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Sector Rotation

  • Writer: Lester Davids
    Lester Davids
  • Jan 21
  • 3 min read

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

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Summary

The JSE is currently defined by a massive divergence between Precious Metals (Gold and Platinum) and almost everything else. While the broader market ("SA Inc" sectors like Banks, Retailers, Insurers) remains trapped in neutral or bearish trends, the resource sector—specifically precious metals—is driving the Leading quadrant.



1. Leading (Strong Trend + Strong Momentum)

Sectors in this quadrant are outperforming the Top 40 with strong upside momentum.

  • Gold Miners vs Top 40:

    • Status: Strong Leading

    • Rotation: This sector has seen a massive surge in momentum since December 31. While it showed some short-term weakness at the end of 2025, it has aggressively rotated back into strength. By Jan 20, it is flagged as "High Bullish Momentum" and "Overbought" across multiple timeframes.

  • Platinum Miners vs Top 40:

    • Status: Leading (Consolidating)

    • Rotation: Platinum remains a dominant sector with "High Bullish Momentum" on the Long Term. However, short-term momentum has cooled from "Strong" (Dec 31) to "Neutral" (Jan 20), suggesting it is still leading but taking a breather compared to the explosive move in Gold.

2. Weakening (Strong Trend + Weakening Momentum)

Sectors here have a positive long-term trend but are losing short-term momentum.

  • No clear candidates currently.

    • Note: Most sectors with positive long-term trends (Gold/Platinum) are actually gaining momentum or holding steady, rather than weakening. The market is very polarized; sectors are either winning big or losing big.


3. Improving (Weak Trend + Strengthening Momentum)

Sectors here are in a downtrend but are showing signs of a short-term turnaround.

  • Hospitals vs Top 40:

    • Status: Improving

    • Rotation: This is the most notable rotation outside of miners. While the Long Term trend remains "Weak," the Short Term signal has shifted to "Strong" (Blue) in Jan 2026. This suggests bottom-fishing is occurring and the sector is trying to rotate out of the lagging quadrant.

  • Luxury Goods / Technology / Paper & Pulp (Potential Candidates):

    • Status: Deep Lagging (Oversold)

    • Rotation: These sectors are currently Lagging (see below), but are flashing "Oversold" signals on Medium/Short term metrics. In RRG terms, deep oversold readings often precede a move into the "Improving" quadrant, though the price action hasn't confirmed the turn yet.


4. Lagging (Weak Trend + Weak Momentum)

Sectors here are underperforming and have negative momentum.

  • Technology vs Top 40:

    • Status: Lagging

    • Rotation: The sector remains under heavy pressure. The Medium Term signal has deteriorated from "High Bearish" to "Oversold."

  • Chemicals vs Top 40:

    • Status: Lagging

    • Rotation: Consistently weak. Long Term remains "High Bearish Momentum," showing no signs of relief.

  • Consumer Discretionary vs Top 40:

    • Status: Lagging

    • Rotation: Continues to show "High Bearish Momentum" on the long term. There is no short-term buying interest visible yet.

  • Insurers vs Top 40:

    • Status: Lagging

    • Rotation: Deteriorated. On Dec 31, Medium/Short term signals were "Neutral." By Jan 20, they have dropped to "Weak."

  • Coal Miners vs Top 40:

    • Status: Lagging

    • Rotation: Short term momentum dropped from "Neutral" to "Weak."

  • Paper & Pulp vs Top 40:

    • Status: Lagging

    • Rotation: Severe deterioration. Short Term momentum crashed to "High Bearish Momentum" in January.


5. Neutral / Uncertain

Sectors huddled around the benchmark with no clear direction.

  • Banks vs Top 40:

    • Status: Neutral

    • Rotation: Zero change. The sector is "Neutral" across all three timeframes for both dates. It is performing exactly in line with the Top 40.

  • Telecoms vs Top 40:

    • Status: Neutral

    • Rotation: Slight loss of momentum. Short Term dropped from "Strong" (Dec 31) to "Neutral" (Jan 20), pulling it back to the center.

  • Consumer Staples vs Top 40:

    • Status: Neutral (Biased to Lagging)

    • Rotation: Slipping. Medium/Short term signals dropped from "Neutral" to "Weak," threatening to pull this sector into the Lagging quadrant.

  • General Miners vs Top 40:

    • Status: Neutral (Biased to Lagging)

    • Rotation: Short Term momentum faded from "Strong" (Dec 31) to "Neutral," likely due to the drag from non-precious metal commodities (like Coal).


Lester Davids

Senior Investment Analyst: Unum Capital

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