Gapex Morning Gut Feel Report 21st of November

1. SA: Recommended national minimum wage
2. SA’s prospects of avoiding a credit ratings downgrade
3. Global majors continue on weakening trend

Local weekend developments were the lifting of the recommended monthly minimum wage of R3,500, as well as Deputy President Ramaphosa and other politicians trying to be positive about SA avoiding junk status. Both trying to promote a more stable environment to avoid a credit ratings downgrade – whether that is enough, time will tell? While there are supportive underlying fundamentals, the positive yield spread which remains attractive or commodity prices that have collectively recovered off their lows, these are all medium to longer term drivers of ZAR. Until the ratings agencies make their pronouncements, the ZAR will probably remain vulnerable with many in the market concerned. On the international front, focus is now firmly on the outcome of the December FOMC meeting, FED members continuing to make the case for a hike.

USD/ZAR Hourly Candle

This chart is in decent shape but at this stage we will have to wait before taking a position.

We will look to sell the USD from R14.87 – R14.97 with a stop over R15.00, but we will only put this trade on if the market has not traded R14.10 first.

We will also look to buy the USD from R14.20 – R14.05 with a stop under R14.00.

“In Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic.”

– Paul Tudor Jones

USD/ZAR Daily Close

We are waiting to buy the USD in size, but will have to wait for a decent pullback.

At this stage we do not have levels as we will need this chart to play out overtime before making a firm call.

“I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms. – PTJ