All things considered, it was not a bad week overall. While we are unfortunately still holding a few active positions currently sitting at an unrealised loss, our underlying confidence in these trade setups remains firmly intact. We experienced our largest account drawdown of the month earlier in the week; however, price action stabilized nicely heading into the weekend, allowing us to finish the week with our total account balance up 2.24% from last week.

In terms of execution, we closed an equal number of winning and losing trades. However, the key takeaway from this week’s performance is that our average loss was larger than our average profit. To maximize long-term portfolio growth, our primary focus remains ensuring our risk-to-reward ratio stays skewed in the other direction. We are fully confident that as long as we remain disciplined, stick to our trading plan, and refine our execution based on these lessons, the numbers will continue to track in the right direction.

Last week

Macro Catalyst

The main drivers of market sentiment this week were the latest US PCE inflation data and Non-Farm Payrolls (NFP) figures. Both PCE and NFP came in softer than anticipated, sparking renewed hope that the Federal Reserve may pause rather than hike interest rates at its upcoming late-October meeting. Locally, the Rand experienced sharp pressure on Thursday, with a notable sell-off driving USD/ZAR up toward the 16.74 level.

Closed Trades (Take Profit)

Compagnie Financière Richemont SA (JSE: CFR)

• Trade Logic: We identified a head-and-shoulders top formation on the daily chart and initiated a tactical short position to capture the downside.
• Status: Shorted at R3,539.13. Closed at R3,437.71.

Nedbank Group Ltd (JSE: NED)

• Trade Logic: Having been stopped out on a previous short attempt, we re-entered a short position; partly to act as a tactical hedge against our FirstRand long. This hedge provided valuable downside protection during Thursday’s banking sector weakness. With the stock rebounding on Friday, we locked in gains for a modest profit.
• Status: Shorted at R289.32. Closed at R285.50.

Capitec Bank Holdings Ltd (JSE: CPI)

• Trade Logic: We initiated a tactical short alongside NED to further hedge our FSR exposure, aiming to capitalize on post-earnings volatility. The stock bounced strongly on Friday, leading us to close near breakeven.
• Status: Shorted at R4,398.98. Closed at R4,363.24.
• Key Lesson: He who hesitates is poor. We wanted to close the trade very shortly after the market open on Friday, but hesitated and only ended up closing it for a small profit.

Thungela Resources Limited (JSE: TGA)

• Trade Logic: Following several consecutive sessions of aggressive selling without stock-specific negative news, Thungela has begun forming a stable consolidation base. We opened an initial 1/3 tranche long position, targeting a rebound just below R125.00.
• Status: Bought at R115.01. Closed at R124.96.

Active Open Trades

BHP Group Ltd (JSE: BHG)

• Trade Logic: BHP continues to trade within a defined channel between R680.85 and R754.58. Anticipating that a recovery in iron ore prices will support upward momentum, our price target remains the upper channel bound around R754.00.
• Status: Active. Bought at R701.05. Currently showing a small unrealised profit after a fairly good week.

Thungela Resources Limited (JSE: TGA) (Remaining 2/3 Tranche)

• Trade Logic: Along with Exxaro, Thungela experienced a few sharp days of decline. With a firming US Dollar, we anticipated that the stock would benefit from hard-currency tailwinds.
• Status: Active. Bought at R121.80. Currently showing a small unrealised profit.

Exxaro Resources Ltd (JSE: EXX)

• Trade Logic: Exxaro stands as a key beneficiary of a firming US Dollar and higher coal prices. 
• Status: Active. Average Entry at R196.83. Currently trading at an unrealised loss. Exxaro paid out a R7 dividend this week which has cushioned the blow slightly and experienced its first good day since going Ex-Div. 

Compagnie Financière Richemont SA (JSE: CFR)

• Trade Logic: After taking profit on our short position as the head-and-shoulders played out, we identified a clean technical bottoming pattern and reversed position to go long; a move that has yielded strong results alongside recent Rand weakness.
• Status: Active. Bought at R3,435.01. Currently showing a modest unrealised profit.
• Key Lesson: Have your Take Profit order in. We could have been out on the fat finger that pushed it above R3,608.00.

Mondi plc (JSE: MNP)

• Trade Logic: Morning call trade recommendation based on a bullish flag-and-pole continuation pattern.
• Status: Active. Bought at R183.00. Mondi experienced a stronger showing last week before pulling back slightly. Crucially, it has not broken recent lows, preserving the possibility of a trend reversal as we hold the position.

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

• Trade Logic: Reinet continues to trade at a substantial discount to its underlying net asset value (NAV).
• Status: Active. Bought at R447.00. Price action remains range-bound. We are managing position size while remaining positioned for Reinet’s historical tendency toward rapid NAV catch-up rallies.

Truworths International Limited (JSE: TRU)

• Trade Logic: Truworths was trading at a major historical support level that has repeatedly held over recent sessions. We initiated a long position to capture a technical bounce off this level.
• Status: Active- Bought at R42.31. Showing a small profit. 

Closed Trades (Stop-loss)

Anheuser-Busch InBev SA/NV (JSE: ANH)

• Status: Closed at a loss | Bought at R1,304.49 | Sold at R1,236.96.
• Details: Initiated as a defensive hard-currency allocation. While Anheuser stands to benefit structurally from Rand weakness over time, sharp downside momentum triggered our stop loss, preventing further drawdown as the stock continued to slide.

Discovery Ltd (JSE: DSY)

• Status: Closed at a minor loss | Bought at R264.14 | Sold at R264.80.
• Details: Discovery broke its primary downtrend line, signalling a prospective reversal. However, price action stagnated in a sideways range while accumulating overnight swap holding costs. We elected to close slightly above our price entry, resulting in a minor loss net of brokerage and financing fees.

FirstRand Ltd (JSE: FSR)

• Status: Closed at a loss | Average Entry at R95.08 | Sold at R88.94.
• Details: We originally went long on a bull flag breakout. As sector-wide selling pushed the stock lower, we added a second position anticipating a value bounce. With persistent banking weakness breaching our risk tolerance, we closed both tranches to reallocate capital toward higher-conviction setups.

Mr Price Group Ltd (JSE: MRP)

• Status: Closed at a loss | Shorted at R160.51 | Sold at R167.50.
• Details: Initiated as a tactical short breakdown play. Price action consolidated in a horizontal range for several sessions before moving higher to trigger our stop loss. Positively, accrued positive swap interest offset the execution fees.

Thoughts on the week ahead

Looking ahead to next week, we have several notable upcoming dividends on the calendar alongside a fairly quiet corporate earnings slate for the JSE, so we expect broader market volatility to remain relatively muted. Among the stocks going ex-dividend is FirstRand (FSR). Although we recently closed our active FirstRand position to limit overnight financing costs (swaps) and guard against further downside risk, we still believe the stock holds the potential for a rapid short-term rally. We are keeping a close eye on the setup to re-enter strategically and capture any sudden upward momentum.

Primary attention for the week will be centered on Thungela Resources (TGA) and Exxaro Resources (EXX). Thungela has established a solid support base following a strong upward push, and if historical sector correlation holds true, we anticipate Exxaro should follow shortly with a similar catch-up move.

Economic Data

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