Bulls still rampant, bears subdued
If we look at the accompanying tables, we are left in no doubt that a robust bull market is still being experienced on the JSE. Weekly closing prices of almost 60% of the top 100 shares on the JSE lie 20% or more above their 200-day exponential moving averages (MA). On the other hand, only one fifth of them lie 10% or more below their 200-day moving averages.
The bulls are obviously dominating the JSE and analyses are appearing regularly of when the current long-term bull market, which began in 2009, is likely to end. A thread that constantly runs through the analyses is that we’re
131.1 125.1 96.6 93.4 88.5 78 74.1 66.6 66.3 63.7 62.7 62.13 61.5 60.9 58.1 55.2 51.6 50.2 49.6 49.6 49 48.4 merely experiencing an overflow of the enormous liquidity, which was f irst pumped into the world economy by the US and currently by Europe and Japan, in order to prevent a recession and deflation.
Another a s p e c t t hat ’ s b e i ng emphasised is that the high valuations in our market are not supported by economic growth. In fact, speculation is that the market could be facing some adversity as South Africa could be downgraded to junk status should government and t rade unions not adequately heed the call of the minister of finance for financial discipline.
Capitec is still the strongest share on the JSE measured in terms of its percentage above its 200-day exponential moving average. How unbelievingly well it has rewarded its shareholders is evident from the fact that it has grown by almost 4 400% (excluding dividends) over the past 10 years, with the biggest increase of close on 150% since September last year. And Capitec has taken its major shareholder, PSG Group*, in tow along with it. PSG’s share price increased over the past 10 years by about 2 900% (excluding dividends).
Telkom recently jumped from 10th place on the list of the strongest shares to third place. This is due to the sale (at last!) of three of its businesses to, among others, Barloworld and Bidvest. Snapping at its heels is Pioneer Foods, another company that’s an important player in the PSG stable. Steinhoff ’s momentum has improved remarkably, from 13th place to eighth.
The weakest shares still consist of mining and building and construction shares that are being clawed by the bear, with Assore, Aveng, Kumba, Murray & Roberts, ArcelorMittal and Altron at the bottom of the pile.
Of the shares that are experiencing sufficient buying pressure to thrust their heads just above the 200-day mark, Truworths and JD Group, in particular, look promising. The latter’s chart has formed a saucer, which is regarded as positive by technical analysts. Steinhoff continues to buy this share. It currently owns 87.12% of JD Group and an offer to minorities seems possible. At BHP Billiton there are signs of some buying pressure being exerted.