Date: 18 April 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

On this one year chart, the SP500 is still trading at the top of its channel with its recent uptrend still intact.

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Top 40 Chart

Although we are still trading in a sideways channel, we have had an uptick in the past week on the Top40. This uptick may be the beginning of the right hand shoulder of a head and shoulder formation, time will tell.

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CURRENCY

The Rand

The Rand/Dollar chart still remains below the neckline of the indicated head and shoulder formation. We have, however, bounced off the 200 DMA but the recent Rand strengthening trend is still intact.

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Charts of Interest

The charts we have included are: SHP, MND and SGL

Shoprite seems to be forming a potential head and shoulders and a break below the neckline could take us down to the R150 level.

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Mondi is approaching an important level around R260. Mondi has bounced off these levels before, however, depending on the Rand, a break down below this level would be technically quite negative.

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Sibanye Gold is trading is a horizontal channel and a break out of this channel could produce a significant move.

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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.

Basic materials and healthcare are still in the geen quadrant. Momentum in financials and industrials are positive, while momentum in consumer services continue to tick up.

Explanation on the RRG:

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 Sectorsabove or below their various Moving Averages:

Previous week:

INDEX / 200 SMA / 100 SMA / 50 SMA / 20 SMA
Banks / -7.42 / 2.05 / 1.44 / -1.24
Gen Retailers / -4.26 / 0.37 / 3.13 / 0.26
Resource 20 / -9.76 / 5.67 / 0.99 / -3.86
Industrial 25 / 2.29 / 0.70 / 1.10 / -1.03
Financial 15 / -4.49 / 0.71 / 1.21 / -2.11
Property / 4.84 / 7.12 / 5.65 / 1.46
% price above moving average
% price below moving average

This week:

INDEX / 200 SMA / 100 SMA / 50 SMA / 20 SMA
Banks / -3.87 / 5.86 / 3.74 / 0.80
Gen Retailers / 1.72 / 6.64 / 8.39 / 4.52
Resource 20 / 0.00 / 15.70 / 8.60 / 5.24
Industrial 25 / 3.91 / 2.48 / 2.59 / 0.64
Financial 15 / -1.64 / 3.73 / 3.29 / 0.11
Property / 5.31 / 7.71 / 5.00 / 1.09
% price above moving average
% price below moving average

Top 40 % above and below

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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 orlosses arising from any use of this report or its contents.