I started trading a small account on the JSE in 2003. In 2011 I opened an offshore account. I have always had an absolute fascination with markets and a desire to try and work them out. This of course will never happen and even the brightest minds have blown up accounts and left the markets. However, back then, besides my fascination, I guess deep down, my idea was to have a side hustle that could spin off some cash so that I could escape the corporate march someday. That was always my aspiration as a young and free 20-something-year-old. Now, almost 20 years on, I have a wife and two sporty young bright boys. I have just left the corporate world after 6 years at Unilever and 15 years at SAB-Miller / AB-InBev. I work in a smaller organisation with exciting growth prospects but of late I have been thinking a lot about time and purpose.

The late Van K. Tharp, who recently passed said the following on episode 76 of Steven Goldstein and Mark Randall’s The Alphamind Podcast:

If you could have anything in the world, what would it be?

They might say: “I want $1 000 000”.

If you then asked them, “If you had that, what would it get you?”

They might then say: “I would be able to buy this, this and this.”

If you then asked them: “What would that get you?”

They may say: “I’d feel more secure.”

If you challenge them further and ask them what security would get them, they could say something like: “I’d feel more peaceful and happier.”

What if you could get peaceful and happy first?

Back in my 20’s it was all about a dreamier future. In mid-life, my wife and I find ourselves searching for a larger home so our boys can live out the rest of their school years. After that, they will be gone, and so will the school fees, and the nest will be empty and I will be in the next stage of my life. So, what am I actually saving for?

In 2018, Tom Canfield, a trader of 20 years, lost $500k in 1hr. It took him 18 months to make the money back and 3 years on, as he relayed the story on The Alphamind Podcast (Episode 62), the emotions were still stirred up. He returned to the podcast a year later (Episode 84) after having had a heart attack. On this podcast he spoke about how he didn’t realise how much of a toll full-time trading had taken on him. He was also always chasing some dream of a ski house in Aspen where he and his wife and kids could live someday. As the kids grew up and left home (and the private school fees and sports clinic fees lifted), he let go of this dream and bought in a new state closer to his kids. He is much more fulfilled, peaceful and happy.

Turney Duff worked on Wall Street and was enormously successful. Unfortunately, he got hopelessly addicted to cocaine and his career eventually came crashing down as he lived the high life on Wall Street. He wrote a book telling his story: The Buy Side: A Wall Street Trader’s Tale of Spectacular Excess. Now divorced, as he relayed his story to Aaron Fifield (Chat With Traders, Episode 106), he stated that he went from being a guy who wanted to live the good life to a guy that wanted to live a good life. He states that when he made this shift, that’s when it all clicked for him. He now lives in Long Island, 40 miles outside of the city and 2 miles from his daughter. He writes and has a simple life, paying $1300 a month for rent, barely gets by and just tries to be a good father. He then goes on to state that he has never been happier!

I think it really is dependent on where you are in your life but my message to you is: know your purpose as a trader or investor. Is it to teach? Is it to raise cash to help Ukraine? Is it to feed your ego? Is it to gain some validation on Twitter? Is it to get filthy rich? If so, what will you do then? Know yourself and know your purpose, first and foremost. Don’t postpone contentment. Be obsessed about markets but have balance outside of that. Live each moment in life and try to do something good for others. Life is short.

Resources have been going higher even before the Russian invasion in Ukraine. In part because they were hard hit after the commodity boom leading to 2021. They’ve since found their respective bottom. The War has been just a catalyst and further pushed them even higher. With continued rising commodity prices. Miners will rise in price in anticipation of higher profit and higher dividends over the next few years. Miners with the cheapest holes, with low debt and high cash levels will be the biggest benefactors of rising commodity prices.

Natural gas

Oil

WTI

Brent

Platinum

Gold

Lazy System update

We have a stop loss triggered. The ETF closed below the 30-day EMA as the Naspers & Prosus got hammered by the market last week. Going to be exiting the trade at the open on Monday

Amplats

The last 3 days of the past week was quite bearish. With a reversal pattern of a bearish engulfing candle. I think the market is about to shake of it’s first set of “weak hands”. With bullish conditions I think the reversal pattern is as a result of a stale bulls from the commodity super circle boom seeing profits for the first time since March 2021. Some people were caught and set with a losing position for a year and would be happy to break even or take the profits they haven’t seen in a year. We could see the market come to the R2237 resistance and provide good buying opportunities to pick the “dip”. I will be looking for a reversal pattern back to the upside this week. To raise my stop and add to my position.

Northam Platinum

The stock found some selling at the R259. I’m waiting the break of this level on the up side to then raise my stop loss and add to my position. I think will have a strong rally once the stock breaks R276.50.

Anglo Gold

The broke out and retested the resistance and held it well as support from the other side. I raised my stop loss slightly to just under the 50-day EMA to R321.05 reducing my risk to -0.22%. I will be watching the price actions for an opportunity to raise my stop and add to the position.

Exxaro

The stock has been moving to higher boxes I held off in adding to my position when I raised my stop loss to R183.32 though my stop loss is a break even. I eexpect the market to rested the R197 resistance. But if the current base holds up. I will raise my stop loss to just below the gap and drive candle to R200, and add to the position

Sasol

As oil continues to make new highs Sasol continues to benefit from that. The stock saw a bit of sell of last couple of days, coming to perhaps retest the R255 resistance. I’m waiting for the stock to break R398 to look for a place to hide my stop loss.

S

Sibanye

Sibanye came with strong interim results. Increased earnings and declared a dividend. Trading at 6-7x PE ratio. With rising platinum and gold price. The company will likely sell in rising price. The stock looks quite cheap indeed. I’m waiting for last Wednesday’s doji which was then engulfed on Thursday to be invalidated with a close above R76.45 to look for a higher place to hide my stop loss perhaps just below the 50-day EMA around R60.40

Kumba Iron Ore

The stock got sold off quite a bit down to the 50-day EMA, and it held strongly. Now I’m waiting for a close through R668.85 to start building a position. I expect the stock to have some reaction at R730 & R790. I will be looking for places to hide my stop and perhaps add to the position, but for now I wait.

Goldfields

The stock moved to a higher box, not without dunking to the lower box. I raised my stop loss to R194.36 raising my position to just above breaking even at +0.28%. I will add another 1% risk to the position with 2.6 shares

Harmony Gold

We have a golden cross on the stock. It close bang on the resistance on Friday. Perhaps it was genuine resistance or sellers were saved by the bell. I’m waiting to see how the market reacts this week. If it continues to break. I will start building a position on the stock

Glencore

The reached it ascending triangle short term target with no surprise found some selling at the target level. I except the R98 level to hold up a bit as it become the new area of memory for the market. When the market breaks this level I will look for another place to hide my stop loss. And possibly add to my position

Retail

Clicks

The stock came back above the 50-day EMA breaking the R304 resistance. I will build a position on the stock, with an initial stop loss at R290.60. Putting 1% risk with 5.6 shares.

MTN

MTN perhaps provides a much better risk reward play on the Russian Vs Ukraine. As it is not a direct play on oil prices but merely an indirect play through its exposure to Nigeria (their biggest market). The stock broke the R192 short term resistance. Only to find some selling at the long term R200 resistance to re-test old resistance. It held on Friday. Not sure if it was saved by the bell or buyers came in to buy the retest.

Portfolio Summary on 6 March 2022

Capital invested: R10 303.77
Current Balance: R9 477.36 -8.02%
Current Equity (Balance including paper P&L): R24 223.38 135.09%
Current P&L : R14 746.02

Village Trader Equity curve Vs Benchmark STX40

Closed trades statistics and distribution

Open positions statistics

Thank you for reaching far. For any questions feel free to email me at njabulo@villagetrader.co.za

MTN

The MTN stock has had a strong run up post the COVID-19 crash in 2020. Smoothly making higher highs and higher lows. The MTN March 2020 lows can’t only be put on the heels of the COVID-19 crash. They had other issues they were battling with, particularly with the Nigerian government. That relationship seems to be behind them now, the listing of MTN nigeria seems to have certainly been helpful.

MTN in my portfolio

I have been holding MTN in my portfolio for just under a year now. Benefiting from the base breakout rally. The stock is currently 25% of my portfolio at the moment, contributing more than half of my profits. I picked up the stock at R88. Here was my view on MTN then.

Looking at the long term technical picture

Markets and memory

Markets have memory, they turn to remember prices they rejected before. Old resistance levels turn to hold up especially in the longer time frames. MTN in its rally showed no respect for market memory, at least not in any significant manner. R178 had been that the market respected fairly regularly before the stock went for a nose dive.

Market remembered this level and held the stock off for 2 months. It took MTN Nigeria results to break this level. Market has tested R178 from the other since the breakout. Held it nice with a combination of a doji reversal candle and a bullish engulfing candle as it was approaching the 50 day EMA.

I’m currently waiting for the stock to take the current relative 52 week high.. The company has results coming in 3 weeks, perhaps there lies in a catalyst that will propel the stock higher. If we get a new high close on the daily chart above R192. I will increase my holding in the position.

Wind at the back

Tensions between Russia and Ukraine have escalated to military war. Commodity prices rallied as the tension heightened. Brent crude made all high hitting $102.09. MTN’s largest market is Nigeria which also happens to be a large supply of oil and gas. Largest in our continent & ranks 11th in the world on oil production. As NIgeria benefits from high commodity prices amid the war, so does MTN, through it’s Nigerian exposure.

Because MTN is an indirect play in the war story, as it’s neither a supplier nor consumer of oil. It’s a much better risk reward opportunity. As it stands to have much less volatility compared to the more direct plays like commodity stocks such as miners & petroleum stocks.

It’s currently in a nice strong up trend, came close to the 50 day EMA and repelled as Russia invaded Ukraine with military action. Now I have to wait for confirmation of this “dip” & close through R191.80, a relative new high close. With a stop loss at R173.40, raising it as it continues to run higher.

MTN has had quite a run in the past year, and may seem counterintuitive to buy a stock that ran hard. It’s usually a profitable strategy to buy at new highs, because as O’neil puts it quite correctly “ what seems high, usually goes higher”.

Market calendar

Let’s get into this week’s stocks in play

Resources

Platinum

Resources prices have been rising recently. Platinum showing a double bottom reversal pattern. Bouncing off the 50 200 day EMA.The first breakout was from a cup and handle pattern we could see the metal run to $1304 with $992 risk point.

Gold

Gold breakout seems to be a valid one. Looking likely to run up to $2063 prior highs. The yellow metal is quite close to make a 52 week high close, if it closes this week above $1902.60 the high is $1916.53.

Amplats

Bulliah platinum prices are positive for Amplats stock. I’m watching the R2006 old support. If the market breaks through, I will raise my stop loss and add to my position. The company has results coming to today

Anglo Gold

The stock broke the R330 resistance but with a doji. Not sure if the market was merely testing R330 or a valid reversal pattern. We have a head and shoulders pattern on the weekly chart. Setting up. With the gold breakout seemingly holding out. I will watch the R360 neckline. Going to hold off on raising my stop loss for now. Just in case the neckline holds up. The company is coming up with results on Friday. Gold was up 13% during the reporting period at the same time the rand weakened by as much as 12% albeit gaining some strength in the last quarter of the reporting period. Still net weak for the period. The results on Friday will be the catalyst that will propel them in one direction or the other.

Exxaro

Exxaro finally broke out of its rather wide range. Exxaro has been a tough hold with wide ranges. I will be cautious and patient with raising my stop and adding to the position.

Sasol

We have a nice bullish flag on the stock. However I’m going to wait for the R353 old support to crack. I might be a tough one to break. I’m targeting R314 as a place to raise my stop loss to.

Sibanye

We have a golden cross. I’ve been watching Sibanye for a while now waiting for the golden cross. I suppose it needed a move in gold. I’m watching the R64 old support for an entry signal. My goal will then be to cross R73 with the position still intact having added to it a few times.

GoldFields

The stock made a new 52 week high after bouncing off the 50 week EMA. Opening the week with a gap and drive. With gold looking bullish I’m positive on the trade but will hold off on raising my stop and adding to the position. I will monitor the price for reaction in the week

Impala Platinum

The stock broke from an ascending triangle pattern. Hasn’t looked back since. There’s an overhead resistance at R266. If the market takes out this level. I will raise my stop and add to the position. My goal is to be holding a risk free position when/if the market breakt R293

Kumba

Iron Ore prices have been surging recently. Causing a turn in the Kumba stock. It left the 200 week and 50 week EMAs behind in the last few weeks. We now have a golden cross on the daily chart. Market remembered the R691 resistance as Iron Ore prices experienced a bit of a pull back. I’m expecting the market to trendline as a result. Perhaps forming a cup and handle pattern or an ascending triangle.

AbInBev

The stock held the uptrend line support. First rally post the golden cross, usually quickly find some selling. Usually from the bulls that have been sitting with a loss for a period and are happy to take a small profit. With the golden cross and uptrend support holding at the back. Closing Friday with a nice bullish engulfing the 200 day EMA. If the stock closes through R966. I will build a position with an initial stop loss at R921.80. The company has results coming this Friday. Those will be interesting to look at.

British American Tobacco

This week will be an interesting week, because historically R708 has been a very strong resistance. Will be looking to see if the share buy back will be enough to finally break R708. If so I will raise my stop and add to the position. Because that means we in R708 and R959 range

Bidvest

The stock had a strong breakout after the company came out with a trading statement on increased earnings on their interim results. HEPS is expected to increase by up to 40%. It came back to retest the R208 resistance. I suspect old bulls were stuck with a loss for a while and are happy to take a small profit or break even. I expect the R208 level to be old.

Capitec

The bank came with an update expecting an increase in HEPS for between 80%-82%. Market was rather flat on the news. The stock has been in a symmetrical triangle pattern for some time now. Now that the market has had the weekend to digest the trading update. I will be interested to see how the market responds this coming week. I am waiting for a breakout from the triangle pattern to raise my stop and perhaps add to my position.

Discovery

The market memory phenomena came through again. Discovery, remembering the R168 price, found some selling after breaking from a symmetrical triangle pattern. I’ve been building a position in this stock. If the market breaks R168 I will raise my stop loss. Watching for opportunities to add to my position. If the market is to break R185, my goal is still holding and sitting with a risk free position.

Foschini

The stock finally broke the R136 resistance and the down trendline resistance. With a golden cross at the back. And few overhead resistance to speak off. We could see a quick run up on the stock chasing the R163 prior highs.

Mr Price.

Mr Price entered what could be a R217 – R273 range. The company has results coming in May, and has made good acquisitions. If they come with strong numbers that would be a catalyst to breaking R237. For now the stock us tugging R217

Remgro

The stock moved to a higher box. It’s still struggling with entry. I will monitor price action and reactions on the higher box. I’m targeting R138 as a level to place a stop loss.

RMI

The stock flirted with the doors of the higher box without any success so far. If the market fails to penetrate to the higher box. Then we could see a retest of the 50 day EMA. However if the market breaks into the higher box I will raise my stop loss R46.30 just below the 50 day EMA. I don’t want my stop right in front of it

Sappi

The stock gapped higher at the back of first quarter results. Came back to the R52.20 resistance from above and held it. The next important level for the stock is R59.40. I will be looking for entry opportunities between now and then. But for now I wanna be cautious with raising my stop loss. Till volatility has normalized.

Truworths

The component some knock it out the pack number, dividends up 29%, earnings up 46% and a share buy back. The market absolutely loved the results. I’m expecting the market to continue to rally. I’m waiting for a close through R67.20 resistance to raise my stop loss and to my position.

Vodacom

The stock legged MTN for some miles. However it woke up from the dead post results. So far the market still remembers R150.50. If the market can take out this level I will raise my stop loss and add to my position.

Portfolio Summary on 20 February 2022

Capital invested: R10 303.77

Current Balance: R8 657.26 -15.98%

Current Equity (Balance including paper P&L): R23 516.02 +128.23%

Current P&L : +R14 858.76

Equity curve Vs Benchmark (Satrix 40 ETF )

Closed trades statistics and distribution

Open trades statistics and distribution assuming all stops are hit

Thank you for reaching far. For any questions feel free to email me at njabulo@villagetrader.co.za