ALSI – LONG-ONG-TERM BREAKOUT
Trend: Long term up. ( But short term overbought.) Strategy: Long- term investors continue buying local stocks on corrections. • This chart of the JSE all- share index goes back to 1987 ( ie 20 years) and shows the index trading in a long- term rising channel ( lines 1 and 2). However, that was until Nov/ Dec 2006, when the price broke out above line 2 resistance of this large channel. This little- noticed event has great significance. It sets the tone for the price to continue rising steadily in the years ahead. This breakout above line 2 now sets up a large upside target of 43 300 on the all- share index ( to be reached over the longer term). This is approximately 70% above current levels. Therefore, long- term investors should continue buying large- cap JSE shares on corrections. There will be some steep corrections along the way. The JSE is currently overbought in the short term. Important support is line 3 at 23 500, but this level looks very safe for now.