Sasol (SOL)

We here at Herenya have looked at Sasol extensively and have held positions on the stock for some time, but we think the time has come to sell. Sasol has seen phenomenal gains since the start of the unfortunate conflict in the Middle East, and those gains are simply due to the supply and demand of oil, which has seen global disruptions. With talks of a potential ceasefire looming, which will drive the oil price down, we believe it is time for us to take profit. Currently, we still think Sasol will trend higher, and are looking for a goal price of R225, but are comfortable with the profit we are seeing.

Rotating Into Precious Metals

During the course of this war, we shifted our positions to try to stay safe by looking at offshore energy markets like gas and coal. Now, with talks of negotiations and a potential ceasefire, we are looking to rotate back into resources like platinum and gold, which were doing well before the war, but have since fallen quite a bit. We are looking forward to a time when the markets bounce and rally once things start cooling off. Some might call this brave; this is, in reality, a tactical trade, since we are seeing some reports of US troop movements and deployments to the surrounding Gulf as “strategically placed forces”, but we find the fact that there are even talks supposedly happening reassuring. We know President Donald Trump wants to find a quick resolution to this war to protect his approval rating, which is declining rapidly as this war goes on. We will be looking at Valterra Platinum, AngloGold Ashanti, Harmony Gold Mining Company, Impala Platinum Holdings, and Sibanye Stillwater.

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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 Selling Sasol, buying gold and PGM miners appeared first on Herenya Capital Advisors.

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Recent Trades

Buy DRD Gold

It’s no secret that we are bullish Gold and we think that DRD is offering a decent risk-reward. Should the wheels fall off the U.S. economy later this week after they report some economic data on Thursday, we believe that Gold should catch a bit and DRD is well positioned to shine in that scenario.

Buy and Sell GFI

We caught the bounce on GFI. After it bottomed on the 22nd of Feb, we managed to get some stock at R229.80, which we sold the very next day (23rd of Feb) at R241.11. If you get a good chance to make a quick buck in uncertain times, take it with both hands.

Buy and Sell SSW

Well, not every trade is a winner. We bought and stopped out of SSW. Entry was R20.82 and we stopped out at R20.18 two days later. Uncertain times indeed.

Buy MCG

So MCG turned down Canal +, only to announce a content deal with Paramount Plus. This is certainly good news for MCG streaming subscribers. Here’s looking good for new highs once this level is broken. We bought the break at R107, which may have been a bit early, but we think it should be ok in the end. Target is R123 with a stop at R100.

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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 Uncertain times appeared first on Herenya Capital Advisors.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

Not only has SPY broken the uptrend line that has been in place since the beginning of the year, you might also see a head and shoulders pattern that has been forming since June. Should the neckline of that pattern break, we might see SPY trading all the way down to $418. For now, our bias here remains bearish.

Nasdaq (QQQ)

QQQ has a very similar setup when compared to SPY. Again, our bias is towards the short side. As a side note, we noted that even after an incredible earnings beat by NVDA, it didn’t manage to hold onto the highs it printed during the after-hours session when results were released. This confirms our bearish bias and make us think that being long U.S. tech stocks is risky business and we have to be dancing close to the door (aka. be ready to bolt out ball when the pawpaw’s start flying towards the fan).

MSCI All Country World Index (ACWI)

Here is where we get into mixed signal territory. While you could argue that the setup looks somewhat similar to those on SPY and QQQ, we want to point out the reverse bullish divergence on this chart. You will notice that the very same divergence is present on both the SPY and QQQ charts. This serves as a good reminder that even strong opinions must be loosely held. We think that the market should come down and are positioned accordingly, but we could be wrong in our view and might have to react rather quickly should the market not do what we expect.

Platinum

Right then, let’s talk about buying opportunities. We had this little bounce pinned on Platinum a few months back, then we saw the reversal and a retest of the lows followed by another bounce. We like Platinum here, in particular a platinum stock which we will get into in the local trade ideas section a little further down. Once Platinum can close and hold above $990, it’s only up from there we think.

Brent Crude Oil

Brent is still dancing close to the door… uhm, close to the upper resistance level. We’d like to see it break higher, but for now we have to be patient for a clear signal. We still like Sasol for a long trade from support (we’ll show the trade a bit further down), but it very much depends on whether or no Oil makes a move to retest the lower end of the range it’s been stuck in since the beginning of the year.

USDZAR

While we don’t really have a very clear view of the ZAR right now, we do think that should BRICS nations start to settle trade in local currencies, it will be very good for the ZAR. We’ve hear that the BRICS have agreed to go ahead with local currency settlements for trade between BRICS nations, now it’s just a matter of implication. Overall, and this might not be the popular opinion but, we think that is a strong positive for our economy.

South African trade ideas

JSE Top 40 Index (ALSI)

About as clear as mud… All we can comfortably say here is that the 66955 level is big. You could trade for the bounce (using a tight stop), or wait for the break and sell into a potential move to 64000. Right now, for us, there is no setup. It does look like the last week has made a bit of a bear flag, but there is also some reverse bullish divergence. So, flip a coin? Either way, watch that 66955 level. There will be a good risk-reward trade to be had in either direction there. Just remember, dancing close to the door is a very good idea.

Aspen Pharmacare (APN)

APN is sitting right on the previous resistance level at R186-ish. There is a good risk-reward long trade from this level, but again, dancing close to the door means tight stops.

Naspers (NPN)

Well, NPN neve broke out the top of the range and is now making its move down to the bottom of the range. Maybe a sneaky long trade from sub-R3000 is the best way to play it now?

Remgro (REM)

Is that a bull flag on REM? It might just be. We like the long trade here.

Sasol (SOL)

SOL is once again testing the support level around R230. If we see Oil give back some gains and head to the bottom or its range, we might see SOL break down below that R230 level. Until then, we stay bullish. Keep disciplined though, because below such a long-term and significant support level the move could be big and fast. Keep dancing close to the door.

Compagnie Financiere Richemont (CFR)

When the trend line broke, it was game over. Friday’s close was on the lows as well, so while we cannot tell how much further this move goes down, we imagine that there is still some meat left in it. If you are short here, you could probably add a little and move your stop loss lower down (to around R268-ish).

Capitec (CPI)

It’s not looking good for CPI. It’s hanging onto the downtrend line for dear life. Maybe this is just a thorough retest… but maybe it’s a complete failure to break out. We can also see a small head and shoulders pattern. We think it’s probably best to abandon longs here for now.

Impala Platinum (IMP)

IMP is looking like a gem to us. Well, let’s see how results go (due out on Thursday next week). The market seemed a little disappointed when guidance came out indicating the dividend will not be as big as what most had hoped for. That said, results are due soon and there might be some upside surprise nonetheless. Lots of upside to be had here if earnings and dividends are beyond expectations.

Sibanye-Stillwater (SSW)

It’s also almost earnings time for SSW. Like with IMP above, we think the worst might be over here and that the time to buy is upon us. Earnings next week will be our guide.

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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 Dancing close to the door appeared first on Herenya Capital Advisors.

For the last few weeks we’ve harped on about ‘it not needing to make sense, we just follow the market’, but over the last week it seems that the ‘follow through’ is not there. In other words, the market is starting to feel the need to make sense again, which makes us a little bearish. There are still many signs that point to a slowdown/recession in the second half of the year and more and more signs pointing to a looming credit crisis/crunch. Canada put up interest rates unexpectedly, U.S. student loans are once again becoming payable (aka. households have had a reprieve from making payments on student loans and that reprieve is now over, so payments are once again due). Overall, the economic grounds are shakier than what Joburg was a 02:40 on Sunday morning.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

So, the 4300 level ($430 on SPY) put up a good fight and won. Our horizontal resistance level is marked out at $429.50, although we know that these support and resistance levels are more zones than absolute levels. Thus, the attempted break higher that failed on Friday is rather significant in our view. Momentum is looking a little stretched too. In the bigger picture, we have the making of a longer-term trend change here (from bearish to bullish), but in the short-term, we think that the market is very likely to come down and test the 4200 level ($420 on SPY) again. There is a metric ton of economic data due out next week, so it is a bit of a wildcard week, but from where we sit, it doesn’t look like there is going to be much good data coming out. Thus, we expect the market to be softer in the week to come. As always, we would be happy to be wrong in this regard, but the start of the week might prove a good time to bank some profits on local (South African) long trades that have worked out.

Nasdaq (QQQ)

There is not too much to add to QQQ that was not said above. Although, we do feel that we should stress that Tech has had an amazing run on the back of all this A.I. mania. We’d said a few times over the last week that we think the A.I. bubble is only just beginning, and we still believe so, but some of these tech stocks (NVDA for example) have gone a little far and are due for a pullback in our view. We also see waning momentum in QQQ and a failure to make a new high. Brace for some downside we think.

Gold

We won’t reiterate our downside (range) target for gold every week as it is a multi-month, potentially multi-year setup. That said, we have to wonder if we might not see gold pop a little on the back of weaker equities in general..? Overall, we are still bearish here. It would not be crazy to imagine gold coming down while equities are coming down, specially on the back of bad economic data and some fresh panic. Let’s see how the week goes.

U.S. Dollar Index (DXY)

It’s looking more and more like DXY will test the 101 level. The surprise BOC move (hiking interest rates in Canada) contributed to some USD weakness. Bad economic data in the week ahead will likely add fuel to that fire.

Brent Crude Oil

The Saudis have just about thrown every kitchen fitting at the oil price to get it to go higher and still it won’t budge. This makes us worry a little. If that $70.50 level breaks, $60 might be on the cards. Slowing global growth (aka. recession) and persistent inflation will likely keep putting the breaks on oil prices. We can no longer be bullish here under the current circumstances.

USDZAR

We asked for reprieve and we got reprieve, in a big way! Time for that Kansas City Shuffle though. We’re happy to take some speculative longs around R18.60. Keep a tight stop though.

S&P 500 Volatility Index (VIX)

VIX sub 10 lows would mean that things are ‘back to normal’. While we think that this will likely be the case rather soon, with a doji candle and all the long stories about headwinds we’ve already told above, a test of 16 or 18, or even 20 in the week ahead is likely more probable.

South African trade ideas

JSE Top 40 Index (ALSI)

We’re looking at a weekly chart here on the ALSI. To us it looks like the momentum has started running out and that a move to be bottom of the upwards sloping channel is the most likely move from here. We know that CFR has had a huge impact and that will be no more, so maybe the ALSI comes back down to earth a little.

AngloGold Ashanti (ANG)

Well would you look at that? If it isn’t a beautiful head and shoulders pattern with a target at the primary trendline? It’s makes sense though. Gold is looking wabbly, the Rand has gotten a huge amount stronger. The party is over here for how. ANG is probably worth a buy sub-R400, but for now we think that there is around 20% worth of downside to come.

British American Tobacco (BTI)

We’re just updating the BTI chart here and reiterating our R584 target price.

Aspen Pharmacare (APN)

APN bounced a little, but momentum ran out pretty quickly. Maybe it’s time for the Kansas City Shuffle here too? We’d take the money off the table from the long trade here and run.

Bidvest (BVT)

BVT finally breaking the flag and putting in a good run. As is the case with APN above though, maybe it’s time to go left while everyone is going right? Take the money and run, in other words.

Compagnie Financiere Richemont (CFR)

Look out below! Well, ok, it’s not that simple. Yes, this chart is looking terrible and yes, there is a ton of selling that needs to be done in order to get index trackers inline with the rebalancing. But, and a big but, CFR is one of the most shorted stocks (in proportion to market capitalization) on the JSE at the moment. Everyone is thinking that this is the easy trade, and look, it probably is, but when it squeezes, which it eventually will, it is going to hurt the overleveraged shorts in ways that they will remember for many years. We do still like the short though.

FirstRand (FSR)

What a move from FSR! ‘Locals’ have done really well, and there are lots of arguments why they are all undervalued and why South Africa is ripe of the picking (aka. buy local stocks over offshore), but again with buts, FSR has slammed head on into the R68 resistance level. We could add a support level at R60 here and it would not be completely unreasonable to think that FSR will come back to test it.

Gold Fields (GFI)

Many years ago I (Petri) worked at a small hedge fund in Cape Town, and there my old boss taught me one of his favourite setups. He called it ‘The Eye of Sauron’. Basically, a failure to make a new high very shortly after a pullback at the top of long upward move. Almost a double top, but weaker. Now, The Eye of Sauron sits atop the GFI daily chart, and it looks down at the primary trendline with malice. And it broods. This is going to be a great short trade actually.

Naspers (NPN)

NPN has been pretty range bound, with the odd fake break out the bottom. We have this feeling that the next break out the bottom will not be fake though. R2785, then R2330. The lower target is less likely, but R2785 we think is rather probable indeed.

Sanlam (SLM)

SLM has also had a great run (see FSR comments) and has also slammed into resistance (at R59). For now, we think this party is over and we will be seeing the R51 support fairly soon. Great risk-reward here too, with a super tight stop and almost R8 on offer. A daily close above R60 takes you out of the short and an intraday high above say R61 does the same. Remember though, there are stop hunters out there who will squeeze you to take your money, so trade small(ish).

Sasol (SOL)

SOL forming a nice little base here and longs from last week worked out rather well. Given the oil and general macro narrative above, we think maybe its time to pack this one in for now. Well, for short-term traders at least. For the longer-term investors, SOL is likely still a good hold.

Sibanye-Stillwater (SSW)

SSW is looking for that R31.80 level with a sore heart.

Telkom (TKG)

So… TKG rejected an offer for R46, because it is not enough. Word is that the ‘buyers’ are still sitting around the negotiating table. It smells like TKG pops in here.

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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 Kansas City Shuffle appeared first on Herenya Capital Advisors.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

Good ‘ol SPY had us second guessing ourselves on Tuesday in a big way. Even more so on Wednesday. But the little bull that could did not give up, and it stomped onwards and upwards and closed on a new high on Friday. Plus, there was some positive news around the debt ceiling this past weekend, so we think that we’re in for one glorious squeeze on Monday. SPY needs to clear $430 to confirm a new bullish trend. So far, so good though.

Nasdaq (QQQ)

If there ever was a little bull that could, QQQ is it! Fresh highs on the back of NVDA and the entire A.I. hype train. We know A.I. is a bubble, just like Cannabis, and Work From Home, and GameStop… but hey, while the ducks are quacking, we may as well join the fun. Just be sure to dance close to the door. That said, an A.I. bubble fuelled rally to make some money off, sure, I’ll take two thanks!

All Country World Index (ACWI)

ACWI is next up for a break out. Easy long trade here with a tight stop and a decent amount of upside.

Gold

Gold making its way lower. We think the bottom of the range, but note that we do also think that it will take many months to get there. For now though, it looks like the gold rush is over.

Brent Crude Oil

Oil is still trading in this range. Nothing exciting for now, we’re just putting this here so that you keep an eye on it as not to lose focus on the macro picture.

USDZAR

So we share our weekly chart again. We warned some time ago that the weekly picture is not looking good and that 21-ish is on the cards at some point. We did not see the Russian weapons scandal and an interest rate hike as potential catalysts though. Nobody did. Although, we do find it more than a little ironic that somehow there always seems to be a fundamental ‘reason’ that appears almost exactly when the chart needs it too. Wishy-washy stuff aside, we stick to our view of the large upward sloping channel and the upper channel band being the near-term target. Yes, it’s undervalued. No, the market does not care.

South African trade ideas

JSE Top 40 Index (ALSI)

Are we just allowed to say that we don’t know? Because we don’t. The market will likely start the week strong… CFR is no longer so important. Anything can happen here. Probably higher.

Sibanye-Stillwater (SSW)

SSW is not looking good at all. The support zone has broken and it seems that R31.70 is next up (or, down in this case). We’re letting go of speculative longs (aka. stopping out) and waiting for a new opportunity.

Aspen Pharmacare (APN)

APN is showing some nice bullish divergence and with the weaker ZAR as a tailwind we think it should do well. Speculative long here with a decent risk-reward. Stop below R165, target price of R190. From there set a trailing stop and let it run.

City Lodge Hotels (CLH)

Thanks for the money CLH! And well done to those who took this trade. R5.00 has been reached. It likely has a bit more to go, so a trailing stop might not be the worst idea.

Naspers (NPN)

NPN is range bound for now, so range trading rules apply. Taking a long around here is a high probability trade, so we endorse it.

British American Tobacco (BTI)

BTI is still floating around mid-channel support. Again, range trading rules apply and we’re biased to the long side.

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*Please note that these trade ideas form part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.

The post The little bull that could appeared first on Herenya Capital Advisors.

Yeah ok, a little dramatic maybe, but that is what it feels like. Here are the charts:

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

Well, well, well, if the SPY didn’t manage to break the resistance level? It’s not exactly at $420 as we have been calling, but the resistance is broken, nonetheless. The American Bull is strong! Perhaps too strong to keep down. And we are sure that there are plenty of shorts out there about to get squeezed till their eyes tear. It might not make sense, but we are here to follow the market – not make sense of it… thus, we go long.

Nasdaq (QQQ)

And here is the source of the power for the foolishly strong American Bull. Tech. It’s been on a tear and has finally now made a new Dow-Theory-High. Uncomfortably, we have to concede here that all indications point to a turning of the trend and the beginning of a few up-phase in markets.

S&P 500 Volatility Index (VIX)

We’d thought we’d see the top of this range before seeing the bottom again, but alas, the American Bull had other plans. Not shown here is the pre-covid lower end of the ‘normal’ VIX range. Perhaps we break this sub-16 low support and the VIX finally returns to its ‘normal’ before the world got duped by covid?

Brent Crude Oil

Nothing really to report here. Oil is still in this range we’ve spoken about for the past few weeks. We’re only interested again once this range is broken.

Gold

The same could be said for Gold really, as our view has not changed since last week. Gold is at the top of the range and is looking rather likely to move toward the bottom end of the range. Since the American Bull over here is trying to break higher (see SPY), risk on sentiment is returning and Gold might get the axe, so to speak. We think the focus shifts away from Gold and onto PGMs and Industrial Metals from here.

U.S. Dollar Index (DXY)

It looks like DXY has formed a decent base at 101.30 and is starting to break higher. It’s found some resistance at 103.70, which is not unexpected. Up through here and 105.30 is the next stop. Fuel to the ZAR fire if you ask us…

USDZAR

The headlines truly have been sensational. There is some expectation that, since the story emerged that it might in fact have been SA buying weapons from the Russians, the ZAR might strengthen tomorrow. Personally, we hope so, but we’re not holding our breath. The channel target is the moon… uhm, sorry, around R22 to the USD. So, let’s hope it never gets there.

All Country World Index (ACWI)

Good ‘ol ACWI seems to be feeling the influence of the American Bull as well. It looks to us like it’s broken our of a key resistance level and is ready to trade higher. Risk on is here.

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South African trade ideas

JSE Top 40 Index (ALSI)

It’s no secret that we’ve been bearish. It’s not been fun. We’re not turning into bulls on SA inc. here either. We just want to remind our readers that the index rebalancing is coming and CFR is not going to be 17% of our index anymore. This may or may not have a big influence on the ALSI as much of the ‘power’ behind it will be gone. SA inc. has not been having a great time and this is not reflected in the headline index. We suspect that once CFR is largely reduced in weighting, the index might surprise to the downside. ALthough, we’ve been saying that for a few weeks now, so take it with a pinch of salt.

Investec (INL)

INL trade seems to be on track. It’s a volatile and less liquid stock in general, so the rather large down day on Friday does not worry us too much as it is not ‘out of the ordinary’ for the stock. Sorry, couldn’t resist. The weaker ZAR surely helps and we’re still looking for above R116 in the short-term.

Textainer (TXT)

No actual trade idea here on TXT. Just a weekly chart trending like a dream. From R150 to R700 in three years. Not many of those around in this market.

Sun International (SUI)

This is a messy chart, but what we are looking at here is two-fold. First, the yellow is a flat-top triangle that has broken higher and has been retested. The white lines shows some bullish divergence (and a bit of a bounce off the R37 level). We like this stock for a long.

Sibanye-Stillwater (SSW)

We had lift-off from this level once before already, and we felt pretty smart at the time. Since then the sad trombone has been getting louder and louder. But, on the bright side, we’re back at the support level and ready for another try at launching this little stock to the moon. Easy long trade here in terms of a clear stop loss and large risk-reward ratio.

City Lodge Hotels (CLH)

Nothing really to report here, other than to reiterate our R5 target price for short-term traders, and the moon for the long-term investors of course.

Anglo American Platinum (AMS)

The AMS idea has been floating around a bit, but it doesn’t seem to be working out so well. We’ll keep the faith for another week, but below R1100 our commitment to this long idea ends.

British American Tobacco (BTI)

Another winner from the ZARs pain here. BTI has been holding the middle here and we think that a long from here to R710 could be a decent play. Stop under R620.

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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 American Bull appeared first on Herenya Capital Advisors.

Bigger Picture (offshore trade ideas)

S&P 500 (SPY)

SPY has still not cleared the $420 level (4200 on the index). Yes, Friday was a ripper, but SPY still ended the week lower. As long as SPY stays below $420, we will remain bears. If, or once, SPY breaks above $420, we can buy into that strength, but until then we will remain very cautious and distrusting of this market.

Nasdaq (QQQ)

The QQQ looks a little better as it managed to close near the weekly highs and looks to be in a more bullish setup. It is almost as if this entire index is hanging on to Apple and if anything happens to the titan, things might turn sour for QQQ. It’s hard to shake our bearish bias here, but QQQ might turn out to be the thing that changes our view. The contrast between the setups on QQQ vs SPY is indicative of the tug of war happening in the market, and thus the tug of war happening with our views. The safest bet is likely to step back and allow the market to unfold a little before making any risk-taking decisions. It’s ok to miss the first part of the move, so if our predominantly bearish view here is wrong, we are happy to buy into a new bull market if it comes. For now though, we are still playing the defensive game.

S&P 500 Volatility Index (VIX)

The VIX got going nicely during the week, although Friday saw a turn in fortunes. As you can tell by now, we are not convinced and we stand by our call to buy VIX calls. The tug of war is only going to get worse in our view, and the VIX should pump a little off all this uncertainty.

Gold

We put out a gold chart on twitter on Thursday asking if this might be the top for Gold for now. After Friday’s session, it looks like that might well have been it. Again though, we are not entirely convinced. The facts here are that the Chinese and Russians are still buying record amounts of Gold in the physical market, and the economic headwinds facing the more Westernised Developed Markets have not gone away. Maybe a soothing balm was put on the wounds on Friday, but the reality here is that there is a lot more pain to come. At least, that is what we think at this moment. We are open to Gold moving down somewhat from here, but our base case expectation is that Gold will likely keep pushing and more than likely print a new all time record high. Hold on folks, the tug of war is going to create a lot of volatility.

Brent Crude Oil

Oil managed to get to the bottom of the range we pointed out a number of weeks ago. A bounce back to the top of the range is very likely and we will be using it as an opportunity to get out of the last of our oil facing equity holdings. If the ‘mild’ (narrator: it won’t be mild) global recession in the second half plays out, there is almost no way that Oil will be able to hold the $70.50 level, even if OPEC cuts production aggressively.

U.S. Dollar Index (DXY)

Some time ago we would be arguing that given the bad global economic conditions, the USD should strengthen as investors seek ‘safety’. Now though, maybe investors are starting to realise that Dollars (and the USA in general) might not exactly be as safe or strong as they had always thought. We think that there is a bit of a global power shift happening and that, sooner than we think, BRICS will be the new global powerhouse. DXY below 101 opens for bearish trades and stronger Emerging Market currencies. This will be in our favour.

USDZAR

A bit of a sideways consolidation / tug of war here. Keep your eye on DXY for guidance. We think that a weaker USD is the most likely outcome, so we are calling USDZAR to R17.60.

South African trade ideas

JSE Top 40 Index (ALSI)

So alright, we are bearish on the global picture. It is difficult and painful to be bearish on the local front though. Sometimes markets defy our beliefs… what’s happening here though is the power of rand hedged stocks, commodities stocks and of course, Richemont. CFR currently makes up around 17% or so of the total weighting of the ALSI, which is A LOT. CFR has also been running very hard thanks to luxury goods generally making record profits while the world falls apart. Eventually, well, rather soon actually, CFR will be downweighted in the ALSI and its influence of the headline index will lessen. We think that once that happens we might see the ALSI come inline with global markets a little. For those who entered the short on the tertiary trend line break, you can move you stop to the 72700 level.

City Lodge Hotels (CLH)

CLH has been power! Nice bullish setup here with a target between R4.60 and R4.80. We’ve seen a return of both local and international tourism in South Africa and hotel groups are looking very attractive at the moment.

Sibanye-Stillwater (SSW)

SSW has not run as hard as most of the goldies, but SSW is not exactly a gold stock anymore. It’s been under some pressure thanks for the three other constituents of the PGM group (Platinum, Rhodium, Palladium – and Gold of course). Finally it is starting to show some signs of life. Remember also that Froneman bought SSW stock just above R36, and he has a great track record of trading his own stock. Hold on to your longs here, because in a year or two from now we might see SSW back at R70 or higher.

Anglo American Platrinum (AMS)

AMS has also not participated in the gold rush, obviously because it is not gold. But as is the case with SSW above, AMS is starting to look really attractive. Entering a long here with a first target of R1300, second target or R1400 is in our view a low risk easy trade.

Bidvest (BVT)

Another bullish setup here on BVT. Wait for this flag to break and take the long if you are a trend follower.

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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 Tug of war appeared first on Herenya Capital Advisors.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

Alrighty, we start with the usual SPY chart. This chart has been giving us some whipsaw of late, but looking at it now it is getting harder and harder to remain bearish. If we completely ignore all the fundamental factors and only look at the chart, we see the probability of a new bull market starting as rather high. This market has made a new higher-high and now two higher-lows. Should the market break below 3750 (or $375 on the SPY ETF – and in doing so make a lower-low) we can comfortably say that the bear is still around and the market is most likely to push a new low beyond the lows of October/November last year. Should the 3750 level hold though and/or we see a move above 4200 (or $420 on the SPY ETF), we can confidently say that a new bull trend has been established. That’s a lot of if’s and maybe’s at this stage, which is indicative of the tumultuous nature of trend changes. Given that right now the market is in a ‘could go any direction’ phase, we are likely not going to make any moves until we have confirmation. That said, we do have two distinct levels that will act as ‘confirmations’. Until one of those levels are breached, we wait and keep evaluating. In the meantime, it’s looking a little bullish.

Nasdaq (QQQ)

The QQQ’s are a bit easier to read at this stage. We’ve drawn in an important horizontal level around the $312 mark. Should QQQ break and hold above this level, it’s time to get long. No doubt it will put up a fight though, and there is some bearish divergence. The market is on shaky ground to be sure, but a bullish break here would have to be bought (in our view at least).

Hang Send Index (HSI)

Maybe we’re being a little too optimistic here with our downtrend line and it being broken… but maybe this is exactly the right time to get long. It’s a rather easy trade here with a stop loss below the swing low and a trailing stop that could ride a long, long while if the larger trend really is turning bullish here. Follow the market, even if it doesn’t make sense.

Brent Crude Oil

We’ve done a weekly chart here, and as is the case with some of the charts above, we’ve removed some of the old annotations and added a few (in this case only one) new ones. Here we’ve highlighted that $70.45 level, which we see as an important horizontal level. It has acted as both resistance and support on a weekly basis over the last two or so years and in our view is currently acting as the last line of defence for the oil bulls. It could be interesting to try get long off this level if it gives another chance, but be warned that if it breaks, it might get messy really fast (which would likely make for an easy $10 to $20 short trade).

Gold

The $2000 level has been holding strong and gold has not managed to get and hold above it. Trends being trends leads us to think that it likely will, given the heightened risk in the overall market. Some money is moving out of the ‘unsafe’ banking sector and into the ‘safety of precious metals’ – and crypto. Can gold break $2000 here? We’re not sure, so we think it’s probably best to sit on your hands until it does.

Bitcoin (BTCUSD)

$28500 is a key level for BTC in our view. It was support about a year ago and is currently acting as rather strong resistance. That said, we won’t beat around the bush here. Bitcoin came about when banks were collapsing… the current environment is very favourable for Bitcoin once more. This is why it exists. It’s going to be interesting.. and it’s looking a little bullish.

USDZAR

By now you would probably have picked up that we have a slightly more ‘risk on’ outlook. Looking at this USDZAR chart, we can see that the R18 level is key for now. We think that we see some ZAR strength and a move towards R17.58 in the short-term. Our longer-term view and large channel shown on previous posts still looms overhead, but for the next few weeks, we think we see a stronger ZAR.

South African trade ideas

JSE Top 40 Index (ALSI)

Squint your eyes just right and you might see the makings of a potential head and shoulders pattern. It’s too early to tell though. Our downside target stands for now, but and overall push from global equities will likely mean that we don’t get to see those downside targets in the next week or so. For now, we’re staying out of the ALSI.

AngloGold Ashanti (ANG)

It may be wise to take some profit here, at least until gold is holding above $2000. There will always be another chance to get in.

Sibanye-Stillwater (SSW)

The R36 level is holding. The longer it keeps being tested though, the less confident we are in the long trade. Below R36 targets R32. Above R40 targets R52. Patience and stop losses are going to be important here.

Sun International (SUI)

SUI is looking very good. We pointed out this setup some time ago and it is playing out very well indeed. A trailing stop loss is advised.

Thungela Resources (TGA)

Dare we say that TGA is building a decent base here for a long trade? No setup yet, but keep this stock on your watchlist for a potential long entry.

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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 It’s looking a little bullish appeared first on Herenya Capital Advisors.

On a more serious note though, the market has been super wild and things are actually starting to look pretty bleak again. It takes some work to try and stay flexible in mindset in these conditions because there is a lot of evidence that things are bad and getting worse. Banks are collapsing, Oil is cratering, global conflict is escalating and come Monday in our local environment… well, perhaps this is not the place to express opinions on that. The point is, either it is now darkest before the dawn, or the night gets even darker. The eternal optimist in us chooses to believe that things will look up shortly, but the pragmatist looks around and starts to plan for the inevitable.

What does this mean for your trading though? And likely more importantly, your investments? Well, we will admit that we’ve been whipsawed a little of late, but we are still holding around one-fifth in cash. Last week some members of our investment committee (Petri, it was Petri) felt a little more panicked than the rest and wanted to free up even more cash to at least cushion the fall a little, but sanity prevailed. The facts here are, well, that we don’t know what comes next and not panicking is definitely the best move that we can make.

So let’s see what the week ahead holds. The world is once again starting to bet on a Fed pivot… maybe the conditions for that are now finally right? Maybe the Fed knows that it’s going to get worse and will stay the course to keep inflation in check. Who knows? All we can do really is follow the charts, follow the macro data, and sit quietly while the bus clammers and clunks its way through whipsaw city.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

So alright, maybe it did not bounce off the tertiary uptrend line, but it is still sort of holding above the primary downtrend line. So, keeping a flexible mindset, this could still be a retest of the broken downtrend and a trend change scenario. There is of course the chart comparing this current bear market to the 2008/09 bear market, which is the fractals are correct, indicates a whole lot more downside. Just a few weeks ago we would be in that camp calling for the bottom to fall out, but as we sit here today, we have to stay open to the idea that the market could be turning. Should we see a move lower, back below the primary trendline, then we will have sufficient evidence to be convinced that we will see a new low (and ironically, this will put our original downside target from 13 or so months ago back on the table). So let’s see what happens. Just keep tight stop losses.

DAX Index (DAX)

When good trendlines go bad! The trendline eventually broke and the initial target was hit. Where too from here?

Hang Send Index (HSI)

If you look closely, there is some bullish divergence there over the last two or three weeks. Just saying. Whipsaw city is a real place. If you forced me to trade here, I would go long.

Nasdaq (QQQ)

Talking about things I would buy if I had to buy something… QQQ is looking very strong given the greater macro madness taking place in whipsaw city! Maybe tech is going to start outperforming energy again for the next few years. Definitely something to keep an eye on.

U.S. Dollar Index (DXY)

DXY looking to retest the 101.30 level. Wait for the break below 103.70 (which then becomes your stoploss).

Gold

What a rally! Gold stocks pumped hard off the back of this as well, and likely will rip higher on Monday too. $2000 might be a bit of a strong resistance level, but once through that, maybe we top out above $2080 this time?

Brent Crude Oil

Oil is probably the primary factor that makes us rethink the ‘this is the low and we’re going up from here’ thesis. Oil is back in the downward sloping channel as global recession fears dries up demand. Unless we see a turn here, odds are good that equities will keep selling off. Maybe that 2008/09 fractal is right?

VanEck Junior Gold Miners ETF (GDXJ)

Well, there is always a long trade somewhere and GDXJ is looking prime to make a new high. Our first target here is $42, second target is $48. It will take some time, but the high gold price is really going to help get the junior gold miners going.

USDZAR

Once again we show the weekly chart and the large upward sloping channel with a price target of R21 to the USD. Not a pretty picture, we know… and if things get spicey on Monday, we’re sure that wont help. This will make for a great trade though, as long as you don’t over gear yourself and have some patience to let it play out over the next few months.

South African trade ideas

JSE Top 40 Index (ALSI)

The very steep trendline broke, had us second guessing ourselves for a short while, and then the ALSI melted like soft butter in a normal fridge during stage 6 loadshedding. The downside target here is the zone market in grey (between 64k and 65.5k). The brave traders would likely buy some near here as we know that the market will bounce and if the ZAR blows the rand hedges will help support the index. We’re not sure we count among those brave traders at the moment though.

Compagnie Financiere Richemont (CFR)

Despite the ZAR support here, we think that CFR will test that R238.60 level in due course. Global recession fears will likely be a more powerful force than a weaker ZAR.

DRD Gold (DRD)

A nice little bull flag here on DRD, backed by global economic meltdown… uhm, we mean higher gold prices. We mentioned above that the junior gold miners will likely be big winners in this, and DRD is a fine example of that.

Naspers (NPN)

R2780 incoming! That little range break at the high was a great short entry. It really tested your steel when it retraced to above R3400, but the fat lady is currently singing and the short is a nice place to be.

Remgro (REM)

No real trade to do immediately here, but maybe worth a buy around R125.

Sibanye-Stillwater (SSW)

SSW is a much more complicated play these days as it has so much more than just gold. Palladium and Platinum have not exactly had the best time either, nor do they have great looking charts. Nonetheless, if R36 can hold, we think that an entry here for a medium-term trade can work well. Just keep an eye on R36, because a break there will open up for R32.

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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 Whipsaw city! appeared first on Herenya Capital Advisors.