This morning we take a brief look at the technicals on the JSE Top 40 and US Dollar Index as well as four potential trading opportunities in Anglogold Ashanti, Richemont, Emerging Market ETF and the Volatility Index.
#1. Technical Analysis JSE Top 40: Yesterday we saw the index test the 51000 level before retreating to a close 50879. In the short term, the momentum and relative strength remains higher however traders should take caution of the channel resistance and swing highs at 51328. Please click here to view the chart: https://www.tradingview.com/x/6AXKNH6d/
#2. Technical Analysis US Dollar Index: Still in my view is the weekly chart of the US Dollar Index. At current levels, the price trades back above the closely watch 97 level and is potentially consolidating for a sharp move higher, that being a break of the tight trading range and a repeat of the price action we saw from December 2014 to March 2015. Please click here to view the chart: https://invst.ly/afq7a
#3. Trade Idea ANG: The share price has declined sharply on the back of a weaker Gold price and stronger Rand. From the recent swing highs of R211 (25/03), the share finds itself below R185 but near support and potentially where we could see a short term rebound. Which are these levels? Provisionally, I’m looking at a dip below 18800c (ANG ADR price of $12.68 x ZAR 14.19) as an accumulation opportunity. Traders could utilize a stop-loss of 17630c with a target of 19000c. Please click here to view the chart: https://www.tradingview.com/x/XkTmkGwi/
#4. Trade Idea Richemont: The share price is showing signs of buyer’s fatigue with the candle structure suggesting that sellers may be having the upper hand as the price struggles to break it’s 200-day moving average while the downward trend line is serving as a cap. In the interim, buyers may have the opportunity to also take a profit.
Short/sell scenario: Traders could potentially look at the share with a view to short sell the share based on the following: A small ‘gap’ and overhead resistance exists at 10947c (sell zone). Utilize 11200c as a stop-loss and 10300c as a take profit target. Chart: https://www.tradingview.com/x/nRB1csnf/
Buy/long scenario: Alternatively and in the interim, with the ZAR back at 14.19 from yesterday’s high of 14.13, we may see the share attempt to break above the consolidation zone and downward trend line. US Futures are slightly lower hence hence we may see a pullback from the last close however this will provide an opportunity to enter a long position. What are the provisional levels? Buy CFR below 10360c Stop-loss: 10120c. Take Profit Target: 10750c. Chart: https://www.tradingview.com/x/ede4WUjI/
#5. Trade Idea Emerging Markets vs US Dollar Index: At the top of 2018 (29 January), at the EM price peak, I took a contrarian view that due to various factors, Emerging Markets were due a sharp pullback. We subsequently saw the region (as a collective) under-perform global markets. Since December 2018, EM has rebounded however a look at the relative chart versus the US Dollar Index sees the price back-testing the breakdown level.
Is it possible that we could see a continuation of EM weakness vs the US Dollar? If so, traders may be afforded another opportunity to participate in the potential downside of EM buy buying new longer dated put options.
Expiry: 20 September 2019
Please chat to the trading desk about the specific entry levels (premium) for this idea.
#6. Trade Idea Buy VIX Call Options: The price action for the S&P500 Volatility Index suggests that we may see a repeat of the prior moves (Jan-2018 and Oct-2018). Traders could consider buying call options as a way to take advantage of a potential spike in volatility. Please see the chart below:
Please chat to the Unum Capital Trading Desk to take advantage of any trading opportunities.
All the best,
Unum Trading Desk Analyst
Tel: 011 384 2923