Buy on the downturn
Use pullback before shares recover
THE JSE IS FINALLY SHOWING a longawaited correction, and the question is how far the market will pull back, ie how serious will this pullback be? We try to answer this question by looking at a chart of the JSE top 40 index. We also look at the chart of the JSE Financial (“fini”) 15 index (the 15 largest financial stocks on the JSE), to see what it’s indicating for fini stocks in the short term.
The charts show both the top and fini 15 indices heading rapidly to medium-term support. A breakdown below there is likely with more short-term weakness to follow. However, the long-term trend of the market remains up, and a correction will provide a good opportunity to buy stocks at cheaper prices.
Please note: For more recommendations and charts by the author on shares, stock indices, and commodities, please go to www. themarket.co.za.