A strong week for the JSE as we closed almost 2,5% up from Monday morning on the J40, all thanks to Gold & Precious metals miners after the Gold price bounced off the support level, and the strong Financials and Banking sector. Our standout for this week has to be Reinet (RNI). While it might not be the best performer in our portfolio, it had a very good week, starting with the lows of R431.84 on Monday and closing all the way at R446.13.

This is significant, as we have been holding onto this stock for more than 2 months -which technically disqualifies it from counting as a swing trade- AND our very own Petri Redelinghuys wrote an article on the long-term value unlock in Reinet, which featured on the TradingView Home and the Editors’ Picks pages! Now we are not claiming that our article is the sole reason for the great week from Reinet, but we are more than happy to let you think that!

An interesting note that helped in our trading journey was the lesson of removing stop losses at market open to avoid being closed out due to volatility. We did exactly that on Thursday, as we would have been closed out well below our original stop loss for our position in BHP (BHG). However, we removed the stop loss and decided to see how it trades for the day. While this was a somewhat risky call, it was a lesson we learnt early on, and we would rather risk losing a bit more on a trade than be closed out of the lows of the day on a trade that would go on to make a nice profit. We were rewarded for this, as BHP closed much higher and traded considerably better on Friday.

Last week

Macro Catalyst

CPI and PPI data were released during the week, with both coming in higher than expected, which is likely to put pressure on the Federal Reserve to hike rates in order to tame inflation.

Closed Trades (Take Profit)

Thungela Resources Limited (JSE: TGA) (1/2 position)

• Trade Logic: Closed at a profit. Bought at R125,50. Sold at R140,65.
• Status: Thungela had strong momentum this week, and we decided to put in a limit order at R140,65 to close half of our position. Seems like this was the right call, as the momentum died down and, with the great day it had on Wednesday, it unfortunately closed at the lows.

Active Trades

Impala Platinum (JSE: IMP) (1/3 of our standard size)

• Trade Logic: As mentioned last week, Gold is holding up surprisingly well, considering that further interest rate hikes are expected. We put in a limit order for Impala, AngloGold (ANG) and Gold Fields (GFI), as these have consolidated for a while, with gaps that will hopefully fill. For now, we’ve decided to split these stocks into 3 equal-sized positions to reduce the risk of overexposure to a specific sector. We did, however, not get filled on Gold Fields, so we keep a close watch on the other two.
• Status: Active. Bought at R186.10. Currently showing a small unrealised profit.

Anglo Gold Ashanti (JSE: ANG) (1/3 of our standard size)

• Trade Logic: Same reasoning as Impala (IMP) above. AngloGold has also proven to be a very strong mining stock.
• Status: Active: Bought at R1518,13. Currently showing a small unrealised profit.

Pick N Pay Group (JSE: PIK)

• Trade Logic: Pick N Pay is a stock that we have had in the portfolio for a long time, and it’s usually one of our first go-to picks (or PIKs) for clients interested in longer-term trade ideas. With the R20 mark finally broken, we believe that this has the potential to move up to R 21 or even R22. While the number may seem small at face value, it would still account for a 5% or 10% growth, which we would take any day of the week.any day of the week. 
• Status: Active. Bought at R20,11. Currently showing a small unrealised profit.  

BHP Group Ltd (JSE: BHG)

• Trade Logic: BHP continues to trade within a defined channel between R680.85 and R754.58. We had a tricky day on Thursday but took a calculated risk and, so far, we’ve been rewarded for it. We will see how this plays out in the future, and whether we should have just taken the loss.
• Status: Active. Bought at R701.05. Currently showing a small unrealised loss.

Thungela Resources Limited (JSE: TGA) (1/2 position)

• Trade Logic: Alongside Exxaro (EXX), Thungela experienced a sharp few days of decline. But as the US Dollar continues to grow stronger, we anticipate that the stock will benefit from hard-currency revenue tailwinds.
• Status: Active. Bought at R121.80. Currently showing an unrealised profit.

Exxaro Resources Ltd (JSE: EXX)

• Trade Logic: Exxaro stands as a key beneficiary of a strong US Dollar and rising global coal prices.
• Status: Active. Bought at R204,00. Currently showing an unrealised loss. 

Aspen Pharmacare Holdings Ltd (JSE: APN)

• Trade Logic: AAspen was recently included in the Top 40 index, generating initial buying momentum that carried it past the previous level of resistance near R160.00. However, the price retraced below that level, signalling a lack of sustained momentum. We initiated a short position, targeting a move toward R143.00.
• Status: Active. Shorted at R158.40. Currently showing a small unrealised profit.

Bidvest Group Limited (JSE: BVT)

• Trade Logic: Bidvest has been consolidating in a range between R222.72 and R253.50. Anticipating that R222.72 would act as key support, we entered at that level, targeting a move back toward the upper bound near R253.50.
• Status: Active. Bought at R223.26. Currently showing a profit.

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. The loss is getting considerably smaller given the strong performance during the week, and we are practically at the breakeven point.

Truworths International Limited (JSE: TRU)

• Trade Logic: Truworths traded at a major historical support level that has repeatedly held over the recent sessions. We’ve initiated a long position to capture a technical bounce off this level.
• Status: Active. Bought at R42.31. Showing a nice unrealised profit.

Closed Trades

Exxaro Resources Ltd (JSE: EXX) (1/2 Position)

• Status: Closed at a loss. Bought at R190.15. Closed at R178.16. (Received a Dividend of R7,00 per share) Net Loss of R 4,99 per share.
• Details: Exxaro has been a thorn in our side for a while now. We have held this position, despite breaking our rules of never removing the stop loss and increasing our position to double. Due to this, we have seen a massive running loss on it for a while. We decided to close it with a limit order of the Day before ex-div price at R178,16. The other half we are leaving for now with the impression that it will continue its upward trend.

Thoughts On The Week Ahead

IIt’s not very often that the market proves one right in only one week. Last week we discussed the strong performance of Gold and this week it held. We saw CPI and PPI figures come in hotter than expected, and the increasing pressure on the Fed did not lead to a selloff in gold. Instead, it stayed above the support and traded closer to the resistance. The main concern here is the buying of US government bonds by investors, which does signal a slight risk-off sentiment. We hope that this is not temporary, as this would signal a further move into gold, which is what we have been waiting for.

Economic Data

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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.