It was a challenging week for the broader JSE and the J40, as we saw a steep decline from around the 103,000 level to close just above the 100,000 mark. While we did not take profits on any positions this week, we currently have four positions up by more than 5%, which we are more than happy to let run until we hit resistance or get stopped out by our trailing stop. Additionally, given the rough week, our account finished up overall, demonstrating the strength of our underlying positions such as TGA, TRU, BVT, and PIK.

Gold provided some drama this week, -after proving our thesis right last week- it quickly turned around and traded below the $4,000 mark for the first time since late July. While gold did find temporary support at these lower levels, the technical indicators suggest the pullback may not be over just yet. Overall, global markets were dominated by sector rotation, as the persistent inflation concerns prompted US investors to rotate out of overstretched tech valuations and into safer value stocks and commodities.

Last week

Macro Catalyst

This week we had the Medium-Term Budget Policy Statement in South Africa, alongside US markets moving out of tech stocks, as well as US Treasury yields moving lower.

Active Open Trades

Sasol Ltd (JSE: SOL) (1/3 of standard position size)

• Trade Logic: We might be a bit late to the party; however, looking back, when Brent Crude was trading around current levels for an extended period in 2022, Sasol was trading in the R350–R400 price range. If oil continues to trade higher, Sasol could easily return to those price levels.
• Status: Active. Bought at R288.30. Currently showing a small, unrealised profit.

Mr Price Group (JSE: MRP)

• Trade Logic: Mr Price looks as though it might break its downtrend, while also forming a cup-and-handle pattern on the daily chart, which is a very bullish technical signal.
• Status: Active. Bought at R172.58. Currently showing a small unrealised loss.

Pick n Pay Stores Ltd (JSE: PIK)

• Trade Logic: Pick n Pay is a stock we have held in our portfolio for the long term, and it is usually one of our first go-to picks for clients asking about long-term trade ideas. Now that it has finally broken above R20, we believe it could move to R21 or even R22, which would be a growth of 5-10%.
• Status: Active. Bought at R20.11. Currently showing an unrealised profit.

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

• Trade Logic: Alongside Exxaro (EXX), Thungela experienced a sharp few days of decline. With a firming US Dollar in mind, we anticipate the stock to 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 firming US Dollar and higher global coal prices.
• Status: Active. Bought at R204.00. Currently showing an unrealised loss.

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 unrealised loss has shrunk considerably, following the strong performance of the past week, bringing us close to breakeven.

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 nice unrealised profit.

Closed Trades (Stop-loss)

Aspen Pharmacare Holdings Ltd (JSE: APN)

• Status: Closed at a small loss. Shorted at R158.40. Closed at R158.45 (Paid a dividend of R2.32 per share) | Net Loss of R2.37 per share.
• Details: We were in a nice profit at one stage, but the stock kept bouncing off the R154 level. As it appeared it might break its downtrend, we decided to close the position at the break-even point.

BHP Group Ltd (JSE: BHG)

• Status: Closed at a loss. Bought at R701.05. Closed at R647.63.
• Details: BHP broke below previous support levels and closed below its 200-day Simple Moving Average (SMA). This indicates that the downtrend may persist for a while, so we exited the trade.
• Key Lesson: Temporarily removing stop losses to navigate market open volatility generally works well; however, we need to ensure strict re-engagement parameters are maintained.

Impala Platinum Holdings Ltd (JSE: IMP)

• Status: Closed at a loss. Bought at R186.10. Closed at R176.80.
• Details: Gold and precious metals were trading in a consolidation range, so we bought select mining stocks in anticipation of a breakout above current resistance.

AngloGold Ashanti PLC (JSE: ANG)

• Status: Closed at a loss. Bought at R1,518.13. Closed at R1,459.10.
• Details: Gold and precious metals were trading in a range, so we bought select mining stocks in anticipation of a breakout above current resistance.

Thoughts On The Week Ahead

We previously noted the possibility of a risk-off sentiment looming over the market, and we saw further evidence of this over the past week as bond yields fell and investors shifted into defensive sectors, including consumer staples and utilities. Consequently, we will be keeping a close eye on stocks like Anheuser-Busch (ANH) and British American (BTI). Both counters have enjoyed a very strong run over the past week or two, and if investors continue rotating into defensive names, these stocks could see further upward momentum.

Economic Data

Start your trading journey with us today!

We’re posting on TradingView, we’re posting on our blog… but the real magic happens in our client community where you can get access to our ideas as they develop. So, open your account and join us and start taking advantage of South Africa’s Top Broker for both Active Traders and Traditional Investors. We have a Discord server, with a Daily Morning Call at 08:30 (Monday – Friday), where our Trading Strategist shares market updates and posts information with the Community. If you are not trading with us yet, what’s stopping you?

The weekly game plan is back

If you enjoy reading our blog and would like to get email updates each time we post, please subscribe below.

*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.