Looking Ahead: Probabilities For Q2 2026

Lester Davids
Mar 29
3 min read

Research Notes March 2026 > https://www.unum.capital/post/rmar2026

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Published on Sunday, 29 March for Monday, 30 March.

PLEASE NOTE: The analysis is based on the sectors RELATIVE TO the JSE Top 40 Index.

Based on the aggressive momentum shifts witnessed in Q1, Q2 is likely to be characterized by digestion, mean reversion, and structural base building. Markets rarely sustain the kind of vertical momentum seen in sectors like Chemicals or the rapid breakdowns seen in Platinum without periods of consolidation.

Here is a Q2 structural forecast based on the comparative momentum data:

1. High Probability Mean Reversion (To the Downside)

These sectors ran extremely hot in Q1, moving from weak/neutral directly into overbought territory. In Q2, they are prime candidates for mean reversion (pullbacks to medium-term moving averages) or sideways consolidation to digest gains.

Chemicals: The most extreme case. Moving from "High Bearish/Weak" in December to "High Bullish/Overbought" across all timeframes by March is a massive exhaustion signal. Q2 Structure: Expect a sharp mean reversion pullback or the formation of a wide, volatile base as profit-taking sets in. The risk/reward for new long entries here is very poor until a multi-week base forms.
Coal Miners: With medium-term momentum hitting "High Bullish/Approaching Overbought," the easy money has been made. Q2 Structure: Likely to form a "bull flag" or a high consolidation base. As long as the long-term trend remains "Strong," pullbacks should be viewed as structural resets rather than trend reversals.
Diversified Miners & Hospitals: Both are showing "Overbought" signals in the medium term. Expect choppy, sideways price action in Q2 to allow shorter-term moving averages to catch up to the price.

2. Potential Mean Reversion / Relief Rallies (To the Upside)

These sectors have been battered and are showing signs of structural exhaustion to the downside.

Consumer Discretionary: The long-term trend has hit "Oversold," and the medium-term is "High Bearish/Approaching Oversold." Q2 Structure: This sector is stretched too far to the downside. Expect a sharp, short-term mean reversion rally (a "dead cat bounce") in Q2 to relieve the extreme selling pressure. However, until a proper base forms, this is counter-trend trading.
Technology: Similar to Consumer Discretionary, the long-term trend is now "High Bearish/Approaching Oversold." Q2 Structure: Watch for selling volume to dry up, potentially leading to a short-term mean reversion squeeze.

3. Base Building & Floor Discovery

These sectors are in transition and will likely spend Q2 trying to establish a structural foundation (a base) for their next major directional move.

Platinum Miners: After a violent Q1 breakdown from "Strong" across the board to short-term "High Bearish," the sector is in price discovery mode. Q2 Structure: The primary objective for Q2 will be finding a floor. Look for a "Stage 1" base to form—a period of prolonged sideways movement where the short-term and medium-term momentum slowly neutralize.
Paper & Pulp: Interestingly, while the long-term is "High Bearish," the short-term momentum has suddenly spiked to "Strong." Q2 Structure: This divergence often signals the early stages of a structural bottom. Q2 will likely see the sector trying to carve out a higher low and build a medium-term base.
Gold Miners: They spent Q1 cooling off (short and medium-term shifting to "Neutral"). Q2 Structure: This is highly constructive. Gold miners are currently building a high-level base. If they spend the first half of Q2 consolidating in this "Neutral" zone without breaking long-term support, they will be perfectly structured for a breakout continuation later in the year.

4. Trend Continuation (The "Stair-Step" Movers)

These sectors have strong momentum but haven't yet reached extreme "Overbought" exhaustion levels.

Banks & Telecoms: Both are printing solid "Strong" signals across multiple timeframes without flashing overbought extremes. Q2 Structure: These are the healthiest charts. Expect orderly "stair-step" price action—moving up, forming tight, shallow bases, and moving up again—without the violent mean reversions expected in the more extreme sectors.

Summary for Q2 Action: The Q1 rotation was violent. Q2 will likely require patience as the early-year winners (Chemicals, Coal) consolidate and form bases, while battered sectors (Consumer Discretionary, Tech, Platinum) attempt to arrest their declines and build floors. The safest structural setups heading into Q2 lie in the Banks, Telecoms, and Gold Miners, which are exhibiting sustainable strength or healthy consolidation.

Relative Sector Ratings as of the close on Friday, 27 March 2026.