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.

The election is now just one week away and we recommend staying light into the election and only making decisions post-election results, even if we have to pay up a bit in case of good news, or just stay on the sides in the case of bad news. There is no edge in trying to figure out an election result for a trader. This election has been marred by a lot of intimidation of Trump supporters, so it has become impossible to be sure if the polls are correct, or like 2016 there are Silent Trump supporters. 

Most polls currently have a Blue Sweep penciled in for 2020. What would that mean for the markets?

Shorter-term a very large stimulus deal with money flowing directly to the poorer folks should be good for risk assets (that’s the bank consensus, not sure we would take the bait). On a longer-term basis, the Green New Deal won’t be cheap and will probably cause traditional energy prices to go to levels never seen before. Corporate Taxes are bound to go higher as well, making the S&P 500 more expensive than it already is. So Although there may be a pop higher if there is a Biden win, we think the USD will drop, Gold will fly and the US stock market will be a less favoured destination longer-term, and we will be looking for a rotation towards European based assets as these are not overly expensive in relation to US tech.

Here is the big but;

Are we to believe the polls that Biden is so far in the lead and this will not be a closely contested election? We don’t believe that to be the case, in fact another second surprise win by Donald Trump wouldn’t be a shock to us. In the case of a Trump repeat win, we believe the dollar may pop higher and Gold bulls will need to get squeezed out, as this is still one of the most crowded sectors.

Regardless of the outcome

On the other hand, a sector we are starting to like in the US that should be a winner regardless of Trump or Biden is small Banks in the US. We believe the yield curve will steepen in months ahead providing a tailwind for an improvement in bank margins post-election.

We will be back with more ideas for a portfolio as soon as the election dust settles.

The post Avoiding the US election 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.

S&P500 (SPY)

The Inverse Head and Shoulders (IHS) seems to have played out and the market failed to make a new high. We’re keeping an eye on that key support level at $339.05 (around 3400 on the index). We think that could be significant support and would be worried about the sustainability of the current tertiary uptrend if that level is broken. As will be shown in some of the other major U.S. index charts below, there is a possible bull flag in the very short-term too. Right now we do not see any high probability setups on the daily time frame and thus have not new plays here. We would be open to adding to a long position off that key support level, or on a break to new highs.

Nasdaq (QQQ)

A very similar picture to that above, so much of the commentary and thoughts are on the same track. Here we can see that small bull flag formation though. Note that on the daily time frame that formation might be challenging to trade and looking at a 1 hour chart for entries, targets and stops is advised.

Dow Jones Industrial Average (IYY)

Another U.S. index, another chart that looks pretty much the same as the one before. All the same applies here as above.

Philadelphia Semiconductor Index (SOX)

The gap made on Friday 9 October 2020 has not been completely filled, thus one of two things can be happening here. First, it could be a breakaway gap – a bullish break of the last five days’ worth of consolidation would confirm that. Second, it could be an exhaustion gap – closing the gap from the 9th could double confirm as that would be a break of the consolidation as well.

Right now, there is no game here for us as there is not a high enough probability setup for us to act on. We think that SOX can be seen as a leading indicator to QQQ, which in turn leads SPY. The new high over the last period while other indices failed to make new highs is encouraging for the bulls overall, but we need to pay attention to what happens here.

Dow Jones Transportation Index (DTX)

This chart looks a little more encouraging as the support level seems a little more robust. From a trend following perspective, a good long entry would be in the area between the 20 and 50 moving averages, so there is no real setup here now.

Dollar Index (DXY)

We look at two charts here. The first is the daily timeframe showing our original rectangle, IHS and potential trend change. There is a nice 3 bar bullish reversal pattern with lows right underneath the 20 dma. This could prove to be significant in weeks to come. The second chart is a weekly chart in which we note a potential bear flag. Our thinking is that perhaps, instead of seeing a bottom and reversal, we could perhaps see a few more weeks of consolidation in this channel before an eventual move lower down. Thus in the short-term, perhaps a push higher towards the 20 week moving average (bullish) before a break of the bear flag consolidation (on the weekly) and then a move lower. Much will be dictated by the outcome of the U.S. election though.

USDZAR

We’re looking at a weekly chart here. We see key support around the 50 week moving average. A break of this support could lead to a move toward the 200 week moving average.

Brent Crude Oil

We’ve added another resistance trend line, this time using the candle wicks. It’s created a small zone in which the market has traded over the last week. Our thinking is that a break higher, above the dotted trend line could lead to a longer-term bullish trend. Overall though, Oil is consolidating between $38.30 and $44. We’re not taking any trades until either one of those levels are broken on a daily time frame.

Gold

The makings of a bear flag with the potential to retest the 200 day moving average around $1760 / $1800.

VanEck Vectors Gold Miners ETF (GDX)

2 hour chart of GDX. Looking like a bearish reversal after it failed to reach the top of the channel. Note that this is actually a small wedge (might not be so easy to see on the chart). A bearish break of Gold (above) or a strong move toward Dollar strength could add fuel to the bearish fire here.

Silver

Looking very similar to Gold in terms of a bear flag setup. Strong risk on sentiment, or lack of further stimulus could be a catalyst here for a weaker move in both Silver and Gold.

Direxion Daily Small Cap Bear 3X ETF (TZA)

The 1 hour chart is showing signs of a nice rounding bottom and potential bullish break. Note that this is a 3 times leveraged inverse ETF of the Russell 200 Index, thus a bearish move in the Russell 2000 index would be a 3 times multiplied bullish move on TZA.

Anheuser Busch Inbev (ANH)

The breakout that was doubted, that ended up happening, has disappointed…. we’re watching R885 for support and a potential long entry, although our confidence here is low.

Aspen Pharmacare (APN)

The consolidation is broken and the R100 level comes back into play as a target for this trade. Once the R100 level is tested, it would have completed a multi-month move back to the bottom of a large channel formation.

FirstRand (FSR)

FSR is approaching support. Although R36.90 (R37) seems like a solid support level to take long positions off, stay open to the possibility that it could break this first level and only bounce off R33.83 (R34).

Redefine Properties (RDF)

Very high risk-reward on offer here for the long trade. Stop loss below R2, target R3.60, then R4.50.

Sasol (SOL)

Another set of hammers fairly close to a key support. It could well be a long here with a stop loss below R99 and a target at R123, then R140. Below R99 spells trouble.

Telkom (TKG)

Price holding well above all moving averages now. Stop loss below R25, targets shown on chart.

Discovery (DSY)

The trend seems to be broken here. Door is open for a retest of the 200 day moving average and a short trade. Stop loss above R125 with a target of R107.

*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 18 October 2020 appeared first on Herenya Capital Advisors.

Every week in 2020 seems to get stranger and stranger. Last week we saw the death and rebirth of stimulus talks and Trump uses his ‘art of the deal’ tactics to look good for the election. Make no mistake, the election is a big deal and it’s coming closer. Odds are that volatility will pick up a little heading into the election and thus we’re happy to take it very slowly. That said, markets are looking generally strong and confident at the moment.

S&P500 (SPY)

A number of different things happening here all at once. There is a small inverse head and shoulders busy playing out, as well as a return to the primary trend and very likely a push to new highs.

Nasdaq (QQQ)

Very similar picture to the S&P500 above. The support held very well and it’s broken the resistance level rather convincingly.

Philadelphia Semiconductor Index (SOX)

This index can provide a decent lead on tech stocks in general. Interesting to see that SOX has already pushed to new highs. That last candle does not look too terribly bullish though. No real trade here, but just something to keep an eye on.

Dow Jones Industrial Average (IYY)

Once again, a very similar set up as on the S&P500. Inverse head and shoulders playing out and a push to new highs most probably.

USDZAR

We’ve removed all our analysis from this chart in order to clear our minds of any bias. As time went by, our levels started making less sense. Right now, just looking at it from a Dow Theory perspective, we see lower lows and lower highs. Other than that, we expect to take our lead from the Dollar Index (DXY).

Brent Crude Oil

We thought Oil had triggered a short trade last week, although we clearly got it wrong. Oil bounced hard and moved back to the top of the range. Right now, we see no setup and thus no trade. We are watching to see how it holds above the 200 dma. It always interesting to see how charts develop when there are convergences of levels and moving averages as we see on oil at the moment. We are bullish over the longer-term (2021), but acknowledge that this period is usually weak for oil (seasonality). Patience. And potentially a long above the 20 dma.

Anheuser Busch Inbev (ANH)

We hesitated here last week, but the flag seems to be playing out. Needs to get above swing highs (early September) to really get going.

Aspen Pharmacare (APN)

We’d marked out a small bear flag last week, although it never really broke convincingly. Since then we’ve noted a bullish signal line crossover on the MACD. Perhaps we see this little consolidation break higher? We’re setting alerts for a potential long entry above R120.

Discovery (DSY)

The little trend that could! It could also be setting up for a high probability trade. We’ve got alerts at R125 and will be keeping an eye on the price action around that level. If buyers step in and show interest from that level, it would be a great place to jump on the trend. If no buyers arrive and the level does not hold, there is some building divergence here that could see that beautiful trend line break and the stock scrambling for support around R110. Watching how the stock behaves around R125 is key.

FirstRand (FSR)

No real deep insights here other than the R42 level being rejected. The stock is currently in the middle of the range and thus, for us, there is no setup to trade from here. Wait for another opportunity.

Growthpoint Properties (GRT)

The trend line resistance put up a decent fight. All trade ideas in GRT are off the table now.

Nedbank (NED)

NED broke the downward sloping trend line and has spent the whole week testing it (walking the line). We’re still bullish above this trend line and note the 20 dma and 50 dma crossover. Target remains the 200 dma around R128, with a stop loss below R100.

Telkom (TKG)

Telkom is still looking constructive. It’s holding the moving averages well and seems to be on track to test swing highs.

Vodacom (VOD)

Momentum starting to look a little better here, but still no bullish break. Our alerts are set for R125. Above that might be a good long trade.

*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.

For charting, we use TradingView:

The post Weekly game plan 11 October 2020 appeared first on Herenya Capital Advisors.

S&P500 (SPY)

Both out support levels have been hit. Volatility is higher than usual as evidenced by the large daily ranges on major indices. We are still of the view that the S&P500 should come down to test the 200 day moving average (and the downtrend line).

Nasdaq (QQQ)

Our view here is similar to that on the S&P500. We note a range here though, that if broken to the upside could act as a trigger to make us close short trades. A break lower, of course, would continue to play in our favour. We still expect the 200 day moving average to be tested.

Dow Jones Industrial Average (IYY)

Not the worlds biggest head and shoulders formation, but it targets just below the 200 day moving average. This actually offers a great risk-reward for a short trade. Above the neckline and the trade is off though.

Philadelphia Semiconductor Index (SOX)

This chart could well prove to be a bit of a leading indicator for the tech sector at large. Note that this is a flat bottom triangle. Perceived bearish in general, although bilateral in nature. A bullish break here would likely see us close shorts on QQQ.

Dow Jones Transportation Index (DTX)

We don’t really have too many comments here. This chart looks fairly constructive to us at this stage. We’ll keep an eye on the range formed over the last 5 trading days for a directional break. Other than that, there is no real setup of clear picture here for us.

Dollar Index (DXY)

The consolidation has finally broken and a stronger Dollar is on the cards. Ironically, traders added more short DXY positions over the last week. This heightens the risk of a short squeeze and an even stronger Dollar. This will continue putting pressure on precious metals and commodities (and also the Rand).

USDZAR

The fake breakout to Rand strength was short lived. The DXY chart above overrules the USDZAR setup as EM currencies will take their lead from the Dollar. For now it seems that the USDZAR is back in the range. Further bullishness on the DXY will continue to put pressure on the Rand.

S&P500 Volatility Index (VIX)

We’ve been experimenting with different ways of looking at the VIX. Right now the only useful information this chart is communicating is that across all terms, volatility is is generally higher that usual. This is likely for a few reasons; uncertainties around a potentially contested U.S. election and the unprecedented events caused by COVID-19 earlier this year. In order for markets to really start accelerating back down, we’d need to see short-term VIX comfortably above long-term VIX. Let’s see how this plays out. *Note that this chart takes into account the absolute values for the various terms of the VIX futures contract and not their relative change compared to each other.

AngloGold Ashanti (AU) – U.S. listing

Given the DXY chart above, it would seem probable that AU trades around the 200 day moving average in the coming week.

Old Mutual (OMU)

Four relatively bullish looking individual candles seems could not stop the power of the down trend here. R9.24 is the next support level. We’ve taken a small against the trend long position here, although it’s not feeling very comfortable at the moment.

Sibanye Stillwater (SSW) – S.A. listing

Key support is broken here. Once again, the DXY above dictates all in this sector right now. Key support levels are around R42, R38 and R32 (very roughly).

Exxaro Resources (EXX)

Simple range break short trade with a decent risk-reward.

Dis-chem Pharmacies (DCP)

One (down) trend to rule them all…

*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.

Depreciation in your tax return

An important thing to keep in mind when doing your annual tax returns is whether any depreciation can be claimed against your earnings. This may seem like a strange thing for a salaried individual to think of, but if you have had to buy a laptop or a piece of equipment for work, it applies to you. Read more…

The post Weekly game plan 27 September 2020 appeared first on Herenya Capital Advisors.

S&P500 (SPY)

Key close below the lows of last week, as well as, below the 50 day moving average. A retest of the (black) trendline is becoming increasingly more probable. Horizontal support levels marked in red.

Nasdaq (QQQ)

Similar to the S&P500 in the sense that it has broken below the 50 day moving average and that the 20 day moving average is starting to slope down. The uptrend (blue) was broken and thoroughly tested. High probability of testing the 200 day moving average in the weeks to come.

Dollar Index (DXY)

Although the downtrend has seemingly been broken, the DXY is still rather range bound. We await a break of the range before changing any major views. Further Dollar weakness will be good for emerging markets and commodities and visa versa if we see Dollar strength. Patience is required here for clear direction. As things stand now, we think that the current status quo (stronger ZAR and industrial commodities) remains in tact as long as the DXY remains in that range.

USDZAR

The range in which the USDZAR has been trading seems to have broken. We’ve marked out support for the USDZAR at around the R15.50 level. Lack of Dollar strength, which could be interpreted as the DXY remaining range bound (chart above), would likely see the USDZAR trade to that support level.

Palladium

The uptrend seems to be in tact here. The purple uptrend line would be the one to watch for a potential reversal, but for now all seems well and positive.

Gold

We’ve widened the triangle a little to accommodate the last week’s worth of directionless trading. Generally though, no real change in the setup.

AngloGold (AU – NYSE listing)

Friday’s close triggers a short trade to that target zone.

Glencore (GLN)

The resistance zone is putting up a decent fight, but the stock is also holding both the 89 day and 200 day moving averages very well. Unless we can get a clear decisive push beneath the longer-term moving averages in the next week or so, our conviction on a short trade here is fading. That said, stop losses have not been triggered either. Patience.

Tiger Brands (TBS)

The long trade was triggered here. A long wait lies ahead to see how the inverse head and shoulders works out. It is encouraging that TBS managed to get above and hold the 200 day moving average.

Old Mutual (OMU)

The short trade worked well here. The first target was tagged on Friday, but the second target is still some way down. We note though that the Friday candle was a hammer, on a key support level and wil higher than usual volume traded. Trailing stop losses are recommended from here on out, to lock in profit made if this stock bounces.

Anheuser Busch Inbev (ANH)

Some time ago we looked at ANH testing the 200 day moving average. It appears to be ‘walking the line’ rather well and has just made a golden cross. We like this for a longer-term entry as we think it could be the start of a new primary (bullish) trend.

Aspen Pharmacare (APN)

Short trade identified on 2 August 2020 still in tact. Trailing stop loss from here with a target around the R105 level.

Blue Label Telecoms (BLU)

This trade unfortunately stopped us out at the worst possible time (there is a lesson for us in there). Currently there is a lot of interest in this stock with many inverse head and shoulders charts making the rounds. We note the range marked in purple and would use it to potentially trigger a new long trade in BLU.

British American Tobacco (BTI)

This flat bottom triangle setup seems rather bearish at this stage. Remember that triangles are generally bilateral formations, which means they are not indicative of a predetermined directional break, but only reliably useful in the determination of price targets once a break has occurred. This is a setup to watch though.

Capitec Bank (CPI)

CPI is forming a nice, almost year-long range. Above R1000 would likely have us looking for longs, although we marked out a smaller support (R950-ish) that could offer a great short entry to the bottom of the larger range if price manages to close below it.

MTN Group (MTN)

MTN needs to break the marked support levels in order for the downtrend to completely establish itself.

Top 40 Index (ALSI)

It’s not looking good for the bulls here. Lower highs and lower lows and two bearish candles around a resistance level. It’s going to be an interesting week.

*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.

Depreciation in your tax return

An important thing to keep in mind when doing your annual tax returns is whether any depreciation can be claimed against your earnings. This may seem like a strange thing for a salaried individual to think of, but if you have had to buy a laptop or a piece of equipment for work, it applies to you. Read more…

The post Weekly game plan 20 September 2020 appeared first on Herenya Capital Advisors.

Don’t get us wrong, tech is the future and the way the world is changing and will keep changing is driven by tech. That very long-term fourth industrial revolutionary trend is not going to change for many decades to come, although like all things in markets it will not move in a straight line. The COVID crash is very long topic, but one of the influences it had was to create a massive increase in interest in trading and financial markets. In the U.S., people just sat at home with nothing to do and a nice fat government cheque to inspire their day trading dreams. We’re not here to critique anyone or anything like that, we’re just looking at some data and are getting worried about the short-term consequences of the actions of millions of people.

The chart below shows that in August the S&P500 index rallied 7.2% and that only 10 stocks in the S&P500 index accounted for over 50% of that rally. In other words, the market capitalisation of Apple, Microsoft, Amazon, Facebook, a few more tech companies and good ol Warren Buffett’s Berkshire Hathaway, is so large and their weighting in the idex so heavy that they accounted for over half of all the power driving the index higher during August. This creates some concerns around market breadth, which we spoke of last week.

Below, to further illustrate, is a chart of the FAANGM stocks as a proportion (percentage) of the S&P500 index market capitalisation. We see here that just over a quarter of the entire index is concentrated in just 6 stocks; Facebook, Amazon, Apple, Netflix, Google/Alphabet and Microsoft. Now, all of these companies are actually pretty amazing and this is not the year 2000. These tech companies literally are changing the world in front of our eyes and are making a lot of money doing it. What worries is that perhaps ‘we the people’ have gotten a little over optimistic about how much these companies will continue to grow in the very short-term.

When looking at investment flows into Nasdaq ETFs over the last while, we see something else that is rather concerning. Funds have been flowing out of the normal good ol fashioned boring Nasdaq ETF (QQQ), but has over the last two weeks been piling into the exciting and racey 3x leveraged long Nasdaq ETF (TQQQ). So, investors are pulling out of the cash index tracker and piling into the three times leveraged index tracker… this is rational, right? (Narrator: No, it was not rational.)

It doesn’t end there though. During the last week the SPX Top 100 Call/Put ratio reached around 2.15, meaning there are 2.15 times as much open interest in SPX Top 100 call options than there are put options. Essentially, more than twice as many people are taking short-term (generally around 2 weeks) bets that the market (particularly tech) is going to keep going higher, than what there are people acting on the opposing view. When everyone is looking left…

All that said, In general we’re not entirely bearish either. Coming out of COVID the world is starting to turn back on and this will drive demand of energy and commodities and gambling and all sorts of other industries. Yes things will be different forever, but to a large extent, the things we needed pre-COVID are still the things we need post-COVID. Our thinking currently is that we will very likely see a rotation out of tech and into ‘everything else’, which is likely to increase overall market volatility and put pressure on the very concentrated indices.

S&P500

The S&P500 (as charted here with the SPY ETF) has come down to test the 50 day moving average. Thus far it has not managed to break below the key support, although if does break it could go on to test the 200 day moving average over the coming weeks. A retest of the 200 day moving average would also be a retest of the recent breakout (and secondary trend change). Although that would be a relatively large move, a retest of the 200 day moving average would not negate the current upward primary trend.

Nasdaq

The Nasdaq Index (charted here using the QQQ ETF) looks very similar to the S&P500. In this case though we note that it closed below the 50 day moving average, which opens the door for a move lower. A few key levels to watch would be the previous all time high and the 200 day moving average.

Dollar Index

We’ve mentioned a few times that the fate of the USDZAR is in the hands on the Dollar Index (DXY). So, depending on how much confirmation you want of a trend change, you might have different views here. We’ve been watching the range marked our in grey as a potential signal that the trend is changing, others have been pointing out the purple trend line that was broken and retested in the last week. Either way, it is looking like USD strength is on the cards.

USDZAR

USD strength will spell ZAR weakness. Overall though, the Rand is still in the range, so a move back to the top of the range would not be surprising.

Gold

Gold hasn’t broken out of the formation we pointed out last week. Just a reminder that this is a bilateral long-term pattern, meaning that it can break either way and the formation width is merely used as a tool to target a breakout trade with. The two potential targets here are thus $2160 and $1760 (roughly).

AngloGold

Looking at the NYSE listing of AngloGold (AU), we note that the stock is still very much range bound. For now there is no trade to be had, although this range is offering a clear opportunity to trade a break in either direction.

Richemont

CFR finally broke the range, but most of the targetable move is already done so we’re not happy to chase it from here.

Tiger Brands

The inverse head and shoulders pattern on TBS has still not triggered. Closing the week above the 200 day moving average is worth taking note of though. One to watch in the week ahead.

Old Mutual

OMU tested the breakout and pushed back to the lows for the week. Short trade is looking fairly good.

The Foschini Group

Not a bad move on TFG and encouraging to see it closing above the 200 day moving average. Trade initially featured in the 30 August 2020 weekly game plan. Trailing stop loss for here is recommended.

Woolworths

This one didn’t work out.

Standard Bank

SBK looks fairly solid for a bullish break from the range here.

MTN

Nice break of the trend line, followed by a back test and a solid move firmly below all the moving averages. A close below R57.00 would spell big trouble for MTN.

Nedbank

Make of break here for the NED short.

Requested charts

Sibanye Stillwater

We looked at SSE a few weeks ago and noted a broadening pattern (megaphone). Considering that the current move is a bounce off the bottom of the megaphone, it would seem that there is much more upside to be had before it reaches the top of the formation again.

Momentum wise, we note that momentum is bullish on all counts. Both the MACD and Stochastic have given their full range of buy signals, while relative strength and On Balance Volume hare not really communicating anything of significance.

For traders who are currently long, depending on gearing and trading style, we would recommend either a three day low trailing stop loss or a ATRx2 trailing stop loss. Only once the stock trades and closes below the reg zone (support) would we be convinced the upward thrust is over, although that is a long way down for geared long positions to be able to hold. Should there be a strong ‘risk-off’ theme in the near future, a break above that green zone (resistance) would signal a buy for us.

Nampak

Besides the incredible down trend (weekly chart), what worries us here is that it managed to eek out a close below the previous all time low of 85c. It is a very high risk-reward to buy here for the long-term. But like @VolatilityQ says: “Return always wants its risk payment.”. If you want to get involved here, make sure that it’s with a long-term mindset and that you are not allocating a huge amount of capital into this idea. The close below the 85c level earlier this week could signal further downside. There are also debt problems and just general lower demand for cans (driven by lockdown). Maybe waiting for a rights offer would be a wise way to gain entry into this stock?

Impala Platinum

Generally we are of the view that the global economy coming back online after all the COVID lockdowns will be good for platinum and palladium prices as demand for these two metals will once again outpace supply to meet vehicle and battery manufacturing demands. Thus we are bullish on Platinum Group Metals (PGMs) in general. It follows that our view on platinum miners reflects that view.

Looking at IMP, we note that we have three of four buy signals on the Stochastic as well as two of two buy signals on the MACD. This tells us that from a momentum perspective, the stock is looking strong. A small concern is that the stock has been a relative underperformer for about a year now, although it comes from being the strongest stock on the board last year, so contextually its underperformance this year is understandable.

Without the noise of the indicators, we note a bull flag that has broken higher. Watch out for some resistance around R177.50. A close above that level would likely be a buy signal if you are not already long. A three day low trailing stop or ATRx2 trailing stop would be recommended.

*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 Weekly game plan 13 September 2020 appeared first on Herenya Capital Advisors.

S&P500

Using the SPY ETF as our tool to track the S&P500 index, we note a nice bounce off the lows of Friday’s trading session. Technically the daily candle formed a hammer. Although not a perfect one, it is pretty close to perfect. The fact that the hammer was formed on a significant support level counts in its favour. That said, not every hammer is a buy signal. We want to point out the support zone that comes into play around the 50 day moving average (and just below – as indicated by the red horizontal levels). In the short-term, we expect that the market will come down to test those support levels at least. All of that said, the market is still in a medium-term to longer-term bull configuration. So while we are expecting this correction to still get a little deeper, we can’t yet tell if this is a repeat of the late-February to mid-March action, or if this is more similar to early-June. For now, we’re just being careful and ensuring that we don’t take geared long positions until there is a more clear buying opportunity.

USDZAR

We still largely think that the USDZAR will take its lead from the DXY (as indicated in last week’s post) and therefore do not currently much more to add to that view. Riskier traders could trade long positions off the support here, taking a view that we could see a move back to the top of the range. That trade does offer a good risk-reward and has a very clear stop loss.

Gold

Gold seems to be forming a descending triangle. Conventional knowledge says that this price formation is usually bearish, although we want to point out that this is in fact a bilateral pattern and has a 50/50 chance of breaking either lower or higher. With these formations, the pattern does not necessarily indicate the direction of the expected breakout, but rather is just a useful tool that can be used to measure a target for the breakout when it comes (whichever direction it might be in). The two potential targets here are thus $2160 and $1760 (roughly). In the even that the Nasdaq comes unstuck in the week ahead and there is some panic, we might see ‘the correlation of everything go to 1’ again. In other words, panic in equity markets would lead to a rush for liquidity and we might see this formation break lower. At least, that is our current thinking.

Palladium

Palladium is still looking bullish, although it might have a hard time breaking free of overhead resistance in the very short-term. As demand gradually returns to the global economy, the structural shortage of Palladium will become a driver or prices again.

Woolworths

Some support around the R30.50 level, but one clear of that the short trade looks good.

Old Mutual

It was a bit of a wild week for the Old Mutt last week, but so far this short trade is looking rather good. The chart on the left indicates the formation that we are trading, while the chart on the right is more focused on momentum oscillators, which are all very supportive of the short trade at this stage.

Nedbank

So far so good on the bear flag trade on NED. Support expected to come in around the R80 level. Watch out for USDZAR strength though.

Massmart

Our community pointed out a potential megaphone / broadening pattern on MSM. These are usually very reliable trend reversal patterns over the longer-term, so we are most definitely sitting up and taking note. On the left we indicate the broadening pattern and note that the shorter-term and medium-term moving averages are starting to fall into a bullish configuration. There is still some way to go before we can confidently say that the trend has changed though. On the right we focus more on the oscillators and we note that both the Stochastic and MACD have both given their full range of buy signals. We also note that the stock is a trending relative outperformer and that On Balance Volume is moving higher, which is indicative of more and more volume participating (buying) as price goes higher. Note that this is a long-term pattern and this trade is perhaps better suited as an equity trade (or a medium-term investment, if you will).

Imperial Holdings

Not really much to do here, although the continuous rejection of the R37.00 level is worrying for the long view on this trade. Perhaps it’s time to get rid of the risk?

Glencore

Last week we spoke of mixed signals on GLN and this week things are pretty much the same. Our bias is shifting more and more toward the short though.

Redefine

RDF has come down a lot since the peak. We’re looking at a potential move above R2.50 for a new buying opportunity from a bounce off support.

MTN

It’s not looking good for MTN. Well, it is looking good for a short on MTN. Momentum wise, this is ticking all the boxes as well. Decent risk-reward on offer too. We like this trade.

Harmony Gold

R97.50 was the last line of defense here and it broke with Friday’s close. We could see a move down to previous resistance.

Growthpoint

A daily close above R12.50 / R12.60 could be a short-term buying opportunity with a stop loss below R12.10 and a target of R13.50 / R14.00.

Goldfields

GFI closed below the day day moving average. Below here, moves could be large and fast.

We like the idea of having at least one long in the banking space to offset risk on our NED short.

FirstRand

FSR results are due this week. Getting above R37.00 might be positive for a bounce back to the 50 day moving average.

Capitec

CPI looks like it could be a decent buy. We see some higher lows, although momentum wise it’s in the middle of nowhere.

ABSA Group

Speculative long off the support here with a stop at R75.00.

*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 Weekly game plan 6 September 2020 appeared first on Herenya Capital Advisors.

S&P500

Oh the most hated chart on the market… the rally that nobody likes. Things really are confusing at this stage of the game. We saw a very clean break to new highs over the last week, as well as a rather nice build up of bullish momentum. If you look at only price and momentum, there really is no reason to be short this market.

That is not the entire story though. When looking at market breadth data (by McClellan and Yardeni) we start to see a worrying picture. A dwindling number of shares are participating in the rally and tech stocks are becoming a worryingly large proportion of the index. While these are not clear signals that are actionable when some trigger is generated, these are signs of distress and extreme concentration risk in market indices. History is a good teacher and we have seen similar market conditions before.

We think that it is likely that the market continues to trade higher in the immediate to short-term, although we caution very strongly against taking on gearing at this stage. Strategically we are allocating and keeping a larger proportion of cash and making sure that we do not get caught with geared long positions.

USDZAR

We see some support around the 200 day moving average on the USDZAR chart and note that the pair is currently trading in a rather large range. A move back to the highs of the range would likely put pressure on our banking sector while rewarding the resources counters. For for the most part though, we think that the fate of the Rand will largely be determined by the Dollar Index (DXY). We note that the DXY has been consolidating for some time now. We await a directional break of that range for directional guidance on the Rand and other emerging market currencies.

Glencore

A few weeks ago we looked at the long on a break of the 200 day moving average and the potential setup of a golden cross. Our thinking was that we could see a longer-term trend change. Strictly speaking, in the medium to longer-term that view is unchanged, although in the shorter-term there are some concerns. When GLN broke the 200 day moving average we saw a strong move to the R44 level, although it has since faded and broken below the 50 day moving average and out of a rising channel. This puts us in a difficult position as it is highly likely that we see the 50 day and 200 day moving averages crossover, which generates a medium to longer-term buy signal, while confirming a bear flag and failing to break above a significant resistance zone. We have mixed signals on the momentum oscillators as well. Our bias shifts toward the short side for this stock, although will not enter into any new positions until the picture becomes more clear.

Tiger Brands

We’ve been tracking a potential inverse head and shoulders formation on TBS. There are currently no confirmations for this formation or trade, although we will continue to watch the stock to see how things develop here.

Old Mutual

Momentum wise, OMU is triggering a number of sell signals. Confirmation would be a bearish break from this wedge / triangle formation.

The Foschini Group

TFG triggered a long trade for us which we entered on Monday. Not really much for us to do now other than wait for the trade to either hit target or stop loss.

Exxaro

There are a few things happening here. Golden cross, inverse head and shoulders and a flat top triangle. We entered into a long position on the bullish break of that flat top triangle, although so far the trade is not working out. Our stop loss is below the triangle support.

Discovery

A rather ugly looking bearish engulfing candle on the daily chart for DSY. ATRx2 trailing stop loss is currently at R122.66.

Imperial Holdings

Another bearish engulfing candle on the daily chart. This trade is currently floating around break-even and our stop stays in place just below the recent lows.

*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 Weekly game plan 30 August 2020 appeared first on Herenya Capital Advisors.