There does not seem to be too many good setups around at this stage, and the only relatively attractive setups are slightly longer-term in nature. That is, on a swing trading basis were trades are taken for a number of weeks, rather than just a few days or hours. A catalyst might come in the form of Trump signing an executive order to provide further coronavirus relief directly to US households.
After strong earnings reports from tech stocks in the U.S. and more rhetoric around continued stimulus, markets closed last week on a strong note. We’re sticking to the good old technicals for this week and highlighting some of the stocks that we have been watching.
During the last week we started seeing some signs of distress in the Nasdaq, with some heavyweights beginning to show a little bit of weakness. Our strategists put up two posts on the current outlook on the Nasdaq on the International Outlook blog, which showed some key support levels being tested and broken. With those in mind we are slightly more cautious this week.
One of the things that we’ve been thinking about over the last few weeks is; the past. We find ourselves wondering how similar this current situation is to the one back in 2009/10. Could the monetary stimulus just refuel the rally and keep the market (first) and the world economy (second) pushing higher and harder? Possibly, yes.
The world is mostly mad, but luckily our views and beliefs about the world around us has little to do with what is actually happening, and the key to moving forward is to respond appropriately to the external environment, regardless of whatever it is that we might believe. Our job as traders is now and has always been to simply follow the market. Therefore we look mostly at technical analysis again this week so that we stay unbiased.
There is a lot that happened this past weekend! Brexit actually took place… the World Health Organisation (WHO) declared the Coronavirus a Public Health Emergency of International Concern. Our expectation is that we will see heavy losses in Commodities and Commodities stocks, specially industrial metals.
The week that lies ahead has one half-day (31st) and one public holiday (1st), so there is not really going to be too much going on, on the JSE. The base case expectation is that this coming week remains strong, once again on low trading volumes.