JSE weaker in the knees
The moment has arrived for commodity groups such as Glencore and Anglo. WEAKEST SHARES STRONGEST SHARES
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