Offshore trade ideas

S&P 500 Volatility Index (VIX)

So we’re going to look at a few things here. In the past we have seen that the VIX term structure can provide reliable buying signals while the rest of the world is in a flat panic. The first chart (below) shows that VIX term structure has started to invert. This may be a little early still as the term structure has not completely inverted, but generally it’s been a good buy signal for equities.

We’ve also seen that in recent times, when the VIX gets up to around the 28 level, it has retreated back down rather quickly as the dip buyers step in to buy equities. Also shown here is a big red line which indicates the call option expiry we had on a previous VIX trade. In truth, it was silly not to roll the contract… but alas, you can’t win them all. From here though, perhaps a put at 20 with a 30 day expiry might be a good trade.

S&P 500 (SPY)

Following on from the VIX narrative, SPY could be a buy on Monday. From a momentum perspective it appears as if the pullback has some way to go still, although looking at historic VIX spikes and the subsequent bounces in SPY, it does look like a high probability buy setup.

Brent Crude Oil

Talking about VIX spikes, pullbacks and buy signals, here we look at OVX (oil volatility) versus the Brent Crude Oil price. We can see here too when OVX spikes as it did last week, it is generally followed by a rather sharp recovery. We like the long oil trade here and think it is likely a good time to add to oil exposed equities as well.

Russell 2000 (IWM)

This breakout trade hasn’t gone too well at all. We’re going to be a bit patient here though and see if our buy the VIX spike idea plays out in the coming week or not.

That’s all folks

That’s all we have for you this Sunday. If you would like more insights and trade ideas, consider opening a trading account with us and joining our community. We work really hard to add value for our clients by giving them information, analysis and guidance. We also offer some very competitive rates on trade executions and have accounts that are suited for very active, semi-professional and intraday traders. Give us a call or drop us an email if you would like more information.

*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.

The post Buy the VIX spike appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

Last week we were looking for a bit of a pullback on the major U.S. indices. The pullback came around for a few days, although was very short lived. Friday’s session was nice and strong once more. At this stage, we’re not really sure how to call it. On the weekly chart (left) it looks as if SPY is in a bit of a resistance zone near the upper end of a large rising wedge. On the daily chart, however, it looks like the small correction in the first half of last week has set SPY up for another push into fresh all-time high territory. That said, from a momentum perspective we are still seeing some emerging sell signals. Therefore, for now, we remain somewhat bearish SPY and will avoid entering new long trades on this market (instrument).

Russell 2000 (IWM)

In stark contrast to the SPY above, we really like the IWM setup for a long trade. IWM broke out of an almost 12 month consolidation and has come back to test the break out very nicely. Perhaps there is still room for it to test the $234.60 level before seeing further upside, but either way we are happy to be long here.

Philadelphia Semiconductor Index (SOX)

SOZ has been a bit of a market leader in the past and we believe that it still very much is. After a sharp sell-off in the first half of last week, it managed to put in a strong end. Right now there is no high probability setup for us to trade here, so we cannot initiate and new trades. For those who bought the break out though; moving your stop loss to the Wednesday lows would be a nice way to ratchet your stop higher and allowing a winner to run.

Invesco China Technology ETF (CQQQ)

We mentioned CQQQ some time back as a potential buy and reiterate that today. Using a weekly chart we illustrate the significance of the support level it managed to hold. We also note that Chinese equities are still underweight in most asset managers’ portfolios. Once policy starts to become a bit more favourable in China again (which is starting to happen – look at Chinese education stocks and recent policy changes in that space), we think that institutional funds will start to flow into Chinese tech once more and CQQQ should put in a decent rally over the next 3 to 6 months.

Gold

Weekly chart on gold here showing that triangle formation we’ve been eyeing has finally broken. As the market is coming to terms with the realities of inflation, gold could really catch a bid.

U.S. Dollar Index (DXY)

The mighty Dollar broker higher and out of the range it’s been in for a couple of months. Although nothing moves in straight lines, we expect that we will continue to see a stronger Dollar for another few months at least. We can now comfortably say that the DXY trend is up.

USDZAR

Unfortunately a stronger DXY means a weaker ZAR. At present the USDZAR settled inside the range, although we think the most likely move from here is towards R16.00. Also note that from a trend perspective, we can say that the trend here has changed too.

Joining HCA trading

HCA trading offers a number of different trading accounts to suit different types of traders. Our offshore trading accounts allow traders to buy shares, ETFs, CFDs and even fractional shares in the United States for only $2 a trade. Locally, we offer shares, ETFs and CFDs at good rates with robust and reliable trading platforms. All our trading, including CFDs, is done on a Direct Market Access basis and thus our clients are able to interact directly with the real equity market and not have to worry about excessive counterparty or liquidity risk. Our prime broker locally is a big four bank and offshore we make use of one of the largest non-bank prime brokers in the world.

Local stockbroking rates

Offshore stockbroking rates

Subscribe for post updates

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.

The post Brief thoughts appeared first on Herenya Capital Advisors.

We’re not saying that the melt up is over. Hell, it could go for another year or so. Just in the very short-term it seems like the rally might have run out of steam on Friday and is due a pull-back. Let’s look at some charts and you’ll see why.

Offshore trade ideas

S&P 500 Volatility Index (VIX)

The VIX has held the base around 15, but put in a decent up-day on Friday. This might have been some of the smart money buying cheap protection in the face of stretched equities. A spike up to the low 20’s here would not be too surprising.

Philadelphia Semiconductor Index (SOX)

SOX has had a great break out from the flat top triangle. Friday’s action resulted in a spinning top candle formation though. A gap lower at the open on Monday with red action all day will likely create a shooting star candle formation. Not the end of the world, but maybe enough for it to go test the break out level again. Keep in mind that a large part of this index is NVDA, which was driven higher by high options volumes last week. Fade the calls…

S&P 500 (SPY)

Bit of a doji on the daily candle there on Friday. Interesting to see that it formed just under what was a historic upward sloping support (trend) line. Again, we’re not calling for the end of the world here, just a bit of a breather.

Dow Jones Transportation Index (DTX)

Well, thank you Avis for trying harder and doubling in a day so that DTX could fly! Note that the trend here is firmly up, but again, a small pull-back would make sense.

Russell 2000 (IWM)

We’ve been tracking ol Russell (the love muscle) for a while now. Finally the break-out came. Hopefully this is the start of a 12 month long grind higher. But first, fade the calls and let IWM retest the break out level.

Nasdaq (QQQ)

We’re really picking tops this week it seems. Again though, not the greatest action at the close of the week. One last pull-back before the Santa Rally arrives?

U.S. Dollar Index (DXY)

DXY finding a bit of resistance around 94.50 (and support at 93.50-ish). Our view is that DXY should continue to climb over the next 12 months, although it will have to break this range (marked in white) first.

Brent Crude Oil

Weekly chart on Brent here. It looks rather likely that we see it pulling back to test the trend line marked in white. There was some news over the weekend that OPEC will be increasing prices to their biggest customers… so oil is a bit of a wild card now. We could see it gap up rather a lot when futures open. The words ‘energy crisis’ are ones you will probably see a whole lot before our summer is over. We maintain our bullish view on oil and energy and think that weakness continues to be a good opportunity to add (buy).

Gold

Nothing to do just yet, but keep watching this weekly chart. Remember, the best trades take a long time to set up. Patience young Padawan.

USDZAR

USDZAR overshot the resistance initially, but now looks set to make a push to the bottom of the channel. We would guess that an encouraging election result might ignite some interest in SA assets and lead to some inflows into our market. In a strong ZAR environment, local retailers and banks come to mind.

Cryptocurrencies

Ethereum (ETH)

ETH is doing better than BTC at this stage. Call it the leader if you will. It’s made new highs and is grinding ever-so-slowly higher. There is nothing about this chart not to like. Sitting long for another month seems like the right trade.

Bitcoin (BTC)

BTC is trying, but hasn’t quite yet broken free from its resistance. Maybe some of those TSLA call profits will make its way to the crypto space in the coming weeks? A large portion of the market seems focused on the shi… altcoins and NFT space at the moment though. Once the apes realise that most altcoins are merely pump and dump schemes, they will find their way back to big daddy Bitcoin.

South African trade ideas

Anglo American PLC (AGL)

Well… not many words are needed here. This chart looks like a dumpster fire.

AngloGold Ashanti (ANG)

ANG needs to be watched in conjunction with Gold (above). If Gold can break out of that large triangle and ANG can hold above the 200 day moving average, we could be setting up for a decent strategic long here. Keep in mind that miners often lead the actual metal. This is worth keeping on the radar.

Brait SE (BAT)

If you’re not following @tradinglikeafox, you should be. He did a good thread on ‘at home exercise’ companies earnings that were disappointing. The ‘lockdown’ trades are out of steam and people are returning to the outside world. This bodes well for BAT as its gym business is going to do well. Looking at the chart though, it broke that range nicely and had a multi-week pull-back. Now it’s made a decent bullish push again and momentum is turning proper bullish again. New (recent) highs are on the way.

BHP Billiton (BHP)

Another dumpster fire looking chart. This is not as clear as AGL though as BHP has some oil exposure. Nonetheless, the chart is pointing down.

Naspers (NPN)

NPN is not looking good at all. We’d thought that this stock could break higher, but it is starting to look like we got it wrong. Careful with the longs here.

Sasol (SOL)

Following on from our comments on oil (above), SOL could be very much in play in the week ahead. Nice chart setup too.

New educational content

We uploaded the JSE Power Hour presentation Petri did earlier this year, although the link in the mailer that went out did not work. So for those who are keen to watch the video and download the slides, please have a look at our Presentations page. You will actually find most of the Presentations that Petri has done over the last fews years, including the slides. It’s a good place to start learning if you are new.

Joining HCA trading

HCA trading offers a number of different trading accounts to suit different types of traders. Our offshore trading accounts allow traders to buy shares, ETFs, CFDs and even fractional shares in the United States for only $2 a trade. Locally, we offer shares, ETFs and CFDs at good rates with robust and reliable trading platforms. All our trading, including CFDs, is done on a Direct Market Access basis and thus our clients are able to interact directly with the real equity market and not have to worry about excessive counterparty or liquidity risk. Our prime broker locally is a big four bank and offshore we make use of one of the largest non-bank prime brokers in the world.

Local stockbroking rates

Offshore stockbroking rates

Subscribe for post updates

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.

The post Fading the calls appeared first on Herenya Capital Advisors.

Sentiment

Below is the Goldman Sachs ‘Sentiment Indicator’ which measures stock positioning across retail, institutional, and foreign investors versus the past 12 months. Readings below -1.0 or above +1.0 indicate extreme positions that are significant in predicting future returns. As we can see, this indicator is currently only very slightly bullish.

Next up is the Bank of America ‘Bull & Bear’ indicator. Once again, it’s in the middle of nowhere. We interpret this as a signal that the market is currently able to sustain more upside without greed becoming too extreme.

Buybacks

The buybacks mentioned earlier is put into perspective by this chart from Goldman Sachs. Just over $1trillion consistently on the bid… More upside coming?

Tapering

It is also worth noting that even with the market mostly expecting tapering to start in November, and interest rate hikes to start mid-next year, the market is not responded negatively. Goldman Sach says “We are pulling forward our forecast for the Fed’s first rate hike by one full year to July 2022, shortly after tapering is scheduled to conclude. We expect a second hike in November 2022 and two hikes per year after that”. Even so, the market remains strong.

Now let’s go through our (mostly) usual charts and see what is out there.

Offshore trade ideas

Philadelphia Semiconductor Index (SOX)

SOX is a bit of a leading indicator to the greater tech stock indices in our view. Although there is not setup to trade here right now, this large flat top triangle has been in the making for a few months. A bullish break here would likely lead the broader market higher.

Nasdaq (QQQ)

Our bearish divergence shown last week was the wrong call. QQQ printed fresh all-time highs and seems to be set on grinding higher. Some tech excitement thanks to Meta might also be a driver here.

Dow Jones Industrial Average (IYY)

IYY is also looking fairly strong. Last week was mostly spent consolidating around new all-time highs and the week ended with the highest ever record close. In the very short term (5 days), this consolidation probably breaks higher.

Russell 2000 (IWM)

This IWM chart is one that our regular readers are probably very familiar with by now. Still not trade here, but still on the radar. This consolidation, at least in our view, will dictate the fate of the wider equity market in the 12 months ahead.

U.S. Dollar Index (DXY)

We’ve included both the daily and weekly chart of DXY here. On the daily we note that our short-term target from our ‘Headed for news highs‘ post was tested. From there DXY bounced hard. Our base expectation here is that DXY will likely rise, or the U.S. Dollar will strengthen, in months to come. Much of this we think will be driven by two forces. 1. Funds flowing into the U.S. Treasuries market as investors will start to seek protection against inflation, and 2. The energy crisis is not nearly as severe in the U.S. as it is in Europe and China, which should give the U.S. economy an advantage during the winter months.

China Coal Futures (CCEX2021)

Longer-term view of Coal Futures in China. It’s been rather volatile (to say the least), but in our view the party is not over. Lots of Chinese coal production was impacted by flooding (about 50 mines) and we are likely in for a cold northern hemisphere winter. We think that (although extremely volatile) weakness here can be bought as coal will likely stay hot (excuse the pun).

Gold

We don’t want to go too much into the commodity commentary here, perhaps a post for another time. But this weekly chart of Gold shows a large symmetrical triangle in the making. Keep it on your watchlist.

Xtrackers Physical Rhodium ETC Fund (XRHO)

We showed the XRHO chart before and show it to you once again. This is a weekly chart, so the timeframes here are slightly longer-term. This chart is working its way into our hearts and might be one of our favourite setups in the market at the moment. You can put on a fairly tight stop and potentially get a decent ride back to the highs.

USDZAR

Daily and weekly charts on USDZAR. On the daily, we have reached the top of the recent range between 15.30 and 14.15. The weekly chart shows us that it is sort of back in the range it was trading before this whole pandemic thing took the world by storm. Perhaps it is reasonable to assume that (unless South Africa shoots itself in the foot) the USDZAR should stay in this range for a few more months?

Bitcoin & Ethereum (BTC & ETH)

We’ve grouped these together this week because they both look rather good. ETH admittely looks a little better that BTC, but we are on track for a new high on both we think. We noticed that some of the larger investment banks started updating targets on these two as well, with Goldman Sachs saying they see ETH going to $8k. Regular readers will know our targets and expectations for year end. Newer readers should have a look at the 2021 roadmap for Bitcoin, Which cryptocurrency to buy in 2021, Stimulus, Gold and Bitcoin and It’s time to buy Bitcoin posts for context. They are older posts, but our views have not really changed.

South African trade ideas

As we mentioned earlier, there is not really much in the local market that looks attractive to us now. So we only have three ideas to share with you this week. Surely there will be some setups to come in future, but for now, perhaps this is a good time to practice discipline.

Woolworths (WHL)

WHL could be a good buy off the 200 day moving average here. Risk on sentiment and strong buying in the U.S. could raise all ships, and local retailers have been underwater for a few months now. Also, Christmas is coming and retailers tend to like them some of that Santa Rally.

The Foschini Group (TFG)

TFG has been consolidating around the 200 day moving average for a while now. It offers a decent, high risk-reward long trade from here. Keep a tight stop though.

Vodacom (VOD)

Maybe this 6 week plus selloff in VOD is a little overdone now? Back in June and July, the zone between the 89 and 200 day moving averages proved to be a good buying zone. Let’s see if the general market agrees this time.

New educational content

We uploaded the JSE Power Hour presentation Petri did earlier this year, although the link in the mailer that went out did not work. So for those who are keen to watch the video and download the slides, please have a look at our Presentations page. You will actually find most of the Presentations that Petri has done over the last fews years, including the slides. It’s a good place to start learning if you are new.

Joining HCA trading

HCA trading offers a number of different trading accounts to suit different types of traders. Our offshore trading accounts allow traders to buy shares, ETFs, CFDs and even fractional shares in the United States for only $2 a trade. Locally, we offer shares, ETFs and CFDs at good rates with robust and reliable trading platforms. All our trading, including CFDs, is done on a Direct Market Access basis and thus our clients are able to interact directly with the real equity market and not have to worry about excessive counterparty or liquidity risk. Our prime broker locally is a big four bank and offshore we make use of one of the largest non-bank prime brokers in the world.

Local stockbroking rates

Offshore stockbroking rates

Subscribe for post updates

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.

The post Bigger picture appeared first on Herenya Capital Advisors.

Offshore trade ideas

Dow Jones Transportation Index (DTX)

This is our canary in the coal mine. If DTX can get and hold above both the down trend line and the 89 day moving average, it will trigger a buy for us on most U.S. equity indices.

Russell 2000 (IWM)

The going nowhere slowly chart. After a long flat like this, all we can know for certain is that a large move is coming. Until this range breaks though, there is nothing to do here.

S&P 500 (SPY)

SPY might be leading the pack here with a buy signal. It’s not the strongest buy signal ever generated (4 out of 6), so it’s best to wait for the DTX to confirm.

Brent Crude OIl

Regular readers of our blog are probably bored of us going on and on and on about oil… but we’re almost at the $86.71 handle. We’ll have to see what happens after that target is reached. Fundamentally, there is no reason for oil to come down any time soon. At least not in our view.

Xtrackers Physical Rhodium ETC Fund (XRHO)

The weekly chart has not broken yet, but this is still very much a commodity to keep an eye on.

Platinum (PL1!)

Decent break of the down trend here. It would be nice to see a push to $1140 and get above all the moving averages. Hopefully this is the start of a new multi-month up trend.

Palladium (PA1!)

Palladium also rallied hard over the last two sessions of last week. If it can get above $2150, things will get very interesting in the PGM space.

Bitcoin (BTC)

Weekly, logarithmic chart om BTC is still looking very bullish. Can we have that fourth quarter melt-up now please?

USDZAR

A bit of a bumpy week for the ZAR last week. Our view, for now, is somewhat undecided. We saw a lot of USD buying last week (DXY not shown in this post), so by the looks of things, emerging market currencies might remain under pressure. Besides, this chart is giving some mixed signals at the moment so it’s probably best we just stay out here.

South African trade ideas

JSE Top 40 Index (ALSI)

Nothing like a little bit of whipsaw on the ALSI to remind you that to be a short-term trader you have to use stop losses. Again, no real read for us here, so we’ll sidestep this market for the week as well.

African Rainbow Minerals (ARI)

ARI finding support on a key level here. It could get really interesting once that down trend is broken. Might be worth taking a small long here and adding into it once that trend line is broken. Just be careful with liquidity here.

BHP Group (BHP)

Above R398.00 and things get interesting. Maybe a small long to start with and again adding to is once it gets going.

Capitec (CPI)

No real trade here, just an observation. Last week we’d thought that it was a long, but the seller was just too big. Now we wait for another decent setup.

Impala Platinum (IMP)

Boom! Three day low as a trailing stop for now. Maybe we see R220 this week?

Mondi (MNP)

MNP should be on your watchlist this week. You can put a tight stop on this and potentially get some good upside once this down trend breaks.

Want ideas, insights and research?

*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.

The post Trade ideas appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

So the SPY bounced off the 89 day moving average and has closed the gap it left on the way down. Momentum wise, it has generated a buy signal on the Stochastic, although not yet on the MACD. It’s not shown here, but it was interesting to see that during this selloff institutional positioning did not really change. Basically, nobody panic sold into the selloff… in fact, most people were buyers. Seems that the bull is strong yet! How long before we see new highs?

Russell 2000 (IWM)

Bwaa! IWM is the most boring index on earth right now. As has been the case for many, many weeks now; there is nothing to do here until this range is broken.

Nasdaq (QQQ)

Well, the QQQ looks very similar to the SPY. The trend is still up and we’ve seen the dip being bought. “A bull market climbs a wall of worry” they say.

Philadelphia Semiconductor Index (SOX)

SOX, the great leader of U.S. tech stocks, is on the verge of breaking higher. This is a rather constructive setup and one that will likely see not only the SOX print new record highs, but likely QQQ and SPY as well. The bull is strong yet!

Dow Jones Transportation Average (DTX)

DTX is one of the more important indices we keep an eye on as it is a measure of ‘on-the-ground’ economic activity. The better the transport companies do, likely the better the overall consumer economy is doing. We’ve expressed concerns around the breaking of the 200 day moving average on this index in the past. Last week DTX broke its 200 day moving average, and reclaimed it. For now there is no real trade for us here, although we are keeping an eye on the (white) downtrend line as a potential buy signal. We must add though, if DTX loses the 200 day moving average support, we will once again start thinking very hard about defensive plays.

U.S. Dollar Index (DXY)

Once again we are talking about the $93.50 level on the DXY. It is interesting to see that institutional fund managers are increasing their long positions of USD. Should we see continued flow into the long USD trade, we can expect the DXY to break higher. The question is then; will we see softer commodities on the back of the stronger USD? We think that the answer to that is yes… driven by a few things. The Evergrande situation in China is likely to soften demand for iron ore, concrete and many other inputs to large scale construction. We also think that the overall impact is that we see the ‘building’ industry cool off somewhat in China. So what came first? The slow down of the construction boom in China, or the strengthening of the Dollar. Or are the two inextricably linked?

USDZAR

Weekly chart of the USDZAR. Some might see an Inverse Head and Shoulders here. It does look like the trend is turning and that a weaker ZAR is on the cards.

Brent Crude Oil

What is not inextricably linked to China is energy. And energy prices are going up! Oil made a new recent high and has its target trained on the $86.71 handle. Hold onto you (Sasol) butts! We’re going up!

Xtrackers Physical Rhodium ETC Fund (XHRO)

Rhodium has been a hot topic for a little while now. Mostly because it has been one way traffic down for the last 5 months. There is a long and winding fundamental story here, but for the traders who are considering picking a bottom, we offer the following guidance. Wait for the downtrend on the weekly chart to break before hitting the buy button. There are emerging signs that we could be near a bottom, but be patient enough to wait for a proper signal. Also, for everyone trading on the Velocity Trader platform; it’s a pleasure for having the XHRO ETF added to the platform for you. *tips hat*

South African trade ideas

JSE Top 40 Index (ALSI)

Our ALSI short last week worked out very well and we closed it very close to the bottom of the move. For now, we see no new setup here. Although we are mostly bullish going into the new week, we’re not being presented with a high probability entry, so we will be patient and wait for another setup.

ABSA Group (ABG)

The good old fashioned buying zone is once again offering a chance to buy while things look dire. Follow the trend, the bull is strong yet!

Anglo American Platinum (AMS)

Our commentary here is much inline with XHRO above. AMS is on the verge of generating a confirmed buy signal and is worth keeping on the radar. Don’t be over hasty though and wait for the most recent downtrend line to be broken.

Capitec (CPI)

The bull is strong yet! CPI looks like it is about to break to new highs.

Sasol (SOL)

Break, retest, go! We’re holding onto SOL on the CFD accounts with a trailing stop loss. Nothing much to do but give it the space and time to keep trending higher. Even from a longer-term perspective, this is at least a R300 stock. The bull is strong yet!

We’re talking to Ghosts!

We will be having a series of chats with The Finance Ghost and Mohammad Nalla during the month of September. Our goal is to educate the listeners and to let people out there know about what we do, and how we do it.

Petri shared a few war stories and answered some more of your questions. Have a listen to the episode below:

Be on the lookout for the final installment of Herenya September coming next week as we handed the mic to Jonathan, a real-deal day trader and part of the Herenya Team.

Want ideas, insights and research?

*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.

The post The bull is strong yet! appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

Alright, the rising wedge has broken. We note also that the SPY closed below the 50 day moving average on Friday. Next support levels come in at the 89 day moving average. Historically this zone between the 50 and 89 day moving averages has been a good ‘buying zone’. Will the buy-the-dippers win again, or will the macro headwinds actually lead to a larger scale correction this time?

Russell 2000 (IWM)

Range bound and going nowhere. At risk of sounding like a broken record… there is nothing to do here until this range breaks.

Dow Jones Transportation Index (DTX)

DTX is thoroughly testing the 200 day moving average. Often the DTX has been a leading indicator to other global markets. Things might get very spicy if the moving average support fails.

U.S. Dollar Index (DXY)

It seems that the DXY is going to have another crack at breaking the $93.50 level. As mentioned before, once DXY gets (and holds) above $93.50, we could see some turbulence in equity markets. A strong move here from the Dollar would put pressure on Emerging Market currencies and commodities.

USDZAR

Long-term trends take a long time to change. The USDZAR has once again made it above the 200 day moving average and the long-term trend change scenario is looking like it is firmly back on the table. As always the USDZAR will take its lead from the DXY, but as things look right now, we’re headed for R15.50.

Brent Crude Oil

The weekly oil chart still looks very constructive to us. Overall energy prices are looking very bullish heading into what is expected to be a cold winter in the northern hemisphere.

South African trade ideas

JSE Top 40 Index (ALSI)

The range break trade is off to a good start. We see support around 55500, 54650 and 53000.

Aspen Pharmacare (APN)

We’ve closed our APN CFD long trade. Perhaps a bit early, but we had a great run on this stock so we were happy to bank. We are still happy holders in the long-term equity portfolio.

Brait SE (BAT)

Higher risk play here, but BAT finally broken higher. As more and more people around the world are getting the vaccine, it appears that we are one step closer to that ever illusive ‘back to normal’. Keep an eye on global mobility tracking data. As people more around more, they will eventually end up back at the gym and then finally BAT might have its moment in the sun.

We’re talking to Ghosts!

We will be having a series of chats with The Finance Ghost and Mohammad Nalla during the month of September. Our goal is to educate the listeners and to let people out there know about what we do, and how we do it.

We only managed to cover about half of your questions last week, so we will be doing part 2 this coming week. Again, if there is anything that you would like to learn about, please feel free to retweet and ask!

Want ideas, insights and research?

*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.

The post It might get a little bumpy appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

It is rather challenging to tell signal from noise here right now. The key here is to discern whether or not this is a technical sell signal, or if this is just another dip that we should buy. We are looking at this chart in a number of different ways;

Weekly chart
The dotted, lower boundary of the rising wedge is plotted using the weekly real body closes. Very strictly speaking, it has triggered the sell.

Daily chart
The dashed, lower boundary of the rising wedge is plotted using the candlestick tails on daily candles. Now it appears that there has been no sell signal triggered yet.

An interesting perspective from ZeroHedge.com

The Pavlovian investor has been taught to buy the dip, but will it work going forward just because it has worked well so far? That is the question many investors are asking themselves at the moment. The current market psychology is extremely complex as the crowd has been rewarded with one behavior; buy the dip. There is a risk of the general investor about to suffer from cognitive dissonance.

Cognitive dissonance is the distressing mental state that people feel when they “find themselves doing things that don’t fit with what they know, or having opinions that do not fit with other opinions they hold.” A key assumption is that people want their expectations to meet reality, creating a sense of equilibrium. Likewise, another assumption is that a person will avoid situations or information sources that give rise to feelings of uneasiness, or dissonance.

Investors know that the market behaves like a cork in water; it always comes back up. Lately the market corrections have been smaller, both in terms of magnitude and time, i.e the buy the dip has been reinforced. Let’s see if those that have bought this last dip will find themselves in the same position as Pavlov’s dogs, waiting for the ringing of the bell, but no meal is following.

ZeroHedge

The question we are asking ourselves now is; do we need to hedge out a potential 10% to 20% correction, or will the market bounce from here?

Inverse S&P 500 ETFs (SH, SDS, SPXU)

If you’re also thinking that it’s time to hedge portfolios, potential hedging candidates include; SH (1x gearing), SDS (2x gearing) and SPXU (3x gearing), which will all rally if/when the SPY comes down. You will need to calculate your portfolio’s beta to the SPY, then work out how much inverse/negative exposure you will need in order to reduce your portfolio’s beta to 0.

Russell 200 (IWM)

This long consolidation period is starting to look like a long-term distribution pattern. For now, there are still no signals on this market. We would be very concerned if the lower range boundary is breached though.

Dow Jones Transportation Index (DTX)

Earlier this year we’d mentioned a bullish break from a bull flag formation on DTX. It has become clear that the bull flag formation is failing and the DTX has failed to make any significant attempt at a new high. It is now fast approaching the 200 day moving average. Failure of the 200 day moving average to hold could be another major sell signal for the broader market.

Brent Crude Oil

The oil chart is one that we have been bullish on a whole a lot over the last year or so and we continue to be bullish. After it finally retested (and bounce off) the primary trend line, it seems that it is gearing up for another leg higher in the coming months. Overall the market is not without its challenges, although rising geopolitical tensions, hurricanes and rising demand are keeping the oil market in a state of ‘undersupply’. Thus we remain bullish and keep looking for opportunities to take long trades in Oil.

South African trade ideas

JSE Top 40 Index (ALSI)

Well, would you look at that? After around six months of consolidation, the range has finally broken to the downside. Is it time to hedge local portfolios as well?

Sanlam (SLM)

Our SLM short from last week is working rather well so far. We’re happy to move our stop loss to just below entry, basically making the rest of this trade ‘risk free’.

Sasol (SOL)

SOL looking like a decent bullish setup here, especially with a bullish oil backdrop.

We’re talking to Ghosts!

We will be having a series of chats with The Finance Ghost and Mohammad Nalla during the month of September. Our goal is to educate the listeners and to let people out there know about what we do, and how we do it.

Next week we will be taking some of your questions. So if there is anything that you would like to learn about, please feel free to retweet and ask!

Want ideas, insights and research?

*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.

The post Time to hedge portfolios? appeared first on Herenya Capital Advisors.

Until then, there is not really too much to do from an index investing and trading perspective. We do think that there are some fairly massive opportunities in selected Asian markets and energy, but those are secrets we’re going to keep for our clients.

Offshore trade ideas

S&P 500 (SPY)

Nothing really to see here. The trend is still intact and there is no signal to spur us into action.

Russell 2000 (IWM)

One range to rule them all…
No real change here, and thus no trading signal. We do note the bearish divergence between both oscillators and price. Will it be enough to break IWM out of the bottom of this range though?

U.S. Dollar Index (DXY)

$93.50 was tested and rejected. It seems now that the downside momentum is fading a little. There is a lot of Chinese data expected out next week, so making any short-term call here would likely be somewhat unwise. We suspect that DXY should stay under the $93 level (which is good for commodities) until there is a big enough catalyst (aka. shock event) to chase the fund managers back into ‘safety’.

Gold

Weekly gold chart update. Nothing really to add from previous weeks observations, but so far so good.

Platinum

Platinum has been under some pressure during the last few months. We note the bounce off an important support level. The next test for Platinum is going to be the tertiary (down)trend line [marked in white]. Ironically, this coincides with the 50 day moving average. A convincing break through resistance could serve as a good buy signal.

South African trade ideas

JSE Top 40 Index (ALSI)

The ALSI is still stuck in the range. No signal to act at this stage.

Clicks Group (CLS)

Perhaps time to bank some of those CFD longs on CLS? Looks like a fairly decent shooting star / inverse hammer candle formation, along with sell signals on both the oscillators.

Capitec (CPI)

Oops, a few sell signals triggering on the wonder bank stock here. Perhaps a pullback to R1700?

Dis-Chem Pharmacies (DCP)

Is this a fake out, or is this the start of a move back to the 200 day moving average?

Exxaro Resources (EXX)

This is a very constructive looking setup on EXX. The longer-term trend appears to be turning up again and price is about to break to a new recent high. With some ‘reflation’ as a backwind, EXX can do well into the last phase of the year.

Sanlam Limited (SLM)

Oh my word, these ranges… SLM has been going nowhere slowly for almost a year now and by the look of things, more of the same is the most likely outcome.

Want ideas, insights and research?

*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.

The post Nothing to see here appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

The wedge that keeps on rising…
This is a purposely bearish view on the S&P 500 index. That rising wedge is something that the Elves could sing songs about. That said (or sung), the chart did make a new high at the close on Friday on the back of dovish stimulus commentary. If you are a trend follower, there is nothing by clear skies ahead on the long here. Can unforeseen shocks derail the market and lead to a large-scale correction? Sure. Will it happen before the end of the year? Toss a coin. In the meantime, sit tight and follow the trend. The major signal here for the bears will be once the bottom of this price formation is broken.

Russell 2000 (IWM)

Small caps put in a decent bounce last week, but IWM is still stuck in its range. At present, when comparing almost any valuation metric of small caps vs large caps, small caps are at decade highs in terms of ‘value’ compared to large cap indices. So this range bound IWM, while SPY is making new highs, has created a bit of a relative value distortion. This, in our view, can lead to one of two probable scenarios. First, small caps are the ‘leaders’ and when they break down the larger market is sure to follow. Second, small caps finally wake up and smell the ‘risk-on’ and rally hard to catch up to large caps. We’re open to both ideas.

Brent Crude Oil

Oil (and energy in general) is still looking very attractive to us. We heard over the weekend that the 400k BPD production increased agreed on in the previous OPEC+ meeting may be reconsidered in the upcoming meeting on Wednesday. No doubt due to higher delta-variant infection rates and thus a reduced demand forecast. Nonetheless, we are looking forward to new highs.

Gold

The weekly hammer candle formation on Gold is holding up well. At present, Gold is lagging behind 10Y US Treasuries. Either yields have to rise, or Gold needs to rise to close the gap. We think Gold will be the mover. The weekly chart looks rather good from a technical perspective as well. It’s been a long bumpy ride for bulls so far in 2021, but heading into the end of the year it is looking like the bulls might catch a break.

U.S. Dollar Index (DXY)

DXY did not manage to stay above the magical $93 level. Looks like most of the market is now expecting tapering to start in November only, which likely means that DXY could weaken somewhat for the next 2 or so months. Keep in mind that correlation… DXY down, commodities up. This could be good for the ‘reflation trade’.

SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

We might have a perfect storm situation for oil next week. XOP has broken its recent downtrend and could be set up to benefit from bullish price action in the oil space.

VanEck Vectors Oil Services ETF (OIH)

OIH is another decent oil play and has also given a technical buy signal.

North Shore Global Uranium Mining ETF (URNM)

Our last energy related chart for the week. Although we have many more, we don’t want to sound like a one trick pony (even if it is a fairly decent trick). The fundamental story is a little long to get into here, but overall our bullish view on the energy sector is one that we’ve been trumping on about for many months now. URNM has pulled back some and offered a decent entry point for trend followers. It also generated a technical buy signal.

VanEck Vectors Gold Miners ETF (GDX)

Our comments on Gold above refer. GDX might be a decent play from here. Not only is Gold lagging 10Y Treasuries, GDX is lagging Gold. Could be a sitter. Nice clear stop loss also.

South African trade ideas

JSE Top 40 Index (ALSI)

Oh look at that, it’s a small cap index stuck in a range… oh wait, no it’s the ALSI. So it is a small cap index stuck in a range…
There is no clear signal here at the moment. The last time it gave a confirmed signal, it reversed two days later and crumbled back to the bottom of the range. So for now, patience.

Anglo American PLC (AGL)

Some DXY weakness and a little bit of ‘risk-on’ and AGL might just go close that gap.

Coronation Fund Managers (CML)

CML held the channel last week. It was looking pretty dire at one point, but R48 held and CML put in the bounce. Perhaps it can get back to establishing a new uptrend now?

Want ideas, insights and research?

*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.

The post No tapering until November? appeared first on Herenya Capital Advisors.