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Date: 13 June 2016

Contents (ctrl+click to follow link):

SP 500 ; Top 40 Chart ; Currency ; Charts of Interest ; Relative Rotation Graph ; Sector Analysis ; Weekly Perfomances

SP 500

The SP500 briefly broke above the 2100, reaching a close of 2119 (intraday high 2120). This was still below the highest close of 2130 (intraday high 2134) reached almost a year ago. There is still negative divergence in the RSI.

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Top 40 Chart

The Top40 failed to reach its year-long resistance level. The Top40 is pulling back to its 50 DMA that corresponds to the top of a triangle slope.

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CURRENCY

The Rand

The Rand is currently trading at its 200 DMA with support at 1550 and resistance at 1450 to the $.

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Charts of Interest

The charts we have included are: TON, sugar price, MTN, TKG and TRU

Since February Tongaat has been in a new uptrend, breaking above its 50,100 and 200 day moving average. Currently it has broken above its previous resistance at about R118. Its stochastic is high and we may see a pullback before resuming with its trend.

Below is a graph of the sugar price showing a corresponding uptrend.

MTN is still trading in a sideways price channel.

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After releasing its financial results, Telkom broke out of both an upward channel and a larger downward resistance line. Telkom is currently pulling back to a possible support area.

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Truworths is currently at a short term support within an upward price channel. If Truworths fails to bounce from this level then we may see a retest of the bottom of the channel.

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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.

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
S32 / SNT / RBX / RPL
SGL / All stocks have equal weighting in their relevant indices / REM / SAC
SOL / TRE / TWR
VKE

Explanation on the RRG:

Both basic materials and healthcare are in the low momentum quadrant, but still outperforming. Financials and consumer services are in the outperformance quadrant. However, many of the sectors are still close to the mid point showing little relative outperformance of the JSE Allshare index.

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 trend-following 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.

·  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.

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SECTOR ANALYSIS

Percentage points of various Sectors above or below their various Moving Averages:

Previous week:

INDEX / 200 SMA / 100 SMA / 50 SMA / 20 SMA
Banks / -0.84 / 5.35 / 2.40 / 5.79
Gen Retailers / 2.41 / 6.21 / 2.41 / 3.36
Resource 20 / 6.06 / 10.99 / 3.74 / 1.51
Industrial 25 / 5.52 / 4.84 / 3.14 / 1.92
Financial 15 / -0.43 / 3.38 / 0.95 / 3.04
Property / 4.09 / 4.58 / 0.68 / 2.29
% price above moving average
% price below moving average

This week:

INDEX / 200 SMA / 100 SMA / 50 SMA / 20 SMA
Banks / -2.77 / 2.14 / 0.19 / 1.45
Gen Retailers / -1.10 / 2.23 / -1.51 / -0.51
Resource 20 / 3.01 / 6.05 / -0.25 / -2.66
Industrial 25 / 4.34 / 3.68 / 2.10 / 0.06
Financial 15 / -2.32 / 0.78 / -0.94 / -0.39
Property / 2.47 / 2.46 / -0.81 / 0.24
% price above moving average
% price below moving average

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Weekly Performances

The week’s best and worst performers:

JSE ALLSHARE:

MIDCAP:

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Compiled by Kevin Barlow-Jones and Simon Hobday

Disclosure

This report provides general information only. 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. Short-term 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.