Weekly Technical Report 26 September 2016 Contents (ctrl+click to follow link): SP 500 ; Top 40 Chart ; Currency ; Commodities ; Charts of Interest ; Relative Rotation Graph ; Sector Analysis ; Weekly Perfomances 1
SP 500 Above is a longer term chart of the SP500. Compared to the Top40 graph shown below, the SP500 is roughly up 10% in the last two years, while the Top40 is at pretty much at the same level. Shorter term, the SP500 has moved up back into the sideways channel indicated on the graph of between 2160 and 2190. The current index level corresponds to its 50 day moving average. It is interesting to note that the gap that was created after the hawkish FED meeting has been closed. HOME 2
TOP 40 CHART Above is a 5 year chart of the Top40. Over the last two and a half years we have been in a huge sideways trading channel, in fact two years ago to the date we were trading at pretty much the same level! In the shorter term, we now seem to be trading in another sideways channel of between 44000 and 47000. The Top40 remains choppy and sideways, trading just below its 200 day moving average. HOME 3
CURRENCY The Rand The Rand continued to strengthen over the past week and broke through the lower band of 1380 to the Dollar and closed the gap at 1360. We now have support at 1380 and resistance at 1320. HOME 4
COMMODITIES The gold price continues to trade in a sideways price channel of between $1308 and $1365. Last week, the price was testing support; however the gold price bounced and is now trading in the midrange of the channel. Below the gold chart are the performances of the platinum and silver price against the gold price. Gold is performing in line with silver and continues to outperform platinum. HOME 5
CHARTS OF INTEREST The charts we have included are: IMP, NED, DSY, COH and ADR Implats continues in its upward recovery. At the R70 resistance level, Implats is forming an ascending triangle and a break above this level, points to a potential target of R87. There is negative divergence on the MACD, so a break above R70 is needed for confirmation. 6
Nedbank has formed a symmetrical triangle, generally speaking if the price moves up into the triangle it will break to the upside. The triangle represents a consolidation of price and this triangle has a potential price target of R243. The top of the triangle is also now support. 7
Discovery is trading on the lower support band and so it can potentially bounce. There is no strong positive divergence coming through at this stage, so caution is required. 8
Curro Holdings has broken above the resistance of R42.70. This level now becomes support. The roughly looking inverse head and shoulder formation gives a potential price target of R50. Volume was not significant on this break out and so we may see a pull back to the support mentioned above. 9
In the last two years Adcorp has halved in price. The price initially bounced off a trend line that started all the way back in 1995 and we are currently retesting that level again. If the level holds, we could see a bounce back up to the top of the channel at R21.50. However, if the lower band does not hold we could potentially see R9. HOME 10
RELATIVE ROTATION GRAPH Below we have a few sectors relative to the Allshare Index. The sectors are based on the Business Day division of sectors. Indu CGoods CServ Prop Fin BMat Tele Health Stocks included in the relative rotation graph indices: Basic Mat Cons Goods Cons Servs Fins Hlthcare Indus Property Telecoms AFE AVI ADH BAT AIP ADR ATT BLU AFX BTI CLH CML APN AFT AWA MTN AGL CFR CLS CPI ASC BAW CCO TKG AMS CLR COH DSY LHC BVT EMI VOD ANG DST COM FSR MEI CGR FFA ASR ILV CSB HCI NTC CIL GRT BIL MTA FBR INL DTC HPA EXX PFG LEW JSE GND HYP GFI SAB MSM LBH GRF ING GLN SNH NPN MMI HDC IPF HAR TBS PIK NED IPL ITU HLM SHP OML IVT NEP IMP SUI PGR MMG OCT KIO SUR PSG MPT RDF LON TRU SBK MUR REB MNK TSH SFN NPK RES MNP WHL SLM PPC ROC 11
S32 SNT RBX RPL SGL All stocks have equal weighting in their relevant REM SAC SOL indices TRE TWR VKE Explanation on the RRG: Basic materials, healthcare and now financials are in the yellow quadrant. Industrials and consumer services are in the green quadrant. Consumer goods, property and telecoms continue to have low momentum and are underperforming the Allshare index (red quadrant) although they are moving up towards the quadrant of improved momentum. Interpretation: Note that each symbol on the chart is plotted as a dot with a tail extending backwards. The tail shows you the history of the symbol's position in the past. Each dot on each symbol's tail represents one period, in this case a week. The large dot at the end of the tail represents the current relative momentum values for that ticker symbol and the colour represents the current quadrant it finds itself in. There are four quadrants on the chart: Leading (Green) - strong relative strength and strong momentum Weakening (Yellow) - strong relative strength but weakening momentum Lagging (Red) - weak relative strength and weak momentum Improving (Blue) - weak relative strength but improving momentum Typically, indices progress through the quadrants in a clockwise manner. Interpretation: The longer the tail, the bigger the move and higher the volatility. The further the index is from the benchmark (the cross hairs) the bigger the move in relative performance (up or down) RS-Ratio (relative strength) is more important than RS-Momentum The rotational patterns are not always perfectly circular and will not always rotate through all four quadrants in a clockwise manner. These are, after all, financial markets driven by fear and greed. In general, a cross from the left half to the right half signals a new uptrend in relative performance. This means RS-Ratio has moved above 200. Conversely, a cross from the right half to the left half signals a new downtrend in relative performance. This means RS-Ratio has moved below 200. The underlying trend-following model that powers RRG includes a lag period, as do all trendfollowing models. This means there will already be upward movement in the price relative before the RRG line actually crosses into the leading quadrant. Similarly, the price relative will peak and move lower before the RRG line actually crosses into the lagging quadrant. Symbols in the leading quadrant should be on your buy list because they show relative strength. Symbols in the weakening quadrant should be on your watch-list for deterioration. Symbols in the lagging quadrant should be on your avoid list because they show relative weakness. Symbols in the improving quadrant should be on your shopping list as potential buys. 12
RRGs separate the market leaders from the market laggards and therefore great for channeling your attention to those areas of the market that deserve it. Keep in mind that these are relative performance indicators, and there is still a risk that the rotation turns back or even reverses. HOME SECTOR ANALYSIS Percentage points of the various sectors above or below their various moving averages: Previous week: INDEX 200 SMA 100 SMA 50 SMA 20 SMA Banks 6.40 2.90-1.77-1.54 Gen Retailers -8.88-10.43-11.11-6.81 Resource 20 5.72-2.04-3.36-3.45 Industrial 25-0.83-1.71-1.07-2.25 Financial 15-2.60-2.83-2.93-2.55 Property -2.45-4.82-5.26-3.46 This week: INDEX 200 SMA 100 SMA 50 SMA 20 SMA Banks 11.46 7.50 1.94 3.98 Gen Retailers -5.69-7.01-7.71-0.17 Resource 20 9.13 1.73 0.39 1.16 Industrial 25-2.25-3.13-2.46-2.91 Financial 15-0.09-0.28-1.04 0.58 Property -1.05-3.15-3.58-0.49 Percentage shares within the various sectors above or below their various moving averages: Previous week: Moving Day Averages 13
Index Ticker Code 20 Day Moving Average Stocks Stocks Above Below 50 Day Moving Average Stocks Stocks Above Below 100 Day Moving Average Stocks Stocks Above Below 200 Day Moving Average Stocks Stocks Above Below JALSH 37% -63% 43% -57% 48% -52% 63% -37% TOP40 19% -81% 19% -81% 35% -65% 53% -47% RESI20 100% 0% 100% 0% 100% 0% 100% 0% FINI15 19% -81% 6% -94% 31% -69% 50% -50% JBNKS 43% -57% 14% -86% 71% -29% 86% -14% JGENR 36% -64% 36% -64% 36% -64% 55% -45% JSAPY 29% -71% 24% -76% 29% -71% 48% -52% This week: Index Ticker Code 20 Day Moving Average Stocks Stocks Above Below Moving Day Averages 50 Day Moving 100 Day Moving Average Average Stocks Stocks Stocks Stocks Above Below Above Below 200 Day Moving Average Stocks Stocks Above Below JALSH 55% -45% 50% -50% 58% -42% 67% -33% TOP40 37% -63% 30% -70% 42% -58% 53% -47% RESI20 36% -64% 55% -45% 55% -45% 91% -9% FINI15 44% -56% 31% -69% 44% -56% 50% -50% JBNKS 100% 0% 86% -14% 100% 0% 100% 0% JGENR 55% -45% 36% -64% 45% -55% 64% -36% JSAPY 48% -52% 38% -62% 43% -57% 52% -48% HOME 14
WEEKLY PERFORMANCES The week s best and worst performers: JSE ALLSHARE: MIDCAP: 15
HOME Compiled by Kevin Barlow-Jones and Simon Hobday Disclaimer This report provides general information only. Information is sourced from Bloomberg and charts from Metastock. This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments mentioned in this report and should understand that statements regarding future prospects may not be realized. No security, financial instrument or derivative is suitable for all investors. Past performance and technical patterns and analysis is not necessarily a guide to future performance. This report may contain a short-term trading idea or recommendation, which highlights a specific near-term catalyst, pattern or event impacting the company or the market that is anticipated to have a short-term price impact on the equity securities of the company. Shortterm trading ideas and recommendations are different from and may not affect a stock's fundamental equity rating. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Constant Capital, trading as Sinayo Securities. Neither Constant Capital, trading as Sinayo Securities, nor any officer or employee of Constant Capital, trading as Sinayo Securities, accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents. 16