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Market Internals

  • Writer: Lester Davids
    Lester Davids
  • 2 hours ago
  • 2 min read

Research Notes January 2026 > https://www.unum.capital/post/rjan2026

Trade Local & Global Financial Markets with Unum Capital.

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  1. Market Breadth: Majority of tickers in Leading/Weakening quadrants suggest a mature but supported bull market. 📈

  2. Sector Rotation: Financials/Materials lead; Retail/Consumer Services show early Improving signs from oversold levels. 🔄

  3. Reward-to-Risk: Average R:R for Buy on Pullback is 4.5:1, significantly higher than Buy Continuation at 3.0:1. ⚖️

  4. Momentum Divergence: Note divergence in CFR and NPN; macro lags but micro-indicators are bottoming. 📉↔️📈

  5. Mean Reversion: Tickers like ARI and APH are >15% away from base term averages, signaling imminent reversion. 🧲

  6. Volatility Pulse: Ultra-Volatile indicators showing extreme readings (>95) in 22% of list; micro-pullback is near. ⚡

  7. Financial Stability: Banks (ABG, NED, SBK) show Deceleration—macro trend remains, velocity is fading. 🏦

  8. Institutional Footprint: Heavy volume at capitulation points of MNP and MRP suggests smart money accumulation. 👣

  9. Commodity Influence: Gold-linked tickers (GFI, HAR) remain in Full Expansion, the strongest RRG configuration. 🥇

  10. The "Lift" Factor: AEL and BID are high-probability turnaround plays exiting the Lagging zone. 🚀

  11. Overextension Risk: Materials sector is the most "overheated," requiring aggressive stop-loss trailing. 🌋

  12. Defensive Shift: Staples (OCE, BTI) moving into Leading, suggesting a shift toward defensive growth. 🛡️

  13. Liquidity Wash: Watch for "stop-runs" in Financials where micro-momentum is unstable but macro is strong. 🌊

  14. Factor Leadership: Momentum remains the dominant factor over Value in the current rotation. 🏎️

  15. Gap Risk: High velocity breakouts in PWR/LSK are prone to "gap-fill" retests before the next leg. 🕳️

  16. Trend Fragility: Tickers in Weakening are one micro-thrust away from rotating into Lagging if support fails. 🏚️

  17. Relative Strength: JSE Top 40 components are outperforming mid-caps in the current RRG cycle. 📊

  18. Cyclical Rejection: PRX and TFG showing "Sell on Rally" patterns suggest structural resistance remains. ⛔

  19. Capitulation Cluster: Cluster of retailers at "surrender point" suggests a sector-wide bounce is brewing. 🧺

  20. Final Verdict: Stay long leaders but prioritize the "Bullish Dip" for new entries to maximize R:R. 🏁


Lester Davids

Senior Investment Analyst: Unum Capital

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