JSE weaker in the knees

The mo­ment has ar­rived for com­mod­ity groups such as Glen­core and An­glo. WEAK­EST SHARES STRONG­EST SHARES

Finweek English Edition - - MARKETPLACE TECHNICAL STUDY -

the JSE has weak­ened even fur­ther with only 34% of the top 100 shares, mea­sured by mar­ket cap, ly­ing above their 200-day ex­po­nen­tial mov­ing av­er­ages (EMAs). Some qual­ity shares are so far be­low their EMAs that quite a num­ber of in­vestors are start­ing to show in­ter­est based on the over­bought lev­els that have been reached. And for the first time this year, there isn’t a sin­gle share that looks promis­ing enough to ap­pear in the break­through col­umn.

How­ever, it isn’t just most of the JSE’s larger shares that are per­form­ing poorly. The All Share In­dex with its wider cover also finds it­self in a bear mar­ket as is shown by its fall­ing 200-day EMA.

What has prob­a­bly sur­prised many mar­ket play­ers is that Glen­core, which has dropped by al­most 70% since reach­ing its high of R69 in July 2014, has re­cov­ered so dra­mat­i­cally that it’s the strong­est share in the top 100, with An­glo Amer­i­can closely be­hind fol­lowed by South32, Kumba and As­sore. It’s en­light­en­ing to have a look at the dark pre­dic­tions re­gard­ing es­pe­cially Glen­core and An­glo when they reached their lows. True to the his­tory of com­mod­ity bear mar­kets, those who had the courage to buy when things ap­peared at their worst, made prof­its of up to a few hun­dred per­cent­age points. In the past, the bear mar­kets of com­modi­ties also tended to re­cover quickly from over­sold lev­els.

It is in­ter­est­ing to note that the de­pressed in­dus­trial sec­tor also have its winners among the heavy­weights this year. Two that catches the eye are Sappi and Tiger Brands, which both had dif­fi­cult times not too long ago. Sappi’s share price has risen by about 120% since reach­ing its low in

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