above).

South African trade ideas

RMB Holdings (RMH)

R1.32 is still the line in the sand. Above that and things start to get interesting.

Growthpoint Properties (GRT)

GRT is still looking fairly solid. Would like to see it break above the R13.00 level and really get going.

Anheuser Busch Inbev (ANH)

ANH is still in the range shown last week. We’re looking for a bullish break of this range for a good risk-reward long setup.

Aspen Pharmacare (APN)

APN as set up really nicely for a trade back to the top of the channel. Stop loss below R120.

Sasol (SOL)

SOL looking good for the R158.40 target.

Kumba Iron Ore (KIO)

Up, up and away! KIO breaks the right shoulder and invalidates the previous Head and Shoulders setup. Spurred on by record high Iron Ore prices, KIO probably has some legs here.

Woolworths (WHL)

We like the long if WHL can get and hold above Friday’s close.

Vodacom (VOD)

VOD has been a bit frustrating for us over the last few month as it just couldn’t break the range. Has it now formed a Head and Shoulders pattern? Maybe leave a comment below and let us know what you think?

Telkom (TKG)

Not too much to say here. TKG made a nice bullish engulfing candle and the up trend is looking pretty solid. Sit tight and let the market grind toward target.

Standard Bank (SBK)

SBK is also looking great in the medium-to-longer-term. In the short-term though, a breakout of the bull flag could be another nice opportunity to get long.

Sibanye Stillwater (SSW)

SSW has been range bound for a few months now. Watch for a break higher out of this consolidation.

Sanlam (SLM)

SLM is looking strong. Short-term moving averages have signalled a buy, price just recently made it above the 200 day moving average, flat top triangle targeting higher and a potentially strong ZAR (weak USD) as a tailwind.

Coronation Fund Managers (CML)

The R45 level has been a strong resistance level for CML for rather a long time. A break above it makes for a very attractive long trade in our view.

*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.

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The post Stonks only go up appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P500 (SPY)

The S&P500 (charted here using the SPY ETF) has been consolidating around the upper end of the larger consolidation we’ve been tracking over the last few weeks. Although SPY did not take out the intraday highs printed a few weeks ago, it has managed to close at an all-time high. Our bias is currently bullish and we’d like to see a break higher out of this consolidation marked in light pink.

Nasdaq (QQQ)

We’ve been keeping an eye on the pennant on the Nasdaq (charted here using the QQQ ETF). We note that although Friday was not a record high, as was the case with SPY, it has broken out of the formation. That said, it did not form the most convincingly bullish candle, seeing at it’s a spinning top after a gap higher (so could suggest exhaustion). We would have liked an opportunity to buy it off the lower support line (inside the pennant formation), although it seem that we might not get a chance too. Long positions taken here offer a tight stop loss and thus a very good risk-reward. We just need to be careful that this does not turn out to be a fake breakout.

Tesla (TSLA)

TSLA is not the best bellweather to use as an overall representation of the tech sector, although it certainly is a stock that many have been chasing. The stock has recently been included in the S&P500 index as well, and thus there has been frenzied buying as index tracking funds became forced buyers. Friday’s trading action saw the stock close at an all-time high, although after leaving a gap at the open and forming an inverse hammer. Should the stock gap slightly lower at the open tomorrow, this could turn out to be an almost perfect shooting star formation. Keep in mind that much of the ‘forced buying’ is likely behind us as participants front-running index inclusion are now no longer interested in chasing the stock higher. A stop loss placed just above Friday’s high could give a great risk-reward, counter-trend trade down to $450-ish.

EURUSD

After a relatively long period of consolidation, it would seem that the EURUSD is starting to break out of the rectangle formation. In this context it is a trend continuation formation and thus we believe it likely to see the EURUSD move toward $1.3000 in the coming months. We note that this would likely be very supportive of commodities prices (although studies suggest that this correlation is only short-term in nature).

Dollar Index (DXY)

We’ve switched to a weekly time frame to bring context and significance to the break of the consolidation on the DXY chart. We’d expect a move (eventually) to the 89 level (with initial support at 91). A prolonged period of USD weakness is likely going to benefit emerging markets and commodity prices. Perhaps not ‘safe havens’ such as gold, but rather industrial metals, minerals and soft commodities.

USDZAR

Given the context of the DXY above, it comes as no surprise that that USDZAR continues to strengthen toward that R14.50 level. Once again, in the very short-term there could be a retracement towards R16.00 as the breakout below R16.16 can be retested. In the medium-term though, the trend toward a stronger ZAR seems firmly in place.

Brent Crude Oil

Starting with the daily chart, we can see a clear breakout of the down trend line we’ve been tracking over the last few months. We also note a bullish crossover of the shorter-term (20 day and 50 day) moving averages, as well as price moving strongly away from the 200 day moving average. Momentum wise, the MACD has moved above the 0 line and the stochastic remains in a bullish configuration. In general, a pullback would be nice, although it appears that oil (and energy at large) has moved back into a bull market.

In order to set a price target for brent crude oil, we need to look at the weekly chart. Here we can more easily see the significance of the down trend line break. We also note that weekly momentum as indicated by the MACD and Stochastic oscillator are both in bullish configurations. We thus expect that brent crude oil will go on to test the 200 week moving average near the $60 a barrel level in the coming months.

South African trade ideas

Sasol (SSL and SOL)

Let’s start with SSL (the Sasol ADR listing on NYSE). We believe that this listing has been a bit of a price leader to the local listing (SOL). We therefore would like to ‘take our lead’ from how Sasol is trading in New York and apply those observations to our local JSE listed SOL. We pointed out last week that SSL had broken the 200 day moving average and could potentially be starting a bullish trend. That observation is confirmed again this week as we now see a bullish crossover of both the short-term and the long-term moving averages. Both the stochastic and MACD oscillators remain in bullish configurations. We have to watch the gap it left rather carefully as we cannot yet tell if it is a breakaway gap or not. We would use a gap fill (and retest of the 200dam) as an opportunity to add to longs.

To illustrate the significance of the break of the 200 day moving average, and the simultaneous crossover of all three moving averages, we’ve included a chart showing more data. This recent move snaps a two year downtrend.

Looking at the local (JSE) listing (SOL), we start with the weekly chart. We would like to see price make a new high in order to confirm the establishment of a bullish trend, by closing a weekly candle above the R158.40 level. From a weekly momentum perspective, there does appear to be a clear shift towards bullishness. The light blue box around the R400 level is in fact a gap left on the daily chart and could serve as a potential price target.

Lastly, looking that daily chart on the JSE listed SOL, we see further confirmation of bullish momentum. It would be nice to see price retest converged moving average support so that we can get a chance to add too (or initiate new CFD) long trades.

ABSA Group (ABG)

Although the overall expectation for the week ahead is bullish, things do not have to happen exactly in the order or time frames that we expect. A move down to retest the break above the 200 day moving average would not negate the now bullish trend, but could serve as a great entry for a new long trade.

Anheuser Busch Inbev (ANH)

Currently there is no trading signal here, although keep a close eye on that range as a break higher would trigger a long.

African Rainbow Mineral (ARI)

Nice clean bullish break in a well established uptrend. Momentum oscillators are all in billish configurations as well. ARI is looking good.

BHP Billiton (BHP)

A nice breakout from a bull flag formation, along with a move above all moving averages and a hammer candle formation made on Friday. Combined with the DXY narrative and with support from oil prices, BHP is looking really solid.

British American Tobacco (BTI)

Two hammers and potentially a stochastic buy signal. BTI bounced off the support and might be making a higher low. Nice high risk-reward long trade from here.

Clicks Group (CLS)

It might be a little too early to jump on the long trade immediately, although if CLS can hold the blue trend line it might be worth taking. The beginnings of bullish divergence is clearly present. We just need to see price find some support and perhaps a bullish candle formation before we can commit to a swing long here.

Kumba Iron Ore (KIO)

This inverse head and shoulders formation we’ve been tracking is on the verge of failing. Once the upper limit of the right shoulder is breached, we can comfortably say that this formation has failed. As a rule of thumb, there are very few signals as bullish as a failed head and shoulders pattern. Given the DXY context mentioned earlier, we are starting to believe that KIO could rip higher once this R550.00 level is decisively broken.

Life Healthcare (LHC)

Tight stops on the long trade here. Below R15.40 and this trade is off the table.

Nedbank (NED)

Watch the bull flag formation here. We’d be happy buyers off the 200 day moving average, or once the bull flag has broken.

Netcare (NTC)

NTC seems to be holding the support level rather well. Initial target is the top of the range (R14.50).

Old Mutual (OMU)

Another financial stock breaking and holding above the 200 day moving average. This stock is looking pretty decent for a long-term equity investment entry. A break above R13.00 would trigger a double bottom with a price target of R18.00 as well.

Telkom (TKG)

With some luck we’ll get a change to buy again off the purple trend line, still targeting the marked levels. Keep in mind, R38.05 has to be broken in order to confirm the trend change.

*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.

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We want to give away some trading books and you need to tell us which book you would prefer. That is, if you’re the one that ends up getting the book. We’ve got a few cool ideas around how we’re going to pick the ‘winners’, so stay tuned to our twitter account for details. In the meantime, please vote for the book you’d like to be able to win in our twitter poll.

The post Trading the oil price appeared first on Herenya Capital Advisors.

On balance it would seem that there are more buying opportunities in the local market than there are reasons to be short. We need to be patient and wait for pullbacks though. More importantly, Thanksgiving sets off a number of seasonal patterns as well. We need to combine several of them for one trade.

The three main seasonal patterns are:

• Post-Thanksgiving bullishness: buy the market at the close of the day before Thanksgiving and hold into mid-December.
• The January effect: which used to take place in January, but because of traders front-running the system, it now takes place in December. Small caps outperform big caps during this time, so buy the small-cap indices (Russell 2000 – IWM, for example).
• The Santa Claus rally: which encompasses the last five trading days of one year and the first two trading days of the next.

We are entering into that time of year that these seasonal patterns will start to exert influence over price, so let’s be mindful of them and try not fight the market.

Offshore trade ideas

S&P500 (SPY)

SPY seems to be stuck around this resistance level. Bullish momentum is starting to fade a little and the door is open for a move back to support $319.80. Nice high risk-reward on the short trade here actually.

Nasdaq (QQQ)

QQQ still finds itself inside it’s consolidation as well. Signs of fading bullish momentum are also present. Perhaps a move down to support?

Dow Jones Industrial Average (IYY)

Somewhat similar to SPY, although IYY is currently above the key resistance. Nonetheless there are early signs of a momentum shift taking place here as well. This is not exactly the clearest sell signal, but it should be heeded as a warning to the bulls.

Russell 2000 (IWM)

The trend is solidly up here and as mentioned earlier, we are likely to see this index outperform its large-cap peers in the short-term. Should we see a decent pullback in the week ahead, buying IWM at $165 or below would be a good entry.

Brent Crude Oil

That trend line we’ve been watching seems to have been decisively broken. Our thesis around the oil market supply demand dynamic heading into 2021 might be starting a little early. A close above $46.50 would be rather bullish in our view. We also note momentum is turning bullish. The possibility of a lockdown driven demand side shock to drive prices down in the short-term is still there. In general though, oil is looking very attractive heading into the new year.

Gold

Gold is still trading in a falling wedge formation. There really is no setup to trade here at the moment. Perhaps we need some sort of fundamental catalyst to get it moving again?

Dollar Index (DXY)

We’ve been tracking the DXY for some time now and have decided to simplify our view a little. In essence we’ve expanded the range to the upside to accomodate for what many had thought was a breakout higher. The bear flag indicated a few times in the past is technically still in play, although we feel that this range is likely a more accurate picture of what is happening. There are two high probability trades available here now, which will both influence the ZAR (and thus our market) rather a lot. The first is to trade it back up to the top of the range with a stop just below 92. The second would be to trade the trend continuation should the bottom end of this range break and the USD weakens to complete the bear flag shown last week.

EURUSD

Not something we usually look at here, although it is interesting to note that the EURUSD has been range bound for quite some time. Range trading rules apply.

USDZAR

We’re putting up the daily and weekly charts on the USDAZAR again. The weekly still looks fairly good for a move towards the 200 week moving average around R14.50. On the daily chart though, we could see a bounce on the USDZAR back towards R16.16, depending on the whether or not the DXY (above) remains in its range or not. The gut feeling here is that given the recent sovereign downgrade deeper into junk and the potential for the DXY to bounce off the range bottom, puts the probability of testing the R16.16 level slightly ahead in the short-term. This does not invalidate the setup on the weekly chart though. It just means that the ZAR bulls need a little bit of patience.

Bitcoin

All about Bitcoin… it would be nice to see a pullback into the $11k region for those that have been left behind to get a chance to get long. If patterns really do repeat themselves, we will likely not see $20k beached this year, but very early next year. Also, now that the FSCA proposed that Bitcoin be treated as a financial product, that finally opens the door for us to be allowed to expressly give financial advice on Bitcoin. We’re bullish. A break above $20k is worth buying, as is a retest of $11k in our view.

South African trade ideas

Anglo American Platinum (AMS)

Two tags of a significant resistance level which coincides with the 50 day moving average, price sitting right on both the 20 day and 200 day moving averages and wishy-washy-middle-of-nowhere momentum… feels like a short.

AngloGold Ashanti (ANG)

Our first attempt at buying gold stocks last week stopped us out on the same day we entered. Looking at ANG again this week, we once again have another high probability entry from inside the support zone. Tight stop loss on any long trades here as vaccine related news could easily spoil the party for gold and gold stocks.

Aspen Pharmacare (APN)

The aggressive trade here would be a long with a stop loss below the 200 day moving average. It might prove to be a bit too volatile for such a tight stop loss though, so a smaller position and a wider stop might be wise here.

Astral Foods (ARL)

We’re watching a break of the tertiary trend line and a potential short trade. Momentum seems to be on the verge of turning bearish as well.

Barloworld (BAW)

BAW finally breaks out and looks very solid. Hopefully we see a pullback to R70 for another chance to get long.

BHP Billiton (BHP)

Stronger oil prices should be supportive of BHP. Interesting consolidation around the 200 day moving average. Very early days yet, but perhaps we could see a move back towards R420? Price has to stay above the 20 day moving average for that scenario to remain viable.

Clicks Group (CLS)

Entering into the short now will reduce the risk-reward on offer here, although momentum is turning bearish and the bottom of the range is starting to look like a price target.

Capitec (CPI)

CPI is hard to short because it is tightly held and illiquid. Bullish momentum is starting to wane and we’re watching that trend line on the MACD. A pullback here would likely only be into the area between the 20 and 50 day moving averages, or perhaps down to the 200 day moving average. Either way, you’re probably going to be better off waiting for a chance to buy it once the pullback is complete.

Exxaro (EXX)

R101.02 opens up again as EXX breaks the supporting moving averages and momentum oscillators give sell signals.

FirstRand (FSR)

It looked like there might have been a bull flag on FSR, although it now appears a lot more likely that we see a retest of this breakout and the 200 day moving average. A second chance to get onboard for the long-term trend change here?

Glencore (GLN)

GLN is back in the support / resistance zone that has proved to be so significant over the two years. We can treat this as a range breakout trade from here. What is encouraging is that the 20, 50 and 200 day moving averages are all moving into a bullish configuration now. Our bias here is currently long.

Growthpoint Properties (GRT)

GRT looking solid now. It would be nice to see it close the gap and trend higher, although the most probable outcome in the very short-term is that GRT retests the trend line break. Should we see that move take place, that would be a great long-term buying opportunity.

Kumba Iron Ore (KIO)

This head and shoulders pattern is not off the table just yet. The second shoulder is actually not that uncommon as this is (now) a complex head and shoulders pattern. A complex head and shoulders pattern is when either the left or right shoulder has two to three ‘shoulders’ and forms a rectangle consolidation, which is the currently the case on KIO. This doesn’t mean the head and shoulders (complex or simple) can’t fail, it just means that the pattern is still valid and can still be considered for a trade, should it trigger.

Life Healthcare (LHC)

LHC support level still in play. This could be a scary trade to take, although it offers a really tight stop loss and thus a good risk-reward.

Mr Price (MRP)

Waiting for a retest of the breakout and 200 day moving average could make for a great long entry.

Nedbank (NED)

Wait for the retest to finish. On first instincts, buying the 200 day moving average seems like the right way to trade this stock, although it could slip down to retest the trend line at around R100. Be patient and make sure you know where your stop levels are.

Netcare (NTC)

NTC bounced a little before it hit the support. Not sure that we would be chasing the long from here. If we get a chance to buy it off the support (R12.18) level, we’ll take it with both hands. we’re not interested in chasing this trade right now though.

Old Mutual (OMU)

Momentum on OMU is starting to turn bearish. It was rejected by the 200 day moving average as well. Moreover, we’ve seen some insurance companies be forced to pay out disaster related business insurance cover due to COVID induced lockdowns. Things could get a little dicey for the insurers. We don’t believe that this stock will get hammered into the ground though. Perhaps we get a chance to buy it off the 50 day moving average?

Redefine Properties (RDF)

It feels like a matter of time before that R2.50 level is broken and RDF grows some legs.

Remgro (REM)

Potential long off the previous resistance (now support). Stay mindful of the potential for momentum to be turning bearish, although the clear, tight stop loss could make for a good trade up to the R112 region.

RMB Holdings (RMH)

Depending on how you plot resistance levels; real body closes, or tails and wicks – RMH has either already broken out or is literally on the level. We prefer the using the De Mark or William method of identifying key support and resistance levels and thus have the level market out as R1.32. RMH needs to break above R1.32 to get a move on. We’re looking for R2 in the medium-term.

Sappi (SAP)

Back to the bottom of the range for SAP?

Shoprite Holdings (SHP)

SHP has tested this support/resistance levels a few times. A break of the support could likely close the gap and test the 200 day moving average. Intraday time frames should be used for entry signals and risk management on the short trade here.

Sasol (SOL)

SOL is in a weird place for us now. On the local market (JSE listing) we see that SOL was firmly rejected by the 200 day moving average. There is also a tertiary trend line that could break and trigger a short trade. If you look SSL (the American Depository Receipt, listed on the NYSE) the picture looks almost perfectly opposite. SSL is holding above the 200 day moving average. Yes, the stochastic is above 80, although we know that the stochastic can remain overbought (and bouncing above and below the 80 level) for prolonged periods of time as trends play out. The MACD has only recently broken above the 0 line, which is indicative that the longer-term momentum might only be starting to turn higher now. I all honesty, we think the SSL ADR will lead price locally as SOL in general will benefit from stronger oil prices.

Telkom (TKG)

No real comments here, except maybe this serves as a good example of the stochastic oscillator remains overbought (and bouncing above and below 80) as a trend plays out. This trade is going well. Using a trailing stop loss is always wise.

Truworths (TRU)

Back into the range for you! Sell signals coming through from the oscillators as well. TRU could possibly retest the bottom of the range it was in for so long. First up though, the 200 day moving average. Range trade rules apply.

Vodacom (VOD)

Does VOD go back to the bottom of the range here?

Woolworths (WHL)

We’re waiting for a retest of the 200 day moving average.

Multichoice Group (MCG)

This chart does not really have much data to work with just yet, although we note that MCG was rejected around the R132 level (and under the 20 day moving average). It offers a high risk-reward short to the R111 support level, with a clear stop loss above R132.

*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.

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The post It’s really not all about Bitcoin appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P500 (SPY)

The S&P500 seems to be range bound still. The contested U.S. election scenario still poses a fair amount of risk, although we are open to taking long positions should SPY break above current resistance. That said, this could be a great range trade as well with a clear stop loss on the short. We’ll take our lead from how markets open this week. Ultimately though, we have to wait for SPY to generate a trading signal by either closing below $350 (for a short range trade), or above $360 (for a long breakout trade).

Nasdaq (QQQ)

The Nasdaq has not gone to retest the highs as the S&P500 (above) has. As is the case with the SPY, we would like for a clear break (or trading signal to be generated) on QQQ before taking an new trades. It has formed a pennant, so it can go either way.

Dow Jones Industrial Average (IYY)

The Dow actually managed to close the week above the key resistance level. This could be a nice speculative long trade with a clear, tight stop loss (use the four day low).

Dow Jones Transportation Average (DTX)

Not the clearest of pictures here, but perhaps we’re overthinking it. The trend is up and the opportunity for a long trade with a tight stop loss is on the table.

Dollar Index (DXY)

This bear flag seems to be working out. The trend is firmly down and we expect to see more USD weakness ahead. One of the primary drivers here is stimulus (brrrrrr) and further weakness here would continue to benefit local banks and retailers.

USDZAR

All trend indicators pointing lower now. In previous posts we’ve shown the weekly chart with a price target of around R13.50. With further USD weakness and a firm trend in place on the USDZAR, we expect more ZAR strength in the weeks to come.

Brent Crude Oil

The trend line we’ve been watching has now been broken. This leaves us in a tricky spot. Although in the longer-term we believe that oil prices will recover (rally) in 2021 and 2022, we’re uncertain if this is in fact the breakout. We’ll be looking for the oil price to find support on the 20 day, 50 day and 200 day moving averages, which all all converging around the trend line support as well. This could be a great opportunity to start building a longer-term long position in oil. Stop loss here would be below $39.32, so still rather tight for now.

Gold

It seems that Gold has formed a falling wedge. From a risk-reward perspective there is really no play for us here this week, although there are a few things that are keeping us bullish here.

Positioning: Looking at how the market is positioned in terms of gold holdings, we note that there has hardly been any liquidation of long positions in most major Gold ETFs.
Seasonality: Gold price performance is generally rather strong this time of year. Not the strongest month in the year but bullish, on average, nonetheless.

Perhaps we need one more push higher to get the bulls properly trapped? In the meantime, there might be some long trade opportunities in Gold miners.

VanEck Vectors Gold Miners ETF (GDX)

GDX is not really lined up for a trade here. We’re keeping an eye on it nonetheless as a bullish breakout here would offer a good trade. For now, we wait.

VanEck Vectors Junior Gold Miners ETF (GDXJ)

Junior Gold miners are looking very similar to their bigger kin. We’re waiting for a clear signal here.

Bitcoin

Weekly logarithmic chart here on BTC. We have a long thesis on what is happening here, which we do not have the time to go into here today. In essence we are looking for a move back up to the all time high and a breakout above it. Patience is needed though as the Inverse Head and Shoulders setup has now reached target and it would not surprise us to see BTC retest the bottom (blue) trend line. Overall though, we think 2021 is going to be a big year for Bitcoin.

South African trade ideas

Harmony Gold (HAR)

The long trade opportunities in Gold miners is mostly concentrated among the local Gold miners at this stage. One such opportunity is a great long entry here off the 200 day moving average on HAR. The stock is a little oversold and there is some bullish divergence present on the Stochastic and RSI indicators. The long trade here offers a great risk-reward.

Gold Fields (GFI)

A similar high risk-reward setup is present on GFI. This is a good zone to put on long positions with a stop loss below the 200 day moving average.

AngloGold Ashanti (ANG)

We prefer HAR and GFI, although ANG has a very clear stop loss below R350 if you take a long position here.

Truworths (TRU)

A few days of pullback would be great to give us another chance at the long here. We can either find support on the breakout level (R38.85) or at the 200 day moving average (rather a long way back down). Either way, we’d like to see a dip so that we can buy it.

Life Healthcare (LHC)

Buying at the bottom of the range offers a clear stop loss and a high risk-reward setup. Targets around the top of the range and the 200 day moving average.

Netcare (NTC)

A very similar setup to LHC and a very similar way to play it. Buying off the bottom of the range could offer a great risk-reward trade back to the 200 day moving average.

Growthpoint Properties (GRT)

Buying the dip here will give us a second chance to catch the trend change. We like this for a longer-term position (investment) as well.

Liberty Holdings (LBH)

We would be buyers of the dip here too if given the opportunity. Taking a long position in the lower R60’s would offer an ideal risk-reward.

RMB Holdings (RMH)

Still in a down trend, although it looks like it might be trying to break higher here. If RMH can get above R1.30 it should confirm the up move. We see this stock at R2.00 in coming months.

Nedbank (NED)

In the short-term the rally might be a little overdone now. We would like to see the stock pull back to the 200 day moving average, at which point we’ll be interested in taking new long positions.

FirstRand (FSR)

As is the case above with RMH, we’d like to see FSR pull back and retest both the range breakout and the 200 day moving average before taking new long positions. We believe that the longer-term trends might be changing on the banks and would like to start building some longer-term positions in these stocks and adding on the dips. Of course, if they trade back below their 200 day moving averages we might have to re-evaluate.

Capitec (CPI)

Shorting something that is overbought is risky, especially closely held overbought stocks like CPI. The all time high can be an easy stop loss though.

Standard Bank (SBK)

As is the case with the other major banks (excluding CPI), we’d like to see a pull back to retest the breakout and perhaps the 200 day moving average.

Bidvest Group (BVT)

Buying the breakout retest offers a clear stop loss and a good risk-reward.

Barloworld (BAW)

BAW is stuck near a supply (resistance) zone. The higher probability outcome here is for BAW to retest the range lows around the mid R50’s. We would be interested in picking up longs from those lows, or if there is a decisive break of the R70 level.

*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.

Want to trade some of our ideas and take some of the opportunities in gold miners, or buy the pullbacks on the banks? HCA trading offers some of the most competitive trading fees in the market, paired with reliable and capable trading platforms. Moreover, our clients get our trading ideas first, as well as guidance from professional and experienced traders.

The post Opportunities in Gold miners appeared first on Herenya Capital Advisors.

That said, the world is starting to push back on lockdowns. This could bring some risk-off sentiment to the market and might just answer the “Biden wins, what now?”. Maybe we just move on from the US elections and start to focus on growing anti-lockdown unrest around the globe?

Offshore trade ideas

S&P500 (SPY)

SPY looks fairly range bound at the moment (as do most US indices). For now we have to wait for this range to break before we can discern a high probability trade setup. The gut feeling is that we trade higher on the back of some optimism for the Biden victory as well as hopes of further stimulus. Patience is still the name of the game here I think as we need to wait for a confirmed break out from this range.

Nasdaq (QQQ)

A very similar picture to the S&P500. One thing that is concerning of the Nasdaq (QQQ) chart is that those two candles are looking a little lonely up there, above a gap. The most recent one is in fact a hanging man candle formation, which tends to be bearish. The bias would be short here, although how markets will react on Monday is still to be seen. This chart is part of the reason we can’t be overly optimistic about the week ahead. The potential for this to be an island reversal is also there. As mentioned earlier, the gut feel is that we trade higher, but patience is the name of the game.

Philadelphia Semiconductor Index (SOX)

I’ve mentioned before that I consider the SOX index as a leading index to the Nasdaq. SOX managed to break to new highs on what looks like a breakaway gap at stage. Further upside here, along with the S&P500 and Nasdaq breaking to new highs would bode very well for our local market and likely the ZAR.

Brent crude oil

Brent just can’t break this down trend. I’ve mentioned a few times that seasonality is a big factor here and that November usually proves to be the weakest month for oil. Price has now made a series of lower lows and lower highs, so the trend is definitely down. The blue trend lines are key here I think. Provided we don’t break those trend lines, lower prices in the short-term is the most probable outcome here. Factors adding to oil weakness now include European lockdowns (and the impact that will have on demand for oil) as well as the possibility of further lockdown measures in the US on the back of the Biden wi, (which will also negatively impact demand for oil), and Russia not cutting production in accordance with OPEC+ guidelines.

Dollar index (DXY)

This flag formation is starting to look like a winner. The only support left here is the lows made in August and September. Weaker USD and stronger ZAR seems to be the sure-bet outcome here now.

USDZAR

Once again looking at a weekly chart on the USDZAR. That R14.50 level is looking like it’s going to be hit rather easily at this stage. It would not surprise me if we overshoot the R14.50 level (200 week moving average) and head back towards the bottom of the range in which the USDZAR traded during 2018 and 2019.

Bitcoin (BTC)

Inverse Head and Shoulders target reached. Now we need to wait for another setup, or just HODL.

South African trade ideas

Nedbank (NED)

Nedbank is looking fairly solid at this stage. If it can get above the 200 day moving average (and break out of the range), we could see a nice run here. A stronger ZAR will be a powerful backwind for this long trade.

ABSA (ABG)

Most banks are looking very similar, all seeming to have formed a solid base and all trying to change their trends. ABG is no different and that 200 day moving average is key.

Discovery (DSY)

DSY bounced off the 200 day moving average with gusto! This could be a small rising wedge with overhead resistance around R120… although the stronger ZAR narrative might negate any short trade ideas on financials in general. That said, this does look like a very high risk-reward setup that is forming and one to watch in the coming week.

Growthpoint Properties (GRT)

GRT just can’t seem to break this down trend. This is a stock that is starting to look very attractive to those seeking both value and dividends. I would still like to see that downtrend breaking, although some in our community and team are starting to buy the dips here. From a long-term equity investment perspective, this stock is a good addition to the portfolio. So perhaps the ‘trading hat’ needs to be put aside and exchanged for the ‘investing hat’?

Redefine Properties (RDF)

Well, RDF make a new low below the R2 level, so the reversal off the bottom (blue) channel line is off the table. There is a small falling wedge forming, and as is the case with GRT, this stock is starting to become very attractive for long-term investment. Any short-term trades can only be considered once this small wedge (market with the black dotted line) breaks.

Sasol (SOL)

Given the weaker Oil, stronger ZAR narrative, SOL looks like it may go break that R74.50 support level. I might be getting ahead of myself here a bit though. Let’s see how the stock behaves when it gets back to that support level first. Some are starting to look for an Inverse Head and Shoulders (IHS) pattern here on lower time frames, although nothing is confirmed yet. A move down to the R74.50 level would negate the IHS setup anyway. For now, short bias to support and patience.

Telkom (TKG)

TKG finally broke the range on the back of earnings. Perhaps this will lead other telecommunications stocks higher?

Vodacom (VOD)

VOD is still in this range. I’m starting to get worried that it won’t break higher. The potential downside here is all the way down to R105. For now though, no signal. It might even be better to remove this from the watchlist for a few weeks, just to avoid being caught out.

Mondi (MNP)

A hanging man and a dragonfly doji candle formation, one after the other… both under the short-term moving averages, while they are in bearish configuration. Feels like a move back to R300 is rather probable.

Kumba Iron Ore (KIO)

I showed this KIO Head and Shoulders chart last week. Although it looked like it might have broken, it ended up making a hammer candle formation and had a solid bounce. This Head and Shoulders formation is not off the table yet though as price will need to trade above the right shoulder to negate it. There is also some weakness in the Iron Ore price. This is still a setup worth keeping an eye on.

Goldfields (GFI)

What is gold going to do in the era of Biden? A little tricky to call actually. GFI gave a doji candle on Friday, in the selling zone (for short trades on a trend following strategy). The bias here is that we see it trade down to the 200 day moving average, but I am staying open to the idea that stimulus hopes pushes gold enough to negate the strong ZAR impact and get GFI above the R205 level. For now though, the highest probability trade here is a short to R160.

Impala Platinum (IMP)

IMP almost back at the top of the range. It could be a nice short around the R177 level. All the 99’s buying is also done now (odd lot takeout offer). Normal range trade rules apply. Stay flexible.

Truworths (TRU)

TRU looking pretty solid here. Risk-on, flows into emerging markets and ZAR strength are all going to help push this stock. I like the potential for a long-term trend change here above the 200 day moving average.

British American Tobacco (BTI)

Mentioned last week for the dividend. Looking like that R495 – R500 support will be tested. Might be worth picking it up there if it gives a chance.

*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.

Biden wins, what now?

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That said, there are some charts and ideas floating around inside the HCA trading community that are worth sharing. Just keep those stops tight and the trades small. The money is made by being around long enough to capitalise when it’s easy, and allowing the market trends to do the work.

S&P500 (SPY)

The neckline of that Inverse Head and Shoulders broke and the SPY find itself scrambling for support around $320. Could be a nice range trade here, but it could be even better to buy sub-$305. News of a fresh UK lockdown might gap markets lower. The $320 level will be key I think. In the medium-term it’s likely that markets will rally as regardless of who wins the US election, money will be printed. In the short-term though, a shock caused by election results combined with UK and EU lockdowns could create some chaos and see this market come off a quick 10%. That is a lower low after all. $320 needs to hold or we’re looking at a test of $300.

Nasdaq (QQQ)

The eye of Sauron!? It’s tongue-in-cheek, sure… but this lower high / bull-trap formation actually has a pretty good track record of picking tops. Maybe just down to the 200 day moving average at $243?

VIX

Keeping an eye out for that 50 level on the VIX for a signal to stay out and wait for a term structure inversion and a buy signal. Things might get a little crazy in the weeks to come.

Dollar Index (DXY)

DXY turned around and bounced off that trend line making a higher low and a new swing high. Perhaps once the election result is out the way, the USD can strengthen into the end of the year? What happens if the FED prints another $3tln? Will the devaluing effect of more stimulus be outweighed by the confidence and greed created by a Trump win, at least in the short-term? I guess we’ll find out.

USDZAR

R16.10 to R16.20 is a key support zone for the USDZAR. Some more USD strength would be nice, but we will have to break that level first. Risk off could work against us here.

Gold

The bear flag is broken and the 200 day moving average looks in sight.

Brent Crude Oil

New lows. Sentiment is getting extremely bearish on Oil and seasonality is working against it too. Perhaps we’ll see it bottom by the end of November, but for now it seems to be heading lower.

Bitcoin (BTC)

The full target for this Inverse Head and Shoulders is around $16k. Multi-month patterns take many months to work out. Daily and weekly charts for reference. My call remains the same: ridiculously new highs in December 2021.

Woolies (WHL)

Coming back to test the 200 day moving average (and the 50 day moving average). Maybe a decent long-term entry here for those who missed the bus. Risk off globally could drive it down to the trend line around R32.50, so just be careful to not get too big too soon.

Vodacom (VOD)

It just can’t seem to break free here. Sellers stepping in above R125 and driving it lower again and again. If the sellers can’t get it to hold below R120 though, it won’t collapse. The fight for the 200 day moving average is still very much on.

Telkom (TKG)

And below all the moving averages again… but still in the consolidation. Bias is still long. Patience is needed.

Standard Bank (SBK)

Provided the US market doesn’t melt down, this SBK setup is looking decent for a long on the swing trading account.

Shoprite (SHP)

Kind of in the middle of nowhere right now. If we get a chance to pick up stock sub-R120, that would be great for a medium to longer-term long position.

Sasol (SOL)

R74.50 (ish) is a rather important historic level. Will it act as support here, or does a lower oil price drive it even lower?

Nedbank (NED)

NED looking similar to SBK. Interesting convergence of support (trend) lines. I still like banks in general and this offers a great risk-reward for short-term. Still a little early to trigger the long-term buys though.

MTN (MTN)

Sellers stepping up to the plate above the 20 day moving average. If we get a risk on theme after the US election and the market gets going, MTN could crack the 200 day moving average and get a move on. Watch the swing lows of this rounding bottom though. That would be the stop for any long trades taken here now. That bear flag has not been invalidated yet.

Mondi (MNP)

From “this could be a fakey” to “bombs away” in a 5 seconds flat! Now it has to hold R301 or it’s at risk of forming a down trend. High risk-reward here for the brave though.

Impala Platinum (IMP)

Fancy a bounce to the top of the range, anyone?

Growthpoint Properties (GRT)

GRT down trend – 2.
Those hoping for a trend change – 0.

Once again, the new low is concerning. Surely this is getting a little overdone now though?

FirstRand (FSR)

It’s a range-trade-o-rama! Looking similar to both SBK and NED. Start buying banks slowly.

Discovery (DSY)

Alright, target hit. Now DSY needs to form a base around this 200 day moving average before we can discern what comes next. If you’re still short, now is the time for trailing stops.

British American Tobacco (BTI)

Looking for key support around R495 to R500. There is also a R40 dividend on the table. This one might be worth buying.

Bidvest (BVT)

Support at R130, resistance at R150. Range trade city?

Barloworld (BAW)

The Inverse Head and Shoulders setup from last week failed to trigger and took out the right shoulder, thus is off the table. Back on old support at R57… resistance around R68. The range of my knowledge of puns is vast.

Aspen (APN)

It’s made a small pennant over the last two weeks. Trend continuation pattern, still looking for R100. Better not to chase here if you’re not already involved.

BHP Billiton (BHP)

R302 doesn’t have to hold, but it could and if it does, it’s a great risk-reward, counter trend setup. Remember to keep it smaller because it’s against the primary trend.

Exxaro (EXX)

Break of the R125 level was a great short trigger for us this past week. From here, not really sure if there is a setup unless we get a chance to buy it off R101.

Tiger Brands (TBS)

So that wedge formation is working out and now we have to ask ourselves if we’re going to buy some at the midpoint between the 20 and 50 day moving averages, or if we’re going to wait for a retest of the neckline (orrange) before we take longs again.

*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.

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The post Weekly game plan 1 November 2020 appeared first on Herenya Capital Advisors.

S&P500 (SPY)

SPY managed to test the support and the short-term moving averages and managed to put in a bit of a bounce. As it stands, our bias is toward new all time highs on this index. Be warned though, US election volatility is coming.

Nasdaq (QQQ)

The makings of a bull flag, on the inverse head and shoulders neckline, and supported by short-term moving averages.

Dow Jones Industrial Average (IYY)

Similar setup to the charts above. The setup looks constructive (bullish).

Philadelphia Semiconductor Index (SOX)

As long as it stays above the 20 day moving average, our view remains bullish. Remember, this is a leading index for the Nasdaq.

Dow Jones Transportation Index (DTX)

DTX is managing to hold above the previous high (now support). Another break higher would be very bullish for equity indices in general.

Brent Crude Oil

The consolidation below the trend line resistance is still intact. We’re watching for a break out of this down trend, although we are mindful of Oil seasonality around this time of year.

Gold

Gold still in the flag formation and once again testing the bottom of it. Be careful out there, a break of this flag could see gold testing that 200 day moving average pretty quickly.

Dollar Index (DXY)

Once again we look at two charts on the DXY. The first (left) indicates what we think could be a bear flag breaking lower, which is indicative of a prolonged period of a Dollar weakness. The second (right) shows that the inverse head and shoulders neckline failed at act as support. Our base expectation here is that the DXY first tests the bottom of the rance as indicated in the second chart (right). From there we will have to see if it finds support or fails. Further stimulus from the US will drive these charts lower.

USDZAR

Once again looking at the weekly chart. We note that the 50 week moving average has broken. Should we see USD weakness as indicated above, we’d expect for the USDZAR to firm up towards that R14.50 level in the months to come.

Barloworld (BAW)

The makings of an inverse head and shoulders. Has not triggered yet, but could provide a good trading opportunity in the week ahead.

Woolies (WHL)

We’ve been tracking WHL for a while now and are getting close to our first target. There are targets higher up, all the way to R47. We’d be interested in buying pullbacks in WHL (as well as other retailers).

Vodacom (VOD)

We’ve added two VOD charts to allow us to illustrate a little more clearly. the range that we’ve been watching has been broken, and both the MACD and Stochastic is looking rather bullish. A final confirmation of a long here would be a move of the MACD line above 0 and a push above 80 on the Stochastic. It is still a relative underperformer, although in general this stock is looking better and better every day.

Tiger Brands (TBS)

Although this stock is now under a long-term (equity) buy condition, we think the short-term trend has gotten a little steep. We note a rising wedge and think a short-term pullback (and retest of the breakout) is possible here.

Telkom (TKG)

TKG is looking solid above all it’s moving averages. A bullish break of this consolidation could be a buy signal for those who are not in the trade yet.

Sasol (SOL)

A nice bounce off the de Mark or Williams point of resistance (now support). We also note signs of momentum starting to turn bullish on oscillators, although would be more comfortable once the MACD line and its signal line crossover.

Remgro (REM)

REM is looking rather good to us. Short-term bullish moving average crossover, trading range broken to the upside and a potential inverse head and shoulders looking like it’s broken higher too. Initial thoughts here are to look for price to test the 200 day moving average and then potentially to close the gap.

Redefine Properties (RDF)

Looks like that bullish bounce to the top of the channel is underway. We noticed an exact triple bottom as well. Needs to get above 50 day moving average and recent de Mark or Williams point of resistance, then it seems to be clear skies to R3.60-ish.

Mondi (MNP)

A bit of a confusing picture here. Market in black is a primary uptrend, and a bull flag in that uptrend. Price broke below the major trend line though, which is rather concerning. Although, marked in red is a falling wedge formation which usually resolves bullishly. Perhaps we saw a fake break below the major trend line to suck in the bears before a major bullish reversal?

Kumba Iron Ore (KIO)

Mining is not the flavour of the day anymore and that looks like a head and shoulders formation on KIO.

Growthpoint Properties (GRT)

This time it managed to close above the trend line. This would still be an against the trend trade, so half size and tight stops.

Goldfields (GFI)

GFI looks like it’s dead. 200 day moving average support is up next.

Clicks (CLS)

Retailers pushed really hard on Friday last week. Another strong push into that overhead resistance could be a high risk short setup on CLS.

*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.

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The post Weekly game plan 25 October 2020 appeared first on Herenya Capital Advisors.