For the last few weeks we’ve harped on about ‘it not needing to make sense, we just follow the market’, but over the last week it seems that the ‘follow through’ is not there. In other words, the market is starting to feel the need to make sense again, which makes us a little bearish. There are still many signs that point to a slowdown/recession in the second half of the year and more and more signs pointing to a looming credit crisis/crunch. Canada put up interest rates unexpectedly, U.S. student loans are once again becoming payable (aka. households have had a reprieve from making payments on student loans and that reprieve is now over, so payments are once again due). Overall, the economic grounds are shakier than what Joburg was a 02:40 on Sunday morning.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

So, the 4300 level ($430 on SPY) put up a good fight and won. Our horizontal resistance level is marked out at $429.50, although we know that these support and resistance levels are more zones than absolute levels. Thus, the attempted break higher that failed on Friday is rather significant in our view. Momentum is looking a little stretched too. In the bigger picture, we have the making of a longer-term trend change here (from bearish to bullish), but in the short-term, we think that the market is very likely to come down and test the 4200 level ($420 on SPY) again. There is a metric ton of economic data due out next week, so it is a bit of a wildcard week, but from where we sit, it doesn’t look like there is going to be much good data coming out. Thus, we expect the market to be softer in the week to come. As always, we would be happy to be wrong in this regard, but the start of the week might prove a good time to bank some profits on local (South African) long trades that have worked out.

Nasdaq (QQQ)

There is not too much to add to QQQ that was not said above. Although, we do feel that we should stress that Tech has had an amazing run on the back of all this A.I. mania. We’d said a few times over the last week that we think the A.I. bubble is only just beginning, and we still believe so, but some of these tech stocks (NVDA for example) have gone a little far and are due for a pullback in our view. We also see waning momentum in QQQ and a failure to make a new high. Brace for some downside we think.

Gold

We won’t reiterate our downside (range) target for gold every week as it is a multi-month, potentially multi-year setup. That said, we have to wonder if we might not see gold pop a little on the back of weaker equities in general..? Overall, we are still bearish here. It would not be crazy to imagine gold coming down while equities are coming down, specially on the back of bad economic data and some fresh panic. Let’s see how the week goes.

U.S. Dollar Index (DXY)

It’s looking more and more like DXY will test the 101 level. The surprise BOC move (hiking interest rates in Canada) contributed to some USD weakness. Bad economic data in the week ahead will likely add fuel to that fire.

Brent Crude Oil

The Saudis have just about thrown every kitchen fitting at the oil price to get it to go higher and still it won’t budge. This makes us worry a little. If that $70.50 level breaks, $60 might be on the cards. Slowing global growth (aka. recession) and persistent inflation will likely keep putting the breaks on oil prices. We can no longer be bullish here under the current circumstances.

USDZAR

We asked for reprieve and we got reprieve, in a big way! Time for that Kansas City Shuffle though. We’re happy to take some speculative longs around R18.60. Keep a tight stop though.

S&P 500 Volatility Index (VIX)

VIX sub 10 lows would mean that things are ‘back to normal’. While we think that this will likely be the case rather soon, with a doji candle and all the long stories about headwinds we’ve already told above, a test of 16 or 18, or even 20 in the week ahead is likely more probable.

South African trade ideas

JSE Top 40 Index (ALSI)

We’re looking at a weekly chart here on the ALSI. To us it looks like the momentum has started running out and that a move to be bottom of the upwards sloping channel is the most likely move from here. We know that CFR has had a huge impact and that will be no more, so maybe the ALSI comes back down to earth a little.

AngloGold Ashanti (ANG)

Well would you look at that? If it isn’t a beautiful head and shoulders pattern with a target at the primary trendline? It’s makes sense though. Gold is looking wabbly, the Rand has gotten a huge amount stronger. The party is over here for how. ANG is probably worth a buy sub-R400, but for now we think that there is around 20% worth of downside to come.

British American Tobacco (BTI)

We’re just updating the BTI chart here and reiterating our R584 target price.

Aspen Pharmacare (APN)

APN bounced a little, but momentum ran out pretty quickly. Maybe it’s time for the Kansas City Shuffle here too? We’d take the money off the table from the long trade here and run.

Bidvest (BVT)

BVT finally breaking the flag and putting in a good run. As is the case with APN above though, maybe it’s time to go left while everyone is going right? Take the money and run, in other words.

Compagnie Financiere Richemont (CFR)

Look out below! Well, ok, it’s not that simple. Yes, this chart is looking terrible and yes, there is a ton of selling that needs to be done in order to get index trackers inline with the rebalancing. But, and a big but, CFR is one of the most shorted stocks (in proportion to market capitalization) on the JSE at the moment. Everyone is thinking that this is the easy trade, and look, it probably is, but when it squeezes, which it eventually will, it is going to hurt the overleveraged shorts in ways that they will remember for many years. We do still like the short though.

FirstRand (FSR)

What a move from FSR! ‘Locals’ have done really well, and there are lots of arguments why they are all undervalued and why South Africa is ripe of the picking (aka. buy local stocks over offshore), but again with buts, FSR has slammed head on into the R68 resistance level. We could add a support level at R60 here and it would not be completely unreasonable to think that FSR will come back to test it.

Gold Fields (GFI)

Many years ago I (Petri) worked at a small hedge fund in Cape Town, and there my old boss taught me one of his favourite setups. He called it ‘The Eye of Sauron’. Basically, a failure to make a new high very shortly after a pullback at the top of long upward move. Almost a double top, but weaker. Now, The Eye of Sauron sits atop the GFI daily chart, and it looks down at the primary trendline with malice. And it broods. This is going to be a great short trade actually.

Naspers (NPN)

NPN has been pretty range bound, with the odd fake break out the bottom. We have this feeling that the next break out the bottom will not be fake though. R2785, then R2330. The lower target is less likely, but R2785 we think is rather probable indeed.

Sanlam (SLM)

SLM has also had a great run (see FSR comments) and has also slammed into resistance (at R59). For now, we think this party is over and we will be seeing the R51 support fairly soon. Great risk-reward here too, with a super tight stop and almost R8 on offer. A daily close above R60 takes you out of the short and an intraday high above say R61 does the same. Remember though, there are stop hunters out there who will squeeze you to take your money, so trade small(ish).

Sasol (SOL)

SOL forming a nice little base here and longs from last week worked out rather well. Given the oil and general macro narrative above, we think maybe its time to pack this one in for now. Well, for short-term traders at least. For the longer-term investors, SOL is likely still a good hold.

Sibanye-Stillwater (SSW)

SSW is looking for that R31.80 level with a sore heart.

Telkom (TKG)

So… TKG rejected an offer for R46, because it is not enough. Word is that the ‘buyers’ are still sitting around the negotiating table. It smells like TKG pops in here.

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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.

The post Kansas City Shuffle appeared first on Herenya Capital Advisors.

Bigger picture (offshore trade ideas)

S&P 500 (SPY)

Well, well, well… the downtrend line held like a champ and the market bounce something furious. As much as we opine about the market and have all sorts of strong views about what we ‘believe’, we are essentially just trend followers. The market takes the lead and we do not try to fight it. If we see SPY get higher than $420 (lol), then according to the simplest of the simple and clean, good ‘ol Dow Theory, we have a bull trend. The market leads the economic cycle by 6 to 9 months. Perhaps it knows something we don’t? [spoiler alert: it does]

Nasdaq (QQQ)

QQQ snapped back as well and broke right back above the key $297.25 level we indicated a while back. The same applies here as above. A new swing high would indicate a trend change.

All Country World Index (ACWI)

ACWI having a go at making a new high too it would seem.

Brent Crude Oil

Bullish equities = bullish oil! This chart is also a slow motion trend change in the making. There were some rumours that some countries might be leaving OPEC, but they were nullified rather quickly and oil caught a big bid on Friday. If equities are leading the economic cycle, then we can assume energy demand will keep growing and thus, so will the price of oil. We remain bullish energy in a big way.

Gold

Even ‘ol gold is looking like it wants to put in a new swing high.

U.S. Dollar Index (DXY)

Momentum wise, DXY is looking like it wants to soften a little. This would be good for equities and commodities in general. We have to admit, we did think this chart would go on to make a new high, and yet, here we are starting at it like a deer in the headlights not sure what to make of it all. We should probably leave it alone, but for now we are going to call it lower during the week ahead.

USDZAR

R18.50 held strong, and truth be told, we still think that over time the ZAR will keep working its way to R20 and above. In the short-term though, which is probably why most of you guys read this blog, it seems very likely that we’ll see the ZAR test the R17.60 level as equity markets rally somewhat in coming weeks.

South African trade ideas

JSE Top 40 Index (ALSI)

Well, the trendline break gave us a short and sharp sell off… which was fun while it lasted. Given all the bullishness in the international arena, does this mean the bull is back locally as well? Momentum shows bullish divergence and the trend has been fairly strong. There was some bad news on Naspers over the weekend (well, Tencent), but will it be enough to completely ruin the party here? We don’t know to be honest, so let the week unfold and remember that risk management is king.

Aspen Pharmacare (APN)

Weekly chart here on APN. We waited rather a long time for this bullish break, so you can bet that we are in. Shorter-term traders might not want to chase too hard here, but for those who are willing to take a smaller bite and wait a bit longer, we still like this stock.

Reinet (RNI)

We’re really just putting this one up as a bit of bragging rights. We hope that some of you took this trade when we pointed it out a few weeks ago. Let us know on twitter if you did. Also, bank your money.

Sanlam (SLM)

We hereby formally retract our bearish stance on SLM and move it to ‘neutral’. If this stock can open above (and hold above) R59.05, buy it for an intraday trade.

Old Mutual (OMU)

OMU leads the way. Trend followers can comfortably be long here we think.

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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.

The post Does that mean the bull is back? appeared first on Herenya Capital Advisors.

In other news, we have something new and exciting up our sleeves. Well, at least we think so…

Please take some time to vote in our poll below. We’ll give some more details really soon.

Bigger picture (Offshore trade ideas)

S&P 500 (SPY)

The power of simple trendlines… So, now SPY has broken the short-term uptrend, it will likely come back to test the medium-term downtrend. Should we see a bounce off the medium-term downward sloping trendline, well good times are here again. If not though, which is our expectation, we might see SPY make a push for recent (Oct 22) lows. The way we see it, this might be the final flush out before the bear market ends. That said, this final flush out could be really ugly. Let’s see what happens now that the bear is here.

DAX Index (DAX)

We don’t share the DAX chart too often, but it is still a rather significant market to keep an eye on. We note that it is now also testing the short-term uptrend and by all indications could be a great short here to that yellow support line as a first target. Should the yellow support fail (we expect it too), perhaps we see if come down to 13750 (second target). The bear is here, so who knows how much ground the Germans will lose here.

Nasdaq (QQQ)

Not too much to add here that we didn’t already say in SPY commentary above. Just another confirmation that the bear is here and is not happy. The downside here is a bit bigger in percentage terms, so likely an easier short trade with a bigger risk-reward.

Hang Send Index (HSI)

HSI has broken its short-term uptrend as well. In fact, it did so some time ago already. Perhaps the Chinese market is currently the best leading indicator we have of what to expect for the rest of the world. Keep an eye on Chinese Manufacturing PMI data due out on Wednesday morning. Trend followers here would expect to see new lows. Not many will want to believe that is possible, but trends don’t really care what we want to believe. The bear is here and it’ll eat your breakfast if you’re not careful.

Gold

The world is a confusing place. You’d expect Gold to be rallying with so much pressure on equities. Although, here we see again that when the bear is here, people sell everything for some liquidity. We saw in 2020 that when the liquidity crunch and ‘crash’ is upon us, everything sells off and only after the initial panic is over does Gold start to rally. Let’s hope that is the case here.

Brent Crude Oil

We speak about oil a lot, so we won’t re-explain what is happening in this chart. Nonetheless, oil is still sort of in no man’s land. We remain bullish.

U.S. Dollar Index (DXY)

The 103.70 level has broken. It’s finding some resistance around 105.30, but one that goes, the sky is the limit! DXY is looking set for plenty of strength, which of course will add fuel to the bearish fire. Interesting times ahead.

USDZAR

Don’t shoot the messenger please. We’ve dusted off our USDZAR weekly chart posted many month ago. Just a gentle reminder that trends are trends and it takes a whole lot of fundamental change to change long-term trends. R21 to the USD? It seemed mad a year ago, it seems almost certain now.

South African trade ideas

JSE Top 40 Index (ALSI)

Uhm, well, this is not good. The question is now; how far to the bottom? Obviously there has been some bad news making the rounds and things have actually never really looked much worse for South Africa, so markets coming off hard completely makes sense. But how far and how fast does this bearish move go? We can’t answer that, but we do know that getting out of the way is a good idea.64k as a first target? Probably.

Anglo American (AGL)

Trend breaks don’t get much cleaner than that. Break, test, confirm. The bear is here and has taken its pound of flesh. R600 could be support, but if/when it breaks, R510 is the next stop.

Compagnie Financiere Richemont (CFR)

Another uptrend about to break. CFR looking like it wants to come and test support at R239. Great risk-reward on the short trade as well. Make sure you keep a stop above the recent consolidation high though. A weaker ZAR and some good news from China could keep this stock moving up. It’s a probabilities game, so even though the bear is here and this stock offers a great risk-reward on the short, don’t let wanting to ‘be right’ prevent you from stopping out if you are on the wrong side. That said, we like the short here.

Naspers (NPN)

We might have said that breaks don’t get much better than this for AGL, but NPN might just take that title. We’ve watched this consolidation for a little while and we saw it break, get tested and push for a new low. The bear is here and is coming to touch you on your Naspers. R2785 and R2330 are first and second targets for the short trade here.

Sanlam (SLM)

Initially we’d said that we expect SLM to break higher. We take the opportunity to take that back and change our view. R59 has been solid resistance and a break above it should be bought, but it’s not looking like it is going to break. We therefore adjust our target to R51 with a stop above R59.

Sibanye-Stillwater (SSW)

This chart, when originally posted around a month ago, got a lot of flack. People did not like the idea of SSW completely breaking down and printing lows around R32. Again, we ask that you not shoot the messenger. Things are not looking so sexy for SSW. Earnings are out on Tuesday, so let’s see if that changes the tide here. It could, so be ready to react quickly once whatever the news is, breaks.

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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.

The post The bear is here! appeared first on Herenya Capital Advisors.

Bigger picture (Offshore trade ideas)

S&P 500 (SPY)

We’ve not drawn in the lateral support line here, but the SPY chart shows that the recent short-term bullish trends have broken. Momentum wise, it is starting to wane as well as the stochastic oscillator is about to dip below 50. For now, we think that is is very likely to see SPY move toward $385 as it tests the longer-term trend reversal. So, in essence, we are more bearish that our logo for at least a week or two from here.

Nasdaq (QQQ)

Looking at QQQ we see much the same as above with SPY, although here we have added in the lateral support line to show it’s significance. There are two ways to play this, the more risky way would be to already be short as the upward sloping trendline has broken, an the more conservative way is to wait for that yellow support line to break before entering the short. The same applies for SPY above.

Brent Crude Oil

Oil is still trading in the channel we pointed out last week. Until we have a clear break from this channel, we don’t plan to make any changes to our positioning.

Gold

A hit of hopium here for the gold bulls. Friday saw a decent reversal and the stochastic is starting to look like it wants to break higher. Perhaps if we see headline indices (as shown above) break down materially, we will see this gold price bounce and pust for $2000? For now we can’t tell, but keep it on the watchlist. Riskier traders can take a high-probability long trade from here (meaning a great risk-reward setup).

U.S. Dollar Index (DXY)

DXY needs to hold above 103.70 in order to keep the pressure on emerging market currencies.

USDZAR

Got Dollars? This chart makes us a little sad to be honest. As things are right now, we see now reason for this current trend to change.

Bitcoin (BTC)

Alright, so finally some good news. BTC is looking well on track with its four-year cycle and seems to be making a run for that 126 week moving average. It needs to get and hold above in order to start a new bull run. Remember though, this is a four-year cycle, so being near the beginning of year 3 of the cycle now, the best we can hope for over the next 18 or so months is a move back to the all-time high region. Only near the end of 2024 will it be time to sell again. Those that bought in November last year when we said Buy Bitcoin are up 50% already. Hang on in there guys, we have another year and a bit to go before we can sell again.

Ethereum (ETH)

We don’t have too many comments here, but things are looking a little better for ETH in our view as well.

Moscow Exchange (MOEX)

Weekly chart here on MOEX. Not the most bullish of candles last week, but overall this market is starting to look like it will recover. Worth having some exposure in our view.

S&P 500 Volatility Index (VIX)

We’ve not shown it here, but hedge funds are starting to load up on the VIX calls. So we will reiterate last weeks call and say again that buying some longer dated VIX calls (3 to 6 months out) is very likely a very good trade now.

South African trade ideas

JSE Top 40 Index (ALSI)

Ok ALSI, it’s make or break time buddy. Short-term bullish trends have broken… well, very almost on ALSI. Let’s see how Monday goes.

Naspers (NPN)

Ol’ NPN is still trading in its range. Watch for the breakout of this range. We think it will be lower and we think it will be rather explosive.

Reinet Investments (RNI)

RNI is also in a range. This one looks bullish to us, but we are open to following this trade in whichever direction it decides to go. A bit of a global equities sell off to fuel to ZAR weakness could work out well for ol’ RNI over here.

Shoprite Holdings (SHP)

Our SHP long idea from last week has not worked. Time to get out if you are not out already.

Sanlam Limited (SLM)

Nice little setup here on SLM that give two trade options, depending on which line breaks first. We think it breaks lower.

Sibanye-Stillwater (SSW)

It’s not looking good SSW. R32 is calling.

Thungela Resources (TGA)

It’s not looking so good for TGA either to be honest. R180 might be a good level to buy from, but until then, be patient.

AngloGold Ashanti (ANG)

Ouch! Is it over though? Who knows at this point? If the wheels fall off the global equities bus, maybe…

Anglo American PLC (AGL)

Short-term bullish trends have broken on AGL too. It’s not looking good.

Discovery (DSY)

Bullish break on DSY. At least some good news in a rough market.

Joining HCA trading

Come find out why we ranked as number one for traditional investors in South Africa. 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

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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 Short-term bullish trends have broken appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

We’ve seen the large rising wedge formation give a bearish break. Now price has moved below the 89 day moving average, which is a key medium-term trend indicator in our book. It is interesting to see that on Friday the market tested the 89 day moving average from the bottom, but failed to break above it. This rejection of a key trend indicator opens the 200 day moving average as a potential downside target.

Dow Jones Transportation Average (DTX)

DTX has lost the 200 day moving average support. This is a longer-term trend indicator in our book and it being broken is worrying for the bulls. The immediate downtrend line (white) could act as a potential buy signal, but until that happens, the trend is down.

Brent Crude Oil

Maybe our bias is too strong, or maybe the chart is just bullish… either way, Oil is looking good for a push higher.

Xtrackers Physical Rhodium ETC Fund (XRHO)

It’s getting close now. A break above the white trend line here would make a good buying opportunity in our view. Should XHRO break higher, it could be a catalyst for local PGM stocks to get moving as well.

Platinum Futures (PL1!)

Platinum might also be on the verge of finally breaking its recent down trend.

USDZAR

Very short-term view here, but the breaking of the yellow trend line could see the USDZAR strengthen to about R14.50.

Bitcoin (BTC)

The usual weekly logarithmic chart for crypto’s. Fairly bullish looking setup. Perhaps it’s finally time for the fourth quarter pump?

Ethereum (ETH)

Two nice looking candles for the bulls on ETH.

American Tower (AMT)

AMT has had a sharp selloff in recent weeks. The last time we saw such a fast and furious selloff it turned out to be a great buying opportunity. Early signs of shifting momentum supports the long trade idea here.

Peabody Energy (BTU)

I don’t know if you guys have seen coal prices in China… or that coal power plants around the world are shutting down due to a shortage of coal…? BTU mines coal. A whole lot of coal. Very decent long setup here as well. Me..? I like the stock.

VanEck Oil Services ETF (OIH)

It looks like the trend line break is playing out. You could probably see an inverse head and shoulders formation there as well if you squint hard enough. We’re looking for $240 as a target price.

South African trade ideas

JSE Top 40 (ALSI)

Looks like the ALSI bounced to retest the 57700 level and is set up to trade lower once more. Downside target is 53000.

Clicks Group (CLS)

CLS looks rather interesting. A reversal around R265 could provide a very high risk-reward long opportunity.

Impala Platinum (IMP)

Momentum wise it looks like IMP might be setting up for a bounce. If we see the two PGMs mentioned in the offshore trade ideas section above break higher, IMP could be a really good long from around these levels.

Mediclinic International (MEI)

MEI back to the bottom of the range?

Sanlam (SLM)

Looks like SLM is going to try break out of this range again. You can use a three day low as your trailing stop loss if you take this long trade.

Sibanye-Stillwater (SSW)

Very high risk-reward setup on SSW here. Once again dependent on PGMs in general, although the risk-reward is so great here it might just be worth taking a stab.

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.

Jonathan talks about Day Trading, what it takes and what his journey was. This was a very insightful chat and is highly recommended for anyone who is actively trading, or thinking about becoming very actively involved in markets.

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 Purely a technical perspective 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 trend is very strong here, despite all the panic and noise out there. We’ve seen that the zone between the 50 and 89 day moving averages has proven to be a good ‘buying zone’ over the last year or so. Given that the FED is going to keep the easy money money flowing (low interest rates and bond buying), we think that this is a ‘buy the dip’ situation.

Russell 2000 (IWM)

Small caps (IWM) are a little messier than SPY, but a chance to buy (the dip) off the trend line would be welcomed.

Nasdaq (QQQ)

Nothing can keep the tech stocks down it seems. Once the market shakes off the reality that ‘at some point’ the FED will stop giving it free money, odds are good that QQQ will just keep pushing higher. The trend looks strong, the index (ETF) is trading ver near highs. Some ‘risk-on’ in the week ahead should see QQQ leading the pack on the way up.

Dow Jones Industrial Average (IYY)

Our commentary on IYY is very much in line with that of SPY. The trend is strong. Buy the dip.

Gold

After the FOMC minutes on Wednesday, Gold took the elevator down. Perhaps the inflation narrative lost some footing, but we believe that in the medium-term it will rear its head once more. Our thinking is that Gold could be a decent buy off the support at $1680 (if it gets there).

Platinum

Ouch! Platinum lost the $1140 support level in glorious fashion. Once again we think that buying around support could be a good medium-term entry. The world is starting to emerge from COVID, the use-case for both Platinum and Palladium in cleaning combustion engine emissions has not changes, nor has the supply side dynamics. Buy the dip.

Palladium

Palladium also felt the smack pretty hard. Our thoughts here are similar to those on Gold and Platinum. We think that weakness (hopefully a little more) is a good opportunity to get entries into strong trends.

Brent Crude Oil

Talking about fundamentals not really changing; Oil is very firmly in an uptrend and as is the case with catalytic converters, there are some persistent supply side constraints in the oil market that have not gone away over the last year. We are still bullish oil in the medium-term. Buy the dip… if there is one.

U.S. Dollar Index (DXY)

Alright, so $92 target was reached. Now we wait for a little while to see if it can get above $93.50 and confirm the double bottom. From the look of things though, Dollar strength is likely going to become a rather important market theme.

USDZAR

Well, well, well. The USDZAR reversed off the ‘Historic large range’ support and also managed to break the ‘Strong resistance’ trend line. Does this mark a turn of fortunes for the Rand? We think it might just. The key level to watch here is R14.50. If the USDZAR breaks that level (likely dependant on the DXY and whether or not it keeps pushing higher), we could see a move back to the upper end of the ‘Historic large range’ at R15.50.

Bitcoin (BTC)

It seems for now that the $35k support level/zone is once again holding. Until we see a clear break of that level, we remain bullish.

Ethereum (ETH)

ETH is also managing to hold support. As long as the support holds on a weekly basis, we are happy to remain long.

South African trade ideas

JSE Top 40 Index (ALSI)

Over the last few months, every time the ALSI traded in the green support zone, it has proven to be a good buying opportunity. Buying this level provides a good risk-reward trade, with a tight stop loss and a fair amount of upside. Perhaps the brave will be rewarded once more?

BHP Billiton (BHP)

The Head and Shoulders formation on BHP is looking rather tempting for a short trade. The risk-reward ratio on this trade is still very good. Well, if you use the top of the right shoulder as your stop loss, then risk-reward is close to 1:1, which is not that good. If you use the R425 as a stop though, then your risk-reward ratio is closer to 1:4. This is a very tempting trade, but not one that we will be getting involved in, at least until we can discern if last weeks’ madness was just a knee-jerk reaction from the market about FOMC minutes, or if we are going to see some prolonged downside in equity markets in general.

British American Tobacco (BTI)

Not much to do but wait for the trade to play out. Stop losses can be moved to be in-the-money.

DRD Gold (DRD)

DRD smashed through the support level, but held teh 89 day moving average. For now, we’re running for the hills on this one.

Discovery Limited (DSY)

R125 – R130 has been a solid support zone for DSY for about half a year now. Perhaps a move back to the R150 level from here? It is a little concerning that the 200 day moving average was broken, although we think the support zone is a little more significant than the moving average at this stage.

Mediclinic International (MEI)

The healthcare stocks mostly pulled back into their ranges, which takes the longs off the table for now. It’d be interesting to see if support comes in for MEI around R60, or if it breaks through there and finds support on R54. For now, we are sitting on our hands.

Mondi PLC (MNP)

Aaah, the good old ‘break out then die!’ formation. Our MNP trade has stopped out. We’ll keep an eye on it for a potential bullish reversal under the 200 day moving average though.

Old Mutual (OMU)

With some luck, we might see OMU at the bottom of the range (and at the 200 day moving average) again. We think it will make a good buy around R12.30.

Remgro (REM)

Buy orders waiting in the zone between the 50 and 89 day moving averages for a longer-term trend following entry.

Sanlam (SLM)

Another fake-out from a range. We still favour SLM for a longer-term position, although perhaps we’ll get a better chance lower down for an entry?

Sasol (SOL)

If all this ESG and Secunda pollution stuff can get it down to R180, we think its a strong buy.

Telkom (TKG)

If TKG could get back down to the trend line, we think it could be a good buying opportunity.

Truworths (TRU)

Our TRU trade is on the verge of being stopped out. Perhaps TRU tests the R51 level?

Vodacom (VOD)

VOD is still range bound and is looking like a fairly safe short back to the R120 zone.

We keep the best for our clients

We give our clients many more ideas and insights than what we put out on our blog. Move your account to Herenya and join our community of actively trading clients.

*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 dip appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

All time record high on the SPY. The trend is up and $430 is but a stone’s throw away.

Russell 2000 (IWM)

Bullish break of the pennant formation. No new high yet, but it’s looking good for the push to $240.

Nasdaq (QQQ)

Key resistance broken. No new high yet, although it’s looking good for the move to $330.

Dow Jones Industrial Average (IYY)

Another record high close.

U.S. Dollar Index (DXY)

$90.50 resistance is putting up a fight, but overall it is looking good for the move toward $92.

USDZAR

Weekly chart.
The moment of truth… does it bounce back to R14.50 from here?

Bitcoin (BTC)

The $35k level has now held for four weeks. Perhaps we see it bounce up to $50k in the coming weeks? Long positions taken here can use a weekly stop loss below $35k.

Ethereum (ETH)

ETH is also holding its support. We still like the long position here with a weekly stop loss below $2040.

Gold

Gold is a little tricky here. At first glance it looks to be finding resistance and potentially setup up for a move back toward the bottom end of the range (at $1675-ish). The flipside here is that the inflation narrative will be a bullish driver for Gold. That said, it seems that the market is convinced that inflation is here to stay. Unless there is a change in sentiment toward inflation, Gold will likely drift towards the lower end of the range. With an eye on the bigger picture, we think that taking / increasing Gold exposure at the bottom of the range would be a great opportunity. For now, patience is key.

Brent Crude Oil

Oil is trending up and has broken recent highs (and resistance). $75.30 incoming.

South African trade ideas

DRD Gold (DRD)

Our comments on Gold above refer.
DRD is looking very interesting for a longer-term equity entry here. The ideal entry was on the break of R15.69, although between R16.50 – R17.50 could be a good entry as well. DRD is ticking all the boxes for a long-term trend change. In the short-term, should Gold come under some pressure, DRD could come under fire as well. For the longer-term trader, perhaps taking some exposure here with the view to add more if DRD drops to R15.69 support again would be a prudent gameplan.

Mediclinic (MEI)

MEI range broken. Last time it faked out, so some caution is necessary. This time around though, it was a slower, more consistent grind to get and hold above the resistance level. A long position here offers an attractive risk-reward.

Mondi PLC (MNP)

MNP could bounce off the 200 day moving average here. The long trade will be triggered on a daily close above the blue downward sloping trend line. Aggressive traders could try get in on a 1 hour close above the trigger line. Stop loss below R360.

Nedbank (NED)

We’ve been tracking NED for a long while now. It is probably wise to take off most of your long position here and keep a small portion on a trailing stop loss.

Netcare (NTC)

NTC broke out of the range and is looking good for that long-term trend change trade.

Sanlam (SLM)

SLM back at the top of its range. Our bias is bullish, although we need to wait for a confirmed breakout of the range.

Truworths (TRU)

TRU finally got clear of the channel resistance. Now it looks like it is making a flat top triangle. Stop loss at R54.

Woolworths (WHL)

We’re looking for a bullish break from this little range on WHL.

Let us help you with your trading

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If you would like to know more about our trading account, or managed CFD trading account offerings, please do not hesitate to contact us.

*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 Follow the trend appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

After all those ups and downs last week, the market didn’t really move all that much in the end. The SPY has made a nice clear range though that could be traded once broken out.

Russell 2000 (IWM)

Our initial attempt at going long on IWM did not go so well, although IWM has set up again for another attempt at the long trade. A break above $225.76 would trigger a trend following long trade.

Nasdaq (QQQ)

QQQ momentum seems to be fading a little, although it still managed to close above last week’s key level. We still favour the long trade here, with a three-day low as the stop loss.

Dow Jones Industrial Average (IYY)

The IYY setup looks very similar to that on SPY. Once again a simple range break will be the trigger, most likely for a trend following trade.

Philadelphia Semiconductor Index (SOX)

That little range break last week (to the downside) played out and reached its target. The 50 day moving average held up well and now SOX is looking to break back into last week’s range. There is some bullish divergence as well. Overall our thinking here is that a break above 3208 could probably be bought.

Dow Jones Transportation Average (DTX)

The trend is strong with this one! A warning sign here for us is how steep this trend has become over recent months. That said, as long as the bottom channel holds (can be used as a trailing stop loss), we’re happy to take a new long position here in the coming week.

S&P 500 Volatility Index (VIX)

The VIX tagged 20 and was promptly rejected. Overall the market is still clearly feeling very comfortable. Our view is that we’ll likely see a lower VIX and higher equity markets in the week ahead.

US Dollar Index (DXY)

The flag formation we’ve been watching on the DXY has finally given a clear bearish break. It seems that the fear created by talk of higher capital gains taxed in the US were short lived and that the power of the brrr is overwhelming. With all those new Dollars in circulation it’s hard to imagine any other outcome, other than a weaker USD. This break should be supportive of precious metals, commodities in general and emerging markets.

USDZAR

Well, after trying to fight it for a while, it seems that the USDZAR wants to continue to strengthen and fighting the trend is unwise. In fact, as stated earlier, trend following is often the easiest way. On the weekly chart a major support has been broken and it looks like the USDZAR is heading down to that historic large range support. On the daily, we can see that a small triangle pattern has formed. Looking at that triangle more closely on the 4 hour chart, it seems like a decent trend continuation setup. A break below R14.20 would likely see the USDZAR move closer to that much coveted R13.20 level.

Gold

The gold bounce is underway. Although, the 89 day moving average put up a bit of a fight. We remain bullish Gold, unless the $1765 level is broken.

Brent Crude Oil

Brent Crude Oil is holding the 50 day moving average well. We could probably take some longs here, looking for $69.60 as a target price.

Bitcoin (BTC)

So much for the bullish break above the previous high. That goes to show why these crypto’s need to be traded on weekly charts. We remain bullish and hope that this is a deep enough dip to buy. Around $35k would be a really strong buy in our view.

Ethereum (ETH)

ETH has also not followed through as we would have thought. Nonetheless, we remain bullish for the remainder of the year and will use a pullback as a chance to add to longs. If we could see $1420 again, that would be a strong buy for us.

South African trade ideas

JSE Top 40 Index (ALSI)

Oh to be a trend following trader… the ALSI is making a symmetrical triangle and has found support in the ‘buying zone’. Given some risk-on context, our thinking is that we see the ALSI break higher in the coming week and trade to new highs.

FirstRand (FSR)

FSR is back to being nowhere. As long as R49.55 holds, we remain long and patient.

Naspers (NPN)

R3337 is the last line of defence for our long NPN trade. Interestingly, it is also a potential double bottom with some early signs of a bullish momentum shift.

AECI (AFE)

AFE is almost ready to start pushing new highs. We’re switching to a trailing stop loss from here.

Nedbank (NED)

NED broke out of its big range and has pulled back to test it. Once again, this setup is looking really attractive to us. The risk-reward here is very good.

DRD Gold (DRD)

We’re moving our stop loss to entry and letting DRD run.

Compagnie Financiere Richemont (CFR)

CFR broke out of it’s range, but fell right back into it. As long as we don’t see CFR trading below the 89 day moving average, we should see the bullish trend continue.

Anheuser Busch Inbev (ANH)

The 89 day moving average was broken and it seems the move to R1100 is on it’s way.

Blue Label Telecoms (BLU)

Decent opportunity to trade against the trend on BLU here. We’ll have to keep an eye on it to see how it behaves around R3.95. It might be a nice buy down there, although right now it is too early to tell. If you’re not brave (or stupid) enough to short it, the wise thing to do would be to wait for R3.95 and re-evaluate when it gets there.

Bidvest (BVT)

BVT is in a decent looking up trend. We note a hammer candle formation, on a key support level. This could make for a decent long entry for trend following traders.

Dis-Chem Pharmacies (DCP)

DCP trend following long trade. It spent some time in the ‘buying zone’ and has now broken out of a flat top triangle price pattern. Momentum is in the middle of nowhere, but could swing bullish if DCP sees another few up days.

Sanlam (SLM)

SLM is trying hard to change its trend. It is currently testing the bottom of the rectangle it has been trading in for a good few months. Taking a long here would offer an extremely high risk-reward opportunity. The stop loss would be a daily close below the rectangle low, with potential upside targets at the upper end of the rectangle (range) and potentially all the way up to R74 if the rectangle breaks higher.

Sasol (SOL)

We like SOL above the R234 level because the trend has been really strong and it keeps making new highs. It is our feeling that the new highs can be bought into. For context, the weekly chart shows how significant the R234 level is. SOL is a buy here with a target price of R300. If this truly is a longer-term trend change, do not be surprised if SOL is back in the R400 zone within the next 3 years.

Tiger Brands (TBS)

TBS has been range bound for some time now and much like BVT, it has made a hammer candle on a key support level. It is also showing early signs on a bullish momentum shift. This could be a decent long trade to the top of the range.

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

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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.

The post Trend following for the win! appeared first on Herenya Capital Advisors.