Not a pretty sight…

In all seriousness though, it has been a difficult year so far and odds are that it is not going to get much easier any time soon. This week we will look at a few ideas, but take them with a pinch of salt because the market is rather wild and unpredictable at the moment.

Offshore trade ideas

S&P 500 (SPY)

We never saw the early week strength we expected last week, but instead had almost one-way traffic lower until Friday. This week we are not willing to make a weekly opening call, but we will say that we still expect that the headline US index trades lower in the coming weeks. Our target currently is the 3400 index level ($340 on the SPY ETF). This level was the all-time high before covid derailed the world in 2020.

MSCI China ETF (MCHI)

We still favour MCHI over SPY at this stage and it seems that we are starting to see a trend reversal here. We saw some good fundamental news coming form the textile manufacturing industry in China over the weekend as well. This strengthens our view that long-term investors should start to allocate capital to eastward facing investments.

Brent Crude Oil

We moved our tertiary trend line just a little lower, although this chart is still ‘make or break’. Recession fears will put some downward pressure on oil, although supply constraints exert force in the other direction. Our base view is that energy in general still has some way to go before it peaks, although a multi-month correction before the trend continues is not outside of possibility. For now we are sitting tight and allowing time and price to lead us.

Gold

Honestly, we can’t really wrap our heads around why gold is not trading higher. We saw a pretty mean hammer formation right on a key support level on Friday… so perhaps this week is the one?

Bitcoin (BTC)

BTC is now trading below the previous all-time high and looks set to test the long-term trend line around $15k. Hold onto your hats if you’re already long, and if you’re not, maybe a buy at $15k is not a bad idea.

Ethereum (ETH)

ETH will take its lead from BTC, although it is starting to look like the time to buy is approaching. As is the case with BTC above, DO NOT USE LEVERAGE with these crypto’s. You are welcome to start nibbling at them, but it is not yet time to buy big. Much more panic and pain has to come before we can really get involved here.

Northrop Grumman (NOC)

Forgive our cynicism, but war is good business for weapons manufacturers. NOC is making its second attempt at a break out higher. It looks like this time it has legs.

South African trade ideas

JSE Top 40 Index (ALSI)

The pressure is on and our view is bearish. We think that there could still be rather a lot of downside in our market over the coming weeks and months (rest of the year) and have a target around 53000.

Sasol (SOL)

This chart will only get worse if oil does not manager to hold its tertiary trend line. We flagged this trend line break a few weeks ago and sincerely hope that you managed to take action in time.

Steinhoff (SNH)

SNH starting to look a little ‘make or break’ here. Remember that the stop loss for this trade is below the long-term trend line.

The Foschini Group (TFG)

TFG is looking like a great short trade once this R118 support level fails.

Shoprite (SHP)

We didn’t draw it, but you can see the Head and Shoulders, right? R191 might put up a fight (and possibly a bounce), but realistically we could see R170 in the coming weeks.

Truworths (TRU)

It’s not looking good for TRU either. High probability setup with a really tight stop on the short trade here.

ABSA Group (ABG)

No doubt there will be those who see the Head and Shoulders on ABG. We think this stock can trade to R136 in the coming weeks. Decent high probability short setup here.

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.

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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 Independence day! appeared first on Herenya Capital Advisors.

Interestingly we say the U.S. Dollar weaken during the last week. We’ve been eyeing a break out from below the current resistance for some time, although the break out has not come. Should we see another week of Dollar strength, that could translate into strong performances on ‘local’ stocks such as banks and retailers. An interesting week no doubt lies ahead.

We remain cautious of global equity markets in general as we are seeing a number of mixed signals. To be specific, the tech space has been probably the primary driver behind market performance over the last few years and it is here that we are starting to see conflicting signals.

Offshore trade ideas

S&P 500 (SPY)

Daily chart.
Nothing too fancy here right now. SPY has been trading in a small range that could offer a decent risk-reward trade when it breaks. At this stage we are agnostic on which way this might break. Probably a slightly higher probability for a break lower, although we will wait for a trigger of sorts before taking any short-term trades here.

Russell 2000 (IWM)

Daily chart.
The IWM is still somewhat of the canary in the coalmine for us. Looking at how it is trading in the range, the fact that it got stuck under the shorter and medium-term moving averages in the middle of the range is something we consider to be bearish. Again, there is no real action for us to take on this index ETF until either one of the range extremes are breached. Momentum is seemingly turing bullish, but there is no high probability entry for us here just yet. So we wait and see.

Nasdaq (QQQ)

Daily chart.
This is where things start to get a little confusing. Well, not so much on QQQ. Looking at this chart we note some bearish divergence. If looking at shorter timeframes, we will likely be able to find a valid short setup as well. Market Breadth is still somewhat weak and if eventually that weakness catches up to the mega-cap tech stocks, this could get really ugly really quickly.

Philadelphia Semiconductor Index (SOX)

Weekly chart.
So this is really were the mixed signals start.

On the left, we have a flat top triangle that has triggered a long trade. There are also signs of bullish momentum and the possibility of a buy signal being generated to support the bullish break from the triangle formation. On the right, we have a rising wedge formation with evidence of bearish divergence. So which chart do we trade? We suppose that given the uncertainty, it would be wise to trade neither of them. It will be interesting to see in a few weeks which one was in fact the correct setup.

U.S. Dollar Index (DXY)

Weekly chart.
The $93 level holds again! There is some bearish divergence too. Perhaps over the coming weeks (leading up to Jackson Hole) we see more Dollar weakness? This would play out well for ‘local’ stocks.

Brent Crude Oil

Oil is still looking very constructive. Interesting to note that the U.S. now buys more oil from Russia than ever before, making Russia the biggest international oil supplier to U.S.. Our view is unchanged. Energy demand is continuing to pick up as the world economy is coming out of lockdown. Supply and demand… as energy demand continues to increase over the next year and supply is not really matching the demand increase… price has only one way to go.

Gold

Weekly chart.
Not much has changed on this chart over the last week. Our view is still somewhat bullish given the ‘inflation is not transitory’ narrative.

USDZAR

We’ve got mixed feelings on the USDZAR as well. When looking at the weekly chart, it appears that we have a decent setup for some longer-term weakness. In the short-term though, should the DXY come off in the coming weeks, we might see a stronger ZAR as a result. In the medium-term though, USDZAR seems to be going through a significant shift of momentum towards weakness. As things are right now, we’d encourage investors to buy USD.

Bitcoin (BTC)

Weekly logarithmic chart.
It might be a little too early to talk, but it looks like after a few fake outs and scary moments, the $35k level held. Onwards and upwards from here?

Ethereum (ETH)

Weekly logarithmic chart.
Looks like that falling wedge formation is playing out. Lots of buying happening over the weekend. Perhaps phase two of the 2021 general crypto moon rally is about to start?

U.S. stock picks

Advanced Micro Devices (AMD)

Weekly chart.
AMD had a huge break out last week. We think that this stock, and other semiconductor and microprocessor manufacturers, could continue to see a decent rally on the back of higher cryptocurrency prices.

Applied Materials (AMAT)

Weekly chart.
AMAT has not broken out just yet, although this setup does look like it wants to break to new highs.

Silicon Motion Technology (SIMO)

Weekly chart.
SIMO also put in a break away week and earns it’s spot on our bullish watchlist.

Five Below (FIVE)

Weekly chart.
A rather decent looking long setup on FIVE as well. We’d likely be buyers above $200 with a trend following, trailing stop loss.

Texas Instruments (TXN)

Weekly chart.
Another semiconductor manufacturer, another bullish setup. A break to new highs would trigger a trend following long trade for us.

Global Blood Therapeutics (GBT)

Weekly chart.
We pointed out GBT as a potential short trade last week. So far so good. Below $26.82 targets $16.59.

Agios Pharmaceuticals (AGIO)

Weekly chart.
AGIO on the way back to the bottom of the range. Not too much meat left in this trade unfortunately, although aggressive traders could sell below the 89 week moving average with a target price at the bottom of the range.

Wells Fargo (WFC)

Weekly chart.
WFC could be setting up a nice bull flag here, which in turn could lead to a decent break out from below the 200 week moving average. This is a stock to watch.

South African trade ideas

JSE Top 40 Index (ALSI)

Daily chart.
All the way to the top of the range again. In truth, this charts looks rather constructive. The highest probability trade here (with the highest possible risk-reward) would be to short it back to the bottom of the range. Your stop loss will have to be right above the highs made on Thursday though. You don’t want to be caught short if this thing breaks out.

ABSA Group (ABG)

Daily chart.
ABG is ticking a lot of boxes for a long trade. A stronger ZAR in the short-term will be a great backwind for this stock (and other banks, financials and retailers in general). Target for the long trade at R150, with a stop loss at R130, makes for a decent 1:2 risk-reward.

Anheuser Busch Inbev (ANH)

Daily chart.
ANH dropping like a stone. We like the idea of buying the R880 support.

Discovery (DSY)

Daily chart.
DSY looks like it is in trouble here. Only a stronger ZAR can save it now (jokes). This chart does look like it wants to go test the R105 level in the coming weeks. Still a greater than 1:2 risk-reward on the table here for the short trade (stop loss above R120, target price at R105).

Shoprite (SHP)

Daily chart.
Retailers have been wonderfully strong of late and SHP is no exception. This looks like it could be a large ascending triangle formation that it building towards a break out. In a strong ZAR environment, retailers might prove to be a good long play.

Transaction Capital (TCP)

Daily chart.
TCP is turning out to be one of those stocks that you always want to buy, but always think that it’s run a little hard and you will buy in a pullback… only for that pullback never to come and you sit on the sidelines wishing you had just bought the stock. From a trend following perspective, it does seem that the opportunity to get on the bus is finally here.

The Foschini Group (TFG)

Daily chart.
No trigger just yet, but TFG is worth having on the watchlist as a potential break out long trade in a strong ZAR environment.

Telkom (TKG)

Daily chart.
TKG offering a nice long entry off the primary trend line. Clear stop loss makes for a good risk-reward trade.

Truworths (TRU)

Daily chart.
TRU also looking like it is going to be a winner in a stronger ZAR environment. Not as clear a setup as TFG, but a volatility based trailing stop loss could be the play here for a small long position.

And that is all we have for this week. As usual, if you would like to know more about trading with us, our very competitive brokerage fees (epsecially on offshore trading) or joining our community, please feel free to contact us and we’ll be in touch.

*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 Mixed signals appeared first on Herenya Capital Advisors.

The charts posted below were all done on Sunday, so they do not include Monday’s trading action.

So, deep breath, clear mind. Let’s look at some trades.

Offshore trade ideas

S&P 500 (SPY)

So much fear and loathing of the selloff during the last week, only to end at an all-time record high. The trend truly is your friend.

Russell 2000 (IWM)

The bias is still bullish here. As was the case last week, there is no trade on this index ETF for us until the range is broken.

Nasdaq (QQQ)

QQQ did not manage to make a new high on Friday, although by the looks of the chart, it will likely make a new high in the week.

Dow Jones Industrial Average (IYY)

IYY also made a record high at the close on Friday. It seems that the market is feeling unstoppable at this stage.

Dow Jones Transportation Average (DTX)

DTX did not bounce off the trend line as we anticipated. It did make an inside day candle formation on Friday though. Given the context of strong markets above, our bias here is bullish. Even though the trend line has broken, we think it might be a fake break out. Time will tell.

U.S. Dollar Index (DXY)

DXY put in a decent reversal on Thursday and Friday last week. Perhaps we see a pullback to the $91.50 zone before the bulls take charge again?

USDZAR

The R14.50 level has been rock solid. We’d like to say that we could see a stronger ZAR from here, although given the events of the weekend, we’re not so optimistic.

Gold

Looking at a weekly chart on Gold. Gold has broken it’s weekly downtrend and seems to have successfully tested and bounced off the previous resistance. Dare we say that we are bullish Gold here? Also, inflation is not transitory.

Brent Crude Oil

We look at both the daily and weekly charts here.
On the daily chart Oil is looking rather bullish and likely to keep pushing to make a new high. On the weekly chart though, we see a hanging man candle formation. This could lead to a pullback similar to the one shown in the first green circle on the daily chart. Thus, for the week ahead we have no play on Oil. We do think that weakness is worth buying into though.

VanEck Vectors Gold Miners ETF (GDX)

Nice buying opportunity on GDX here in our book. Clear stop loss with the potential to catch the start of a medium-term trend here.

Wells Fargo (WFC)

WFC setting up for a nice bullish break out by the looks of it. Depending on your risk tolerance, it may be wise to wait for a confirmed break out before entering a long trade.

Energy Select Sector SPDR Fund (XLE)

XLE giving a nice opportunity to get long in the ‘buying zone’. More conservative traders can wait for a confirmed break out from the short-term downtrend.

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South African trade ideas

Aspen Pharmacare (APN)

APN once again closed above the R168 level, which triggers a long trade with an eye on R185 as a target price. Be mindful though, last time this was a fake break so keep a tight stop loss.

Coronation Fund Managers (CML)

CML setting up really nicely for a push to a new high. The first stop should be gap close, then if it can get above R52, we might be looking at a new high.

Discovery (DSY)

DSY is being a little tricky, although as long as the R120 level holds, we remain bullish. For the range trade to R150, we think DSY offers a great risk-reward.

Truworths (TRU)

This is a technical breakout on TRU… but this also the wild west, so who knows what happens. We are already long here, so we will not be taking another position in this stock.

ABSA Group (ABG)

ABG setup shown a while ago seems to be working out rather well.

Bidvest (BVT)

BVT seems to be setting up for another trend following move, this time aiming above R200.

Gold Fields (GFI)

More ‘hopium’ for the gold bugs. This does look like a decent level to be long from.

MTN (MTN)

What? Someone is in trouble in Nigeria and it’s not MTN? Bullish!
In all seriousness, this looks like a clean trend following break higher.

Nedbank (NED)

No trigger yet, but worth watching this range for a break out.

The Foschini Group (TFG)

TFG looking similar to NED. Again, no trigger just yet, but something worth keeping on the radar.

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.

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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 Focus on the charts 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.

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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 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.

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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 Follow the trend appeared first on Herenya Capital Advisors.

Ironically, the bullish breakouts that took place last week, for the most part, seem to be failing. Perhaps “Sell in May and go away” is rooted in more than just seasonality and superstition? Either way, charts are looking a lot less bullish than they did over the last three or so weeks.

Offshore trade ideas

S&P 500 Volatility Index (VIX)

The VIX has been knocking on 20’s door for a little while now. It’s worth keeping an eye on 20, as a break above it (along with a daily close above it) would probably be a good sell (in May) signal.

S&P 500 (SPY)

So the range break didn’t take very long to not look very good. One good thing that we can take from this is that the high on the hanging man candle is above the $420.69 target price we had on the SPY some time ago. Memes aside, that is a fairly nasty looking bearish reversal candle, right above a key resistance level, after a trend continuation breakout. Combine that with both the MACD and Stochastic starting to turn bearish… well, it doesn’t look good for the bulls. SPY: Sell in May and go away. Come back… when there’s a bullish setup again?

Russell 2000 (IWM)

IWM looked a little better than the rest, although it seems to have failed to break higher too. Momentum petered out, the breakout level didn’t hold and our grand bullish plans have come to an stuttering halt. Perhaps it’s time to become a little more defensive?

Nasdaq (QQQ)

We were a little cautious on QQQ last week as we had some concerns around the Stochastic giving early signs of coming weakness. As it turns out, the small flag formation didn’t really get going all that well and on Friday QQQ closed below the previous high level of $338.19. This is a little worrisome to us. Sell in May. Do we see QQQ back at $310?

Dow Jones Industrial Average (IYY)

IYY looks very similar to SPY and thus we don’t have too much to add to our commentary above. A pullback to the 50 day moving average here would not be out of the ordinary.

Philadelphia Semiconductor Index (SOX)

The SOX chart is getting messy. The 89 day moving average is going to be a key support level here. SOX has been using the 89 as support for a long while now, so a break of the trendline support will very likely lead to a secondary bearish trend. In other words, a pullback lasting a few weeks. Note also that we consider SOX a leader to QQQ, thus the break of the 89 moving average on SOX could likely trigger a larger scale “tech” correction.

Dow Jones Transportation Index (DTX)

DTX could prove to be a great short trade once that very steep trendline breaks. Sell in May… and cover shorts on a medium-term moving average? Yeah that sounds like a decent plan.

Brent Crude Oil

Brent has been trading well inside the small channel. Our thinking is that if we see a bearish sentiment shift in May, we could see brent breaking this small channel to the downside and testing the longer-term (primary) trend support around $56. For now though, we need to wait for a clear signal to act.

Gold

Gold is looking a bit worrisome. The short-term (tertiary) trendline has broken. So far the $1765 level has been holding as support, but both the Stochastic and MACD are starting to signal “Sell in May” (funny that). Our short-term long trades (CFD) in gold stocks have been stopped out and we are awaiting another opportunity. We are open to the idea of a gold rally in the event of a sharp equities selloff, but for now we are patiently waiting for a clear signal.

USDZAR

Welcome back to R14.50. We’re inclined to think that the few weeks spent below R14.50 was a fake breakout… Let’s see what the week ahead holds for us.

U.S. Dollar Index (DXY)

Weekly chart on the DXY here. It looks like the DXY might have formed a bit of a base to trade higher from. Potential narrative here could be “stronger Dollar as investors seek safety during seasonal market rout”? In other words: “the sell in May crowd are making us scared and we want USD and treasuries to feel safe”. Let’s see how it goes.

Ethereum (ETH)

World equity indices: Sell in May and go away!
Ethereum: What is this “sell” of which you speak?

Dogecoin (DOGE)

Dogecoin: Maybe there is some “Sell in May” on the moon? We should go have a look!
A $30bln meme… it’s amazing.

Bitcoin (BTC)

BTC has been a little wild over the last few weeks, but honestly, that is not at all outside of the ordinary. Our game plan and view (and end of year price target) remains unchanged.

South African trade ideas

JSE Top 40 Index (ALSI)

Well just put this ALSI chart down right over here and step away slowly. Sell in May, they say…

AngloGold Ashanti (ANG)

We had some short-term long trades open on gold stocks which were stopped out during the course of last week (mostly at break even, thankfully). We like this bullish setup on ANG though as a very high risk-reward trade. Although the risk-reward ratio on a new long trade here is insanely high, be warned. If that R293-R294 level breaks, it’s good night nurse ANG. Perhaps the better way to play this setup would be to wait for a break of the support level and then to, wait for it, sell in May!?

ABSA Group (ABG)

We’ve seen a decent uptrend for a few months now, although the move is starting to feel a little long in the tooth. By our count, this is now the 6th time this trend line is tested. ABG did close below the trend line and the 89 day moving average on Friday. Maybe the time for the pullback is here?

Astral Foods (ARL)

Bullish setups that make you go “mmmmm”… ARL is looking rather interesting for a speculative long trade. Be careful of not trading too big here, illiquidity could lead to nasty slippage if you need to stop out.

Blue Label Telecoms (BLU)

This bearish setup is looking pretty good. A break, retest and follow through. Sell in May, all the way!

British American Tobacco (BTI)

Oh no, they’re going to ban menthol cigarettes… again. Whatever will the tobacco industry do?
Likely not really care very much as regulators are not moving against tobacco liquids (vape) and that is probably where the most growth is going to come from over the next decade or so. Also, they could keep relying on their totally addicted global customer base..?
Nice range trade here. A weaker ZAR will help.

Investec (INL + INP)

Time to take the money on INL (and INP) we think. Sell in May, book your profits and have a nap. That doesn’t rhyme, but you get the idea.

Tiger Brands (TBS)

The hammer on TBS gave us a day’s worth of bounce. The stock seems to have fallen apart since then. We like TBS for a short trade based on the range break.

Truworths (TRU)

TRU is looking like it could be a decent short around the resistance area here. R30 is some 40% lower than where it is now, so we’re not sure that it will make it all the way back down there. At least, not very quickly. Sell in May though, they say… and a month is a long time in markets, so let’s see what happens.

Transferring your account to Herenya

Did you know that you can transfer your current trading or long-term investment account over to Herenya? It’s fairly easy and significantly cheaper than closing and reopening your positions. You just need to open an account with us and we’ll help you with the required paperwork and admin to move you over. Once your account is with us, we’ll incorporate you in our community and you’ll get access to our ideas, analysis and support. The time to move is now!

*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 Sell in May and go away appeared first on Herenya Capital Advisors.

Bigger picture

Gold

Gold is sitting just above the $1680 support level and is looking very oversold. Although momentum is still pointing firmly down over a longer timeframe, in the short-term we might see Gold bounce from the support here. Perhaps we buy the dip for a retracement to $1750?

Brent Crude Oil

Brent Crude Oil has been super strong ever since the longer-term downtrend was broken. This current uptrend is firmly in place and there is plenty of room for a pullback without it breaking the current uptrend. That said, we’ve been living in hope of a retest of the $60 level, which has not happened. Recent news of extended lower production from OPEC+ drove Brent Crude Oil strongly higher in the last half of last week. The first of our upside targets has now been reached and by the look of things, the other two upside targets (old support/resistance levels) are coming into play. New long trades should probably not be taken here. Waiting for Brent Crude Oil to dip back into the ‘buying zone’ between the 10 and 20 day moving averages would be the better way to play this.

USDZAR

There are two ways to look at the USDZAR right now. The first is that there is overhead resistance looming around the R15.50 – R15.60 zone. We could see a potential reversal from those levels back towards the R14.50 level. The second is to consider the long standing downtrend line that was broken on Friday. Provided the USDZAR can get up and clear of R15.60, the R16.16 level becomes a target. Should it break above R16.16, it would seem that the long-term trend of ZAR weakness will return.

US Dollar Index (DXY)

A little bit of whipsaw, but the falling wedge is playing out. Watch for resistance and a possible reversal around $93. Above the 200 day moving average and things will start to get really interesting.

S&P500 (SPY)

The channel held! Two very bullish looking candles in a row, right on that channel support as well. The ‘buy the dip’ crowd is relentless. The trade would be to take a long back to the upper end of the rising wedge. Seems our $400 level is back on the table.

Russell 2000 (IWM)

Another stock index chart, another massive hammer! There are a lot of proper hammer formations all over the market after Friday’s reversal. In the case of IWM, it’s off the 50 day moving average. We could see a bounce here and a return to the uptrend.

Nasdaq (QQQ)

Hammer time! Maybe not as nice as the one on SPY, although from a fairly oversold position, QQQ looks likely to bounce back to the 50 day moving average from here.

Philadelphia Semiconductor Index (SOX)

The hammer here looks fairly good too. This time it’s off the bottom channel support and from an oversold position. Again, the MACD is still showing longer-term bearish momentum, although that is not enough to outweigh the hammer at this stage. The Stochastic is slightly oversold, which could increase the power of a bounce.

Dow Jones Transportation Average (DTX)

DTX popped back into the channel and is a stone’s throw away from all time highs. A break above the 1365 level would indicate more record highs are on the way.

Bitcoin (BTC)

Well, I’ve gotten it wrong on the cryptocurrencies pretty hard over the last two weeks. Overall this chart setup looks constructive. With some ‘risk on’ in general markets, it would be nice to see a new high on BTC.

Ethereum (ETH)

ETH tested the break out from the previous all time high. Subsequently, the support level held (and did so with a nice hammer candle formation) and price bounced higher. Some ‘risk on’ sentiment would likely do well to drive ETH higher.

South African trade ideas

Top 40 Index (ALSI)

The trendline is holding well. Until the uptrend line is broken, there is no real reason to be looking for shorts on this index. A break above Tuesday’s high would likely make a good long entry.

Transaction Capital (TCP)

TCP is a long standing favourite pick, although we’ll not delve into that today. TCP has broken out of a rectangular consolidation and above a key resistance level. Momentum seems to be in its favour as well. Overall, picking up some TCP on the break out offers a good risk-reward entry on a high quality stock.

Truworths (TRU)

TRU is still consolidating inside the rectangle around the key resistance level. Initially the thinking was that we might see a reversal around the resistance level and a move toward the lower end of the large range. Although that is still a distinct possibility to stay open too, it now seems more likely that we will see a break higher out of this rectangle. Either way, waiting for confirmation is advised. Both trades offer good a risk-reward and thus a pure mechanical trade based on a directional break from that rectangle is the way to play it.

Tiger Brands (TBS)

This setup has been brewing for a long time. It has given many chances to trade the range, although the trade that I am waiting for is the breakout of this range. For now, still nothing to do but wait for a directional break. Keep this one on the watchlist.

Standard Bank (SBK)

SBK rested its previous resistance (now support) level for a solid two weeks and seems to be holding well. A long entry here with a trailing stop loss (and a hard stop below R130) is the call.

Sasol (SOL)

A little bit of patience can go a long way. Oil has been charging and looks sets to keep charging. Subsequently, there is likely no reason to get out of long positions on SOL. R234 might put up a bit of a fight, but once clear of that, we’re looking for R300.

Netcare (NTC)

NTC is still looking rather constructive. Another day or so of higher prices and the momentum indicators will have generated all the bullish signals they can. Combined with the small downtrend break, this is a fairly good setup.

Nedbank (NED)

NED is in the process of establishing a new longer-term uptrend (as are many stocks on the JSE actually). For now though, there is still nothing to do on NED. This rectangular consolidation is yet to give a trigger, but is most definitely worth keeping a close eye on for a signal.

MTN (MTN)

MTN has, as always, a host of problems. The most seemingly insurmountable of all, and also only at this very moment because MTN are literally always in trouble, is that they need to register 37 million of sim cards in Nigeria in four weeks. Honestly, I don’t see how they are going to do it, but, do not underestimate the impact of a higher oil price and an emerging market basket buy order. A break out of the small rectangle would offer a great risk-reward long trade.

Investec (INL, INP)

First the fake out, then the breakout! This looks like the start of a long slow grind toward R58.

Harmony Gold Mining (HAR)

The short trade is not looking very good anymore on HAR. It does look like a spinning top that tagged the 50 day moving average, which could be seen as bearish. Although HMY closed near the highs in the US, so odds are we’ll stop out of shorts on Monday. A bounce in the gold price, and keeping the USDZAR in mind, could send these gold stocks aggressively higher.

Exxaro (EXX)

EXX is in a nice strong uptrend with a bullish engulfing candle after a short pullback. Add a potential momentum based buy signal and you get a hard stop under R160 on a long trade with an ATRx2 trailing stop. You could probably take a chance and load a buy order around the 20 day moving average and with some luck, early morning illiquidity will get you in at a decent price.

Dischem Pharmacies (DCP)

It looks like DCP has made a bull flag with support right on the 50 day moving average. We’ve seen the 50 day moving average has been solid support the last five times it has been tested (four if you only count those above the 200 day moving average). There is also the makings of a momentum based buy signal. The trade would be to go long once the bull flag breaks.

Coronation Fund Managers (CML)

CML looks to be in the process of establishing a solid uptrend. Right now it is in a rectangular consolidation. I would be looking to go long once the consolidation is broken. Emerging markets will probably be a big winner from ‘risk on’ sentiment, which bodes well for CML.

Bidvest (BVT)

BVT has gotten clear of its consolidation as well. Long here with a stop under R165.

BID Corporation (BID)

The short trade on BID has been stopped out. It has broken out of resistance with some flair too! Long and strong from here, although I would not chase it. Rather wait for a retest of the R300 level.

Brait SE (BAT)

The BAT trend change is not going so well. For those that like really crazy high risk-reward ratios and aren’t scared to take a stop loss, taking a long at these levels could be a great trade. If R2.35 breaks though, I guess numbers can get smaller.

Gold Fields (GFI)

The same commentary used for HAR applies to GFI. Technically the Head and Shoulders pattern has still not been invalidated and Gold could put in a decent bounce without GFI breaking the right shoulder. Our stop is above that right shoulder, so there is really nothing for us to do here right now but stick to the game plan.

Aspen Pharmaceuticals (APN)

APN is on track. Good trades take long to play out. Still looking like we’ll see R165 to R170 in the weeks to come.

*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&P500 (SPY)

The rising wedge formation is starting to look more and more ominous. A break below both the 50 day moving average and the trend line support, could see SPY testing the 200 day moving average around $345.00.

Nasdaq (QQQ)

By the look of things, QQQ has broken the bullish channel is has been trading in since the bottom of the “COVID-crash”. It has now taken out the 50 day moving average as well as a significant trend line. Support comes in at $280.00.

Dow Jones Industrial Average (IYY)

It seems that the second target will not be reached in this move after all. IYY has also come down to test its 50 day moving average and a break below will open a move toward $86.00.

Russell 2000 (IWM)

Small caps have been outperforming larger caps for a solid four months, although it seems that the party has finally come to an end. The tertiary trend line has been broken. Although the 50 day moving average has not yet been tested, the secondary trend line has now become a target.

Volatility Index (VIX)

The VIX failed to break below 20. Over the last year or so, each time the VIX has bounced off the 20 level, it traded to resistance around the 40 level. A move towards 40 in the coming weeks would likely mean a move lower on most equity markets.

Dollar Index (DXY)

Looks like the DXY had a fake break lower last week. It failed to make a new low below $89.00 and popped right back above the 50 day moving average. This puts the falling wedge formation squarely back on the table with the 200 day moving average is the first target. Much of the weakness we saw in Gold on Friday was likely driven by the sharp move the DXY made on the same day. A further push of Dollar strength will continue to put pressure on the Gold price. From a momentum perspective, it seems that the DXY is becoming more bullish.

USDZAR

A stronger Dollar spells a weaker ZAR. Keep an eye on that strong resistance (trend) line though. Once that down trend is cracked, we could see a fast move up to R16.16.

Bitcoin (BTC)

Well, hat sure is tasty…nom, nom, nom. Last week I was looking for higher crypto prices in general, although a decent spell of “risk-off” ruined the party. Leaning on historic performance, and based on the assumption that we are in fact in the fourth (or parabolic) year of the halving cycle, we’ve seen that during the parabolic years BTC can easily make 40% corrections. Thus, considering that “risk-off” is likely going to get a little wild next week, a 40% correction in BTC could see BTC scrambling for support around $35k. Overall my view has not changed and nor has my end of year target of $200k. In the short-term though, things could get a little bumpy.

Brent Crude Oil

Oil has had a very good run, although it is starting to look like a pullback is due. Over the medium-term I still believe that we will see strong oil prices, but in the short-term it is due a correction.

iShares 20 Plus Year Treasury Bond ETF (TLT)

TLT has put in a strong bounce. Should this bounce keep up and TLT test its 50 day moving average, we could see a relief rally in Gold.

International Gold ideas

Gold

The key support was broken in a big way on Friday. The next “big” support level comes in around $1680.00. From a trend perspective though, the 50 and 200 day moving averages have formed a “death cross”. Momentum wise things are not looking good either. Further, should the DXY rally, Gold will come under pressure. If the Bond Yields come down again, we might see Gold bounce a little, although overall, for those trading Gold on the long side, it is not looking very good at all. The most probable scenario for me here is that we see Gold test the support at $1680.00 before we see a bounce.

Gold Fields (GFI)

The break is clear. Look out below! Full target here is $5.00.

Barrick Gold Corp. (GOLD)

This stock has come off very hard over the last two weeks. It might be a little overdone here, although from the look of things, we likely won’t see a bounce before the $16.00 level is tested. There could be a good counter-trend trade here, although we’ll have to wait for a small consolidation or a reversal pattern of sorts before we can get involved.

Newmont Corporation (NEM)

NEM is the world’s largest gold miner and if those support levels break, it could be in the world’s largest trouble. $54.00 has been a support level in the past though, so let’s not get too excited too fast. We need to wait for the break below the key support (zone) before we can rush into any new short positions.

VanEck Vectors Gold Miners ETF (GDX)

There are two ways in which this can play out, and perhaps this chart does a better job at communicating the current view on Gold in general. Much depends on Bond Yields and Dollar strength. We could see a brief relief rally come in a drive GDX up toward the down trend line before the next leg lower (green path). The more likely outcome is that GDX follows the orange path. This would simply mean that when markets open, the support breaks and GDX keeps trading lower.

VanEck Vectors Junior Gold Miners ETF (GDXJ)

As above, things are not looking good for the Junior Gold miners either. Death cross, bearish momentum, break of key support… it looks like this ETF is about to fall off a cliff.

DRDGOLD (DRD)

DRD is looking pretty bad. There is some support around $8.00. After that the next major level is $6.00.

AngloGold Ashanti (AU)

Very clear break of the previous low price. Simple trend following dictates that price is headed lower. Much the same as the rest of the Gold stocks, the momentum oscillators are all triggering sell signals as well. This is a very nice short setups with a really tight stop loss and high risk-reward ratio.

Agnico Eagle Mines Limited (AEM)

AEM is looking very oversold, although we know that a stock can remain oversold for long periods at a time before they bounce. If the $55.00 level breaks, it opens a $45 price target.

South African trade ideas

Top 40 Index (ALSI)

It seems that the trend might be running out of a bit of steam. All eyes on the tertiary trend line. If that trend line breaks, we could see the ALSI pull back to the 200 day moving average in the coming weeks.

Netcare (NTC)

NTC could be offering a really nice, high risk-reward long entry here. Be careful though, because if it breaks below R13.50, odds are that it’s going to have another go at the R12.00 level.

Shoprite Holdings (SHP)

Be patient here. Waiting for a potential long around the R125.00 level is the current game plan.

The Foschini Group (TFG)

The trend line has broken, which triggers a short trade to the 200 day moving average. A short trade here is against the trend, so keep a tight stop loss.

Truworths (TRU)

TRU is battling to get through the resistance at R50.20. This offers a high risk-reward short trade down to support around R30.00.

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

*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 Trading Gold in trying times appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P500 (SPY)

It looks like there is a bit of a rising wedge forming on SPY. As things stand now, there is no trade setup here just yet. Some patience needed, but it is worth watching in order to see how this wedge plays out. Ultimately, the SPY is still in its large channel and until that channel is broken, the up trend remains intact. Although there is no trading signal here, some caution is advised and from our perspective, the risk is skewed toward that downside.

Nasdaq (QQQ)

As is the case with the SPY above, the trend on QQQ is still firmly up. That said, momentum oscillators are indicating that bullishness is starting to wane. Again, patience needed. There is no real reason to get into a trade on this index and some caution of taking new longs in tech stocks is advised.

Russell 2000 (IWM)

IWM does look a little more bullish than the other major U.S. indices, although here too momentum is somewhat directionless. Our eyes are on the red trendline for two reasons; 1. it appears to have bounced off the trendline and might provide a decent entry for a long trade to a new high and, 2. should that red trendline break, it opens up for a very high risk-reward short trade. Our bias is toward the downside and thus will likely not participate in long trades on this index from here.

Gold

Well there you have it… a death cross on Gold. Now the question is; did Gold make a double bottom around $1765? From a momentum perspective, it doesn’t seem that way. A break and daily close below the $1765 level would indicate further downside. Should the support fail, $1680 becomes a possible price target. Conversely, should the support hold and Gold manage to break above $1800, the double bottom long trade comes into play.

Brent Crude Oil

Looking at a weekly chart, it appears that Oil is in the process of making a shooting star candle formation. Oil has run very hard and can put in a decent pullback, without nullifying the current uptrend. This candle formation on the weekly Oil chart has been very reliable as a short-term reversal signal in the past as well. Perhaps we’ll see Oil dip below the 200 day moving average before resuming the uptrend?

Dollar Index (DXY)

The falling wedge (and Inverse Head and Shoulders) that we’ve been tracking is starting to look more and more like it is going to fail. Momentum is starting to turn bearish again and the DXY can’t seem to get clear of the 50 day moving average. Both the MACD and Stochastic oscillators have generated sell signals, thus, should the green trendline break, it would seem that there is more USD weakness on the cards.

USDZAR

That R14.50 level is still holding strong. The trend is still down though and should the DXY (above) break lower, it’s rather likely that we see the USDZAR below R14.50 in the coming weeks.

Ethereum

ETH is not rallying as hard as BTC, although the previous all time high was taken out two weeks ago and it looks set to keep trading higher. Should there be a correction or pullback to $1420, that could be a great opportunity to buy ETH. Generally we see cryptos rallying for four to seven weeks, with consolidations (or corrections) lasting between three to five weeks during these parabolic years. Thus, there is no sense in chasing it, even if it does trade to $2400 in the next two weeks. Rather wait for a correction and a high probability setup, or look on lower time frames for opportunities to get in. ETH is lagging BTC for now, but eventually will catch up.

Bitcoin (BTC)

BTC is leading the charge for crypto’s. Talk of BTC being a viable alternative to Gold is starting to circulate, large corporates are starting to buy BTC to hold it on their balance sheets, regulators are starting to think more carefully about how to class crypto’s and what their place in the financial system is… the mass hysteria is beginning. $68k by the end of the week? Just remember, don’t take massive risk. Treat it like a normal stock and make sure that you have a risk management plan.

South African trade ideas

Anheuser-Busch Inbev (ANH)

High risk little long trade on the table here. The risk reward is almost 1:4. The idea is that the trade either works almost immediately, or not at all. We have some buy signals lining up on both the MACD and Stochastic oscillators, as well as a short-term trendline break. An ATRx2 trailing stop loss would likely work best here.

Aspen Pharmacare (APN)

The APN bull flag was broken and retested. Nothing really to do on this trade other than stick to the stop losses and wait for the trade to work out. Once APN gets above R150, an ATRx2 trailing stop loss would likely be the best way to minimise risk on this trade.

BID Corporation (BID)

This is the same short trade idea as last week. The stop loss remains at R300 with the price target at R240.

Bidvest (BVT)

BVT has formed a large rectangular consolidation above the 200 day moving average. In the very short-term, it seems as though BVT is setting up for a move back to the bottom of the consolidation. This presents two high risk-reward opportunities. The first is a short trade back to around R150 with a stop loss above R180. The second would be a long trade on a break above the upper resistance of the green rectangle, although by the look of the long wicks of the candles in the zone, we think it unlikely that we see a break higher in the next few weeks. Thus, our bias is short.

GoldFields (GFI)

This Head and Shoulders formation is ominous. There are some support levels marked out in blue, which together make a zone of support. Should that zone of support fail and price get and hold below R117.50, price targets as low as R60 come into play. A stronger ZAR and weaker Gold price would be a key driver here. Also worthy of note is that both momentum oscillators have generated sell signals.

Harmony Gold Mining Company (HAR)

Not as ultra-bearish as GFI, although HAR has broken a key support of its own. Downside targets are marked out on the chart in blue. A short-term, counter-trend bounce to R61.50 (ish) could make for a high risk-reward short entry (if it gets back up there).

Standard Bank (SBK)

SBK is rather interesting. Although not on a volume spike, it seems to have made a hammer candle formation on a key support level. This is rather bullish. It would be slightly better if we saw a spike in trading volume, so considering that was not the case, it scores a 4/5 on the bullish-candle-o-meter. There are mixed signals though. The candle formation might be bullish, but the momentum indicators are all in a bearish configuration. Well, not entirely… the Stochastic has generated three of four sell signals, while the MACD has generated one of two. This puts us dead even… with four buy signals and four sell signals and another three undecided. Technically that means no trade. Very high risk traders who are disciplined enough to stick to very tight, or intraday stop losses can likely take a long position here, should we have a stronger ZAR by the time markets open locally on Monday. Swing traders though, have no trade setup here.

The Foschini Group (TFG)

TFG has broken a medium-term trendline and has generate a few sell signals on the momentum based oscillators. A short trade with a stop at the two-day high offers a great risk-reward.

Telkom (TKG)

TKG is showing early signs of losing bullish momentum, although the fat lady has not sung yet. There is a potential bull flag setup, but it has not triggered just yet. Worth keeping an eye on in the coming week.

Truworths (TRU)

After a fake break above R50.20, it seems that TRU is heading toward the bottom of the range once more. Sell signals triggering on the oscillators and poor trading updates from the retailers to boot! A short trade here offers a great risk-reward.

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

*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 A dose of patience needed appeared first on Herenya Capital Advisors.

Offshore trade ideas

S&P 500 (SPY)

Last week when I looked at the SPY, I noted a trend line break. Paired with the VIX sell signal generated in the previous weekly game plan, I took a very cautious approach. This view has not changed. Although the SPY went on to make a new high, I still feel that risk is elevated here. For now, there is no setup for me to trade on the SPY either. Therefore I am still in ‘trade half size’ mode as the overall market is feeling very ‘risky’ at the moment.

Dow Jones Industrial Average (IYY)

I’ve said it before and I’ll say it again… the good setups take a long time to play out. As far as technical trade ideas go, IYY serves as a good example of that. The $98.50 and $103.00 targets are born of a Fibonacci retracement and projection. The first target of $98.50 has arguably been hit. The second (full) target is at $103.00. I guess we’ll see how it goes this week. Odds are good that markets come storming out the blocks this week, so for now I am not discounting the possibility of the full $103.00 target being hit.

Dow Jones Transportation Average (DTX)

I left the channel on the DTX chart for a few reasons. The DTX has broken out of the bottom of the channel and is now retesting it, and DTX has not made a new high. It is perhaps too early to tell right now, but this could be the making of a decent bearish setup. One to keep an eye on.

DTX vs IYY

According to the the original Dow Theory; when both the transportation average and the industrial average make two or more consecutive lower highs and lower lows, we are in a bear market. This is not the case right now as you could argue that IYY made a new high. That said, it is most definitely worth noting that DTX did not. Again, no real signal just yet, but something to keep watching.

Brent crude oil

Less than 50 cents away from the $60.00 target. I’m going to call this one ‘target reached’. From here, trailing stop losses with an expectation that the up trend continues.

Gold

The key support (both horizontal support and the 200 day moving average) has been broken. Things are not looking good for gold right now. Perhaps once we see some more brrr this might catch a bid again. For now, gold is looking pretty weak. Perhaps we’ll see some support at $1775?

Dollar index (DXY)

Both the falling wedge and inverse head and shoulders seem to be playing out. We saw a rout of Dollar weakness on Friday, so the question now is whether or not that continues in the week ahead. For now, the $94 target remains in place, although is the 50 day moving average is broken, we could see the current primary (down) trend continue.

USDZAR

Same old USDZAR chart, still no setup. We’ve go to be patient with this one.

Dogecoin (DOGE)

It’s hard to take Dogecoin seriously, although it was hard to take BTC seriously at the beginning too. Either way, this is looking like a fairly strong setup. Should BTC pump this year (which I expect it will), Dogecoin will likely do very well. I like this setup on Dogecoin for a long.

Ethereum (ETH)

The previous all time high has been broken. A pull back to the $1420.00 would be really nice to see for a great long entry. That said, with a (wide) trailing stop and a rationally sized position, this can likely be bought with the intention to hodl.

Bitcoin (BTC)

Buy the BTC break above $42k, but be responsible and take it small. There is a $12k wide stop loss on this setup (below $29.5k). Manage risk first, worry about how cool rocket rides are later.

South African Trade ideas

Top 40 Index (ALSI)

The trend is your friend. It looks like the ALSI should go up to make new highs.

British American Tobacco (BTI)

BTI is still range bound. Perhaps the best game plan here would be to wait for a possible reversal below R500 again?

Harmony Gold Mining (HAR)

Sticking with purely technical trade ideas, HAR is on the last line of defense. A break below R61.40 could be a great short trade with a stop loss above R70.00.

Capital & Counties Properties (CCO)

CCO break above significant resistance in the form of both horizontal resistance and the 200 day moving average. The potential for a medium to longer-term trend change is on the cards. Stop loss below the bottom of the recent range.

BHP Billiton (BHP)

Makings of a bull flag on BHP. A break higher here would not only be our of the bull flag, but also off the 50 day moving average. This is also a very high risk-reward setup.

Clicks Group (CLS)

The blue trend line is still holding. Perhaps a trade back up to the resistance at R270.00 with a stop below R240.00?

Gold Fields (GFI)

The mother of all Head and Shoulders patterns? This could drop all the way to R60.00 if Gold comes off, the ZAR strengthens and there is a mild amount of panic among GFI longs. Let’s see how it plays out.

Investec PLC (INP)

INP is lagging the other banks. A break above this resistance line could see it catching up pretty quickly.

Mediclinic (MEI)

Nice little range break. Can MEI catch up to NTC? Blocking out the noise and sticking to purely technical trade ideas… this looks like a long to me.

Reinet Investments (RNI)

RNI is in a range between R262.00 and R290.00. It’s offering a decent risk-reward on the long trade here.

South32 (S32)

Not the world’s best setup, but some fairly clear bearish divergence. Perhaps a break below the 50 day moving average can serve as a nice entry signal for a short trade?

Sanlam (SLM)

SLM has been on my watch list for what feels like an age now. On Thursday the buy signal was finally triggered. I think we see a decent rally here and perhaps even a medium to longer-term trend change.

The Foschini Group (TFG)

No set of technical trade ideas will be complete without considering at least one candle formation. TFG is showing what could turn out to be a shooting star.

Truworths (TRU)

TRU is also showing what might turn out to be a shooting star candle formation. Here we see the (potential) shooting star, right under a key (long-term) horizontal resistance level. The retailers have maybe just gone too far too fast.

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

*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 Technical trade ideas appeared first on Herenya Capital Advisors.