J200 trade ideas
#ALSI All Share Index Some bearish signalsAlsi is consolidating after the V- Shape recovery. A potential head and shoulders formation is building that could see the index drop by another 3-4%. Keeping an eye on the neckline for a test and break.
#ALSI Back into channel.After spending a few days above the channel the ALSI has now broken back into this channel and could be heading lower in the medium term to test the bottom of this channel once more.
SA 40/SOUTH AFRICAN 40 LONGITS NEVER BEST TO TRADE IN THE BEGINNING OF ANY MONTH, BUT IF A SETUP AVAILS I TRADE WITH PROPER RISK.
HERE IS SA40 OVER TREND WAS BULLISH FOR THE MONTH OF AUGUST AND WHAT WE HAVE IS CORRECTION NESTED ON DEMAND, LONG SA40 WITH 2% RISK RATIO.
Relative Performance of SA40 vs select global ETF's (Weekly)The relative performance of SA40 vs Satrix Nasdaq 100, Sygnia 4th Industrial Revolution, Sygnia S&P 500 and Sygnia MSCI World.
#ALSI JSE ALL Share Index - Cool new features in TradingviewTradingview has now added candle stick patterns. Very nice feature that points out things like engulfing candles (BE) , doji's (D), hammer candles (H)etc. ALSI is currently in a very precarious spot. It has broken through a long term resistance line, but is showing some bearish signals above this break. Not a very convincing break. Wait and see approach for me.
The SA top 40The SA top 40 has tested the trendline 6 times a break of this trendline must be watched with caution. the trend is getting old
#ALSI JSE ALL Share Index - Cautious approach Quite a curve on the ALSI like many other indices in the world. We could have reached double top that also coincides with the high in January 2020. Caution is advice in taking new long positions at current levels over the next few days.
Resistance Reached for Top40; Correction on the CardsTop 40 formed a bearish reversal last week.
For the past 3 years it has been trading within a range and has now reached the upper end of that range.
There is a high probability that in the next weeks and months it will test the lower end of the range starting with 49000 then 44000.
RSI Testing 60 which has been a turning point historically as illustrated.
Resistance Reached on Top40; Correction a high PossibilityTop 40 formed a bearish reversal last week.
For the past 3 years it has been trading within a range and now has now reached the upper end of that range.
There is a high probability that in the next weeks and months it will test the lower end of the range starting with 49000 then 44000.
RSI Testing 60 which has been a turning point historically as illustrated.
JSE Top40Not quite a trade I would take, but for JSE Investors I think the market will probably drop 17%.
Not financial advice
$ALSI JSE All Share Index. Shooting starThe JSE All Share Index is building a shooting star candle formation on a daily chart. This is a bearish signal. The fact that it started against a longer term resistance level solidify the fact that we might be in for a period of consolidation.
$SA40 JSE TOP40 index - is it time for a retracement?The top40 index bumped into weekly downtrend resistance @ 52200 connecting multiple tops since 2017. Given the one-sided rally off the march lows, the probability favors a bit of a pause and retracement before an attempt to break out through the oncoming resistance. I would be quite surprised to see the index break out to new highs without some sort of pause/consolidation in price. Should we begin to retrace off 52200, levels we could target are likely 48000 and 46000.
Divergence on SA Top40, bold shortEvidence of negative divergence on the top40, maybe worth a short at these levels. Understandably a bold move given stimulus measures across the globe but is this rally potentially losing steam
South Africa TOP40 gearing for outperformance against the SP500?Known to all, the US markets have outperformed the SA markets for a significant period of time. From a pure charting perspective, the series of higher lows on the macd indicator vs the series of lower lows on the price chart of the pair (SA40 vs.SPX) is indicative of bullish divergence warning of a change in trend where we could start to see the SA40 Index outperform against their US counterpart. Fundamentally feels impossible with all the bad news locally, but it could purely be a case of the rand weakness against the dollar which drives your "rand-hedge" counters such as Naspers, BTI, CFR and the resources which are a significant weightings of our index. This is a weekly chart so it could take some time to play out, but it will be interesting to monitor this going forward.
Top 40 - After a 53% move off the lows, I'm flagging caution At current levels, and on a medium term view, I'm flagging caution.
Yesterday's thrust higher was potentially a false breakout, similar to what we saw on 17-January with 20 and 21 January being the follow-through. Remember, we are 53% off the March lows. In my view, the 1H 2020 'easy money' has been made and thus very aggressive long index positions would be taking on excess risk.
Caution.
Long term view of SA top 40Within the two shaded regions, it is unclear which is the end of the 4th wave, also wave 5 was very short. Hopefully the next few months give a clearer indication of market direction
JSE Top 40This chart forms part of a larger research note (dated 14 June 2020). None of the information posted here (TV) should be considered financial advice.
Top 40 (J200) | As mentioned in my client note last week, following a very rapid 50% bounce off the March lows, traders should take caution and that returns from then onward would be hard to come by. This past week saw a small unwind of the bullish sentiment with markets having their worst week since March. My current view is that you’re a short term trader, then long entries may not have an attractive risk/reward. Friday’s close was positive, with the candle structure seeing a long tail, similar to Thursday however a period of consolidation may be due. A loss of 48400-48100 would see 47560 open up as a target. Looking back at the first five months of this year, we’ve navigated the broader market well.
1. During Jan-2020 my technical perspective picked up that the Top 40 price action and chart structure was very similar to the August 2018 period. We then saw a drop, with Covid-19 being a fundamental catalyst to drive prices lower.
2. On 18-March 2020 whilst markets were bleeding we were strong advocates of phased buying noting that ‘Red Equals Opportunity”.
Both of these calls having helped manage risk and generating significant alpha. Take caution, because risk happens fast. And not forgetting, know your time frame!
JSE to head to new highsReason #1: Our economy is about to wake up with the ease of the lockdown
On Monday, 1 June 2020, the national lockdown went to level 3.
This resulted in many firms and businesses resuing operation at almost, full capacity.
Already we’ve seen a boost in activity in food production, retail, communications as well as mining.
In fact, most underground mines like DRD are heading back to 100% production.
Millions of employees have gone back to work, there’s been an improved sentiment towards the economy and the JSE has rallied 3.28% with three up days in a row.
Jasper Lawler, Head of research at London Capital Group, said,
“Markets are pinning hopes on a quick economic rebound once lockdown and travel restrictions are lifted,”
Reason #2: The JSE is lagging the World index
The JSE as well as many other emerging markets, tend to follow the world markets…
When the World index moves up, we see the JSE follow. And when it drops (due to a financial crisis or a global Black Swan event) the JSE crashes with it.
This is because most South African equity market’s earnings, are derived from demand factors outside its borders.
Now let’s take a second to look at the World index (MSCI ACWI Index) performance in relation to the JSE…
In the last six months, it’s clear that the JSE (orange line), has traded at a huge discount compared to other emerging markets measured by the world Index (Black line).
This tells us we should expect the JSE to move up in sync again.
And looking at the last two months with the sudden up spike, this means it’s already on its way.
Reason #3: Lowest interest rates since the 70s
On Thursday, the SARB cut the repo rate by yet another 50 basis points.
This came after a 100bps cut in March and another 100bps in April.
This brought the repo rate down from 4.25% to 3.75%.
These are levels we’ve not seen since the 1970s.
What this means for investors is they’ll receive less interest on their savings and low yielding assets…
As the return is much lower, investors will most likely take their money and deposit into better return on investment assets.
And now with many sectors looking very cheap, we can expect investors to start buying low price but high quality companies on the JSE.
And the charts share the same sentiment.
Since 1 March up until 1 June, we’ve seen the ALSI 40 (JSE All Share Top 40 Index) move in a triangular pattern (shaded area).
This is called an Ascending Triangle which has two main characteristics.
#1: Triangle that makes higher highs
The price moves down until it hits a bottom. In this case, the price moved to a low price at 34,000.
It then moves up and forms a high price. Which in this case, the price moved to a high at 48,323.
#2: The price breaks out of the triangle
The market then moves to the top and breaks up and out of the triangle formation.
Now that the price has broken out of the Ascending Triangle, we can expect demand and buyers to rush in.
This will result in the ALSI moving to new highs.
To calculate this target, we’ll take the difference between the high and the low of the formation and add it to the high.
Target price = (High – Low) + High
= (48,323 – 34,000) + 48,323
= 62,646
This means, we can expect the JSE ALSI to rally another 30% from where it currently is, in the next few weeks.
