The Whipsaw rodeo

Personal Commentary

It has been a challenging week on the trading desk. Markets diverged from standard fundamentals, with weak corporate outlooks paradoxically triggering short-squeeze rallies – most notably in Impala Platinum. To sum it up, the whipsaw rodeo was in town and we got whipsawed good and proper!

While closed positions leaned toward losses this week, our strict risk management rules prevented significant drawdown. By honoring our stop-losses, we kept overall capital losses minor and manageable.

Trading requires continuous adaptation; we refine our execution strategy daily to cut underperformers quickly, protect capital, and focus heavily on scaling our winning setups. Also, weeks like the one just past serve as good reminders to stick to your trading rules, honour your stop-losses and stay focused on the process. The outcome of any given edge is ultimately random, although through consistentcy of approach – or by consistently applying your rules – consitency is of outcome is created.

That said, we did make some mistakes as the whipswar rodeo carried us away… let’s look at the trades we did last week.

Last week

Macro Catalyst

The primary catalyst driving global markets on Friday was the US Non-Farm Payrolls report. Expectations were for an increase of 55k jobs, but the data printed significantly stronger at 162k. This robust figure reinforces the argument for higher-for-longer interest rates (or a potential rate hike), triggering a brief pullback across gold and the broader precious metals complex.

Closed Trades (Take Profit)

Thungela Resources Ltd (JSE: TGA)

Trade Logic: We have held this trade for several weeks, and it has been one of our strongest performers. To lock in gains, we trailed our stop-loss higher. While this triggered a disciplined profit-take on Tuesday, it secured an excellent return.
Status: Bought at R113.24 | Closed at R124.65 (1 Sept). Though the stock has continued its upward momentum, enforcing trailing stops remains core to our risk discipline.
Key lesson: We trailed our stop loss to aggressively here. Prior to closing this we had fallen victim to the whipsaw rodeo, so we were eager to protect our capital and moved our stop too tight. When the volatility of Tuesday came around, we were closed out. We still banked a decent winner, but we could have done better to ride our winners for longer.

Active Open Trades

FirstRand Ltd (JSE: FSR)

Trade Logic: FSR formed a clean bull flag pattern and confirmed a breakout yesterday, triggering our long entry.
Status: Active | Bought at R96.00. Slight profit.

Impala Platinum Holdings Ltd (JSE: IMP)

Trade Logic: IMP reported disappointing earnings yet counter-intuitively rallied. After being stopped out of our short position, we recognized that the market strength signaled a bullish trend reversal, so we flipped our bias and entered a long position.
Status: Active | Bought at R246.00. Currently facing temporary headwinds following the hot Non-Farm Payrolls print and the subsequent sell-off across precious metals.
Key lesson: Sometimes you just get trades wrong. Stop-losses are there to save you. It’s ok to change your mind.

Harmony Gold Mining Co Ltd (JSE: HAR)

Trade Logic: We entered a long position as broad-based buying returned to the mining sector alongside rising spot gold prices. There is bullish divergence between the Stochastic Oscillator and Price, and both the 200 day moving average and support line coincide and held.
Status: Active | Bought at R329.99 and R324.00 (average price of R 326.99). Facing similar macro headwinds as our IMP position above. On a positive note, gold appears to be stabilizing after the initial decline.
Key lesson: Here the ‘ol whipsaw rodeo rode us fairly hard as well. We took a bigger loss than we like to take (more details on that trade below) by not sticking to our stop rules. Yes, we all make these same mistakes. It was a good reminder that we need to respect our stop-losses and manage risk before anything else. Nonetheless, we tried to clear the bias and take a new validated technical entry when it presented itself. Our lesson above all is ‘stop-losses save lives’… or the whipsaw rodeo will get ya!

British American Tobacco PLC (JSE: BTI)

Trade Logic: We have held this position for some time, buying on the thesis that the stock had hit technical support and was overdue for a mean-reversion rebound.
Status: Active. We entered around R913.00 and are currently sitting at a minor paper loss, but the setup remains intact. We are closely monitoring price action and considering exiting if bullish momentum does not materialise shortly.

Mr Price Group Ltd (JSE: MRP)

Trade Logic: The retail sector remains under pressure. With MRP breaking down to new local lows, we initiated a short position.
Status: Active | Shorted at R160.51. The stock has experienced a minor counter-trend bounce, which is expected within a broader downtrend. As long as previous swing highs hold, the bearish setup remains active.

Standard Bank Group Ltd (JSE: SBK)

Trade Logic: SBK was trading sideways, presenting a low-risk entry near support. We bought the lows targeting a move back toward R337.00.
Status: Active. Bought at R315.39. Currently showing a modest profit as we wait for further upside momentum.

Sasol Ltd (JSE: SOL)

Trade Logic: Brent crude has been volatile, but we identified key historical support near R180.00 and executed via a limit order.
Status: Active. Bought at R180.00. Sasol has had a strong week, though it is currently consolidating just below the psychological R200.00 mark.

MTN Group Ltd (JSE: MTN)

Trade Logic: MTN printed a double-bottom reversal pattern, opening a pathway toward our structural target near R220.00.
Status: Active | Bought at R205.00. Experiencing short-term friction today, but position structure remains intact.
Key lesson: We chased here a little by buying at the open instead of placing a limit order lower down. Our thinking was that it would break higher without looking back, and look back it did. So we’re on the whipsaw rodeo here a little, although we are still within our risk parameters. We just need to admit defeat and take the loss if it turns out that our stop-loss is triggered. Let’s see how this goes.

Reinet Investments S.C.A. (JSE: RNI)

Trade Logic: Reinet remains significantly undervalued relative to its underlying net asset value (NAV).
Status: Active. Bought at R 447.00. Price action remains range-bound, but we are holding with our stop-loss set at R 418.51.

Closed Trades (Stop-loss)

Sibanye-Stillwater Ltd (JSE: SSW)

Status: Closed at a minor loss | Average Entry Price R48.09 | Sold at R47.85.
Details: Given the broad-based weakness in precious metals, we closed the trade on Monday to mitigate risk ahead of Tuesday’s earnings release. While the market digested the weak earnings and rallied Wednesday, cutting exposure early aligned with our risk parameters.
Key lesson: It’s a pity to have closed our last positions here at a small loss, specially after we had banked a few good winners on it on the way here. We had taken some body blows and were keen to cut risk before it got out of hand. In retrospect we could have given the trade some more breathing room. Our stop was too tight.

Harmony Gold Mining Co Ltd (JSE: HAR – Tactical Trade)

Status: Closed at a loss | Average price of R346.16 | Sold at R315.00.
Details: This was a hard lesson for us as we do not like to take losses these big. We made the rookie mistake of moving our stop loss slightly, thinking we could catch a bounce back. The irony here is that later on, we had what we consider a validated setup and once again too a long position.
Key lesson: Take the stop-loss early. Do not wait for anything. Once your stop-loss trigers, take it, or it’s the whipsaw rodeo for you (or the gulag, honestly not sure which is worse at this stage)! If we had cut our initial position earlier, we would be in a more comfortable position now. Alas, so we learn. We will do better next time.

Naspers Ltd (JSE: NPN)

Status: Closed at a loss | Bought at R790.99 | Sold at R769.96.
Details: NPN continued to trend lower without showing signs of structural reversal and we decided to cut the trade early. Our stop-loss was a R740.00, but once it breached R770.00 on the 1st of September, we decided to exit the trade and focus on higher-conviction setups.

Absa Group Ltd (JSE: ABG)

Status: Closed at break-even/minor gain | Bought at R226.59 | Sold at R226.70.
Details: Despite reporting strong financial results, price action stalled into range-bound consolidation, prompting us to exit and preserve capital.
Key lesson: We cut this trade at break-even as we had taken some pain prior to it and didn’t want to let a winner turn red. In retrospect we should have stuck to our intial stop-loss strategy and we would have still been in this trade. The whipsaw rodeo claims another victim.

Impala Platinum Holdings Ltd (JSE: IMP – Prior Position)

Status: Closed at a loss | Shorted at R227.06 | Stopped out at R245.50.
Details: Initiated a short following bleak full-year guidance and rising global rate expectations. The market absorbed the news positively and squeezed higher, triggering our risk stop.

Conditional / Setup Watchlist

Northam Platinum Holdings (JSE: NPH)

Trade Logic: NPH released full-year results today that met and slightly exceeded market consensus, supported by strong revenue and earnings metrics. Its long-term strategic outlook remains compelling (targeting 15% of global PGM supply by 2030), so we are monitoring the stock closely for a entry, keeping in mind its high sensitivity to underlying PGM basket prices. We would like to see it either pull back to retest the bull flag breakout, or perhaps break the 200 day moving average before we enter.

Pepkor Holdings Ltd (JSE: PPH)

Trade Logic: PPH has experienced prolonged selling pressure over recent months. Yesterday printed a strong bullish engulfing candle on high volume, followed by a +1% follow-through on Friday. We are tracking the stock for confirmation that the broader downtrend has exhausted. We also note a Hammer candle formation on a significant support level on the weekly chart below.

Exxaro Resources (JSE: EXX)

Trade Logic: EXX has reached the higher end of its channel and is slightly underneath the 200 Daily Moving Average. This stock is leaning towards a possible breakout to the upside which will signal a buy.

Discovery Ltd (JSE: DSY)

Trade Logic: DSY has been in a downtrend and seems to have broken this trend along with closing above the 50-day moving average and confirming a buy signal.

Thoughts on the week ahead

It was a tough week and we are glad it’s behind us. Next week we start fresh and we have some decent trade setups forming. There are some risk events on the horizon, notably US CPI data on Tuesday which could materially impact risk sentiment (and heavily influence gold prices), so we will watch that data print carefully. Other than that, we remind ourselves to plan the trades and trade the plans. Risk management and an opportunistic mindset are key and we aim to realy focus on these in the coming week.

Also, we’d like to avoid the whipsaw rodeo by all means necessary. So we will be critically cold with our stop-losses. There is no excuse.

Economic Data

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