BROKERS’ NOTES: Buy the S&P, sell gold

You have two ways to do this: directly, through an offshore account (buy the SPY exchange traded fund listed on the New York Stock Exchange); or buy one of the many S&P 500 tracker ETFs listed on the JSE. Regardless of where and how you decide to get exposure, the weakening rand will be a tailwind. Aside from the rand, however, and according to the age-old “Dow theory” technical analysis, the S&P 500’s highs and lows are both rising, hence its medium- to longer-term trend is changing. This might not make a whole lot of sense, given the headwinds the global economy faces, but as legendary stock trader Jesse Livermore said: “A bull equities market climbs a wall of worry.” Perhaps all this worry and negativity is the exact fuel that the market needs.

Sell: Gold 

Gold has been on a bit of a tear, though recently it has run headfirst into the $2,000/oz resistance level and has failed to break and hold above that. Given that the equities market is looking for almost any reason to rally, it would be safe to assume general sentiment is rather optimistic. Which leads us to believe that gold and safe haven assets might not shine like they did just a few months ago. Therefore we recommend selling gold stocks in general. Many of them have run really hard but from our perspective, in the short term, we think the party is over.