Trading JSE Top 40 Index

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

Trade Local & Global Financial Markets with Unum Capital.

To get started, email tradingdesk@unum.co.za

Date: Sunday, 25 January 2026

Closing Price: 114,357.71

1D Change: +0.76%

Multi-Frame Action: 🟢 Parabolic (D) 🟢 Breakout (W) 🟢 Vertical (M)

Technical Upside: Blue Sky Breakout. No historical resistance overhead.

Target: 118,000 – 120,000. Momentum Extension.

Momentum Signal: "Lock-Out" Extreme.

Risk / Invalidation: Close below 108,000 (Breakout Zone).

Valuation Basket: Momentum / Resource Rotation

Primary Driver: Aggressive buying in Mining Duals (PGMs, Gold, Diversifieds) & Rand Hedge rotation.

MARKET STRUCTURE & VOLUME VALIDATION Volume Profile: The index is in a hyper-aggressive uptrend, driven principally by a narrowing basket of large-cap Resource stocks. The move is vertical on the Monthly timeframe, indicating a "panic buy" or "lock-out" scenario where under-positioned funds are forced to chase performance.

Liquidity Zones: The 108,000 – 110,000 zone is now the nearest structural support (previous breakout level). The index has cleared psychological resistance at 114,000. A failure to hold 108,000 would signal a failed breakout, but the current velocity suggests buyers are active on even minor intraday dips.

Divergences: None. Price and Momentum are synchronized in an extreme extension. The Monthly RSI hitting 100.00 is a statistical anomaly, confirming that the trend is currently defined by flow mechanics (squeeze/chase) rather than fundamental valuation.

MOMENTUM PROFILE (WEEKLY)

Tactical Momentum: Extreme Overbought. The Weekly RSI is at 95.93. In a bull market, sustained readings above 80 signal a "Lock-Out" where the trend accelerates vertically, preventing entry for those waiting for a pullback.

Fast Weekly: Strong. The Daily chart confirms this with an RSI of 97.92, showing no signs of slowing down.

Structural Trend: Bullish Breakout. The index has broken decisively out of its multi-year structure into price discovery mode.

Primary Trend: Bullish. The long-term trend is firmly established to the upside, fueled by the "Two-Speed" market dynamic where winners are winning exponentially.

CORE THESIS The JSE Top 40 is experiencing a historic momentum event. The "Lock-Out" readings on Monthly (100) and Weekly (95+) timeframes indicate a market driven by extreme liquidity flows into specific sectors (Miners) rather than broad-based participation. While the extension is statistically stretched and warrants caution regarding a "snap-back," the trend remains undeniably vertical. The path of least resistance is higher until a confirmed reversal pattern appears on the Daily chart. Traders should respect the trend but be aware that volatility will expand significantly at these altitudes.

Lester Davids

Senior Investment Analyst: Unum Capital