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JSE Sector Rotation Report

  • Writer: Lester Davids
    Lester Davids
  • Dec 28, 2025
  • 3 min read

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

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Date: 28-December-2025

JSE Sector Rotation Report

Summary: The Verdict

Platinum Miners Demoted, Gold Miners Takes the Crown

The latest relative analysis of the JSE sectors reveals a significant shift in leadership. Despite long-term structural strength, Platinum Miners have been demoted from the top spot due to elevated execution risk; specifically, the sector is flashing "Overbought" signals across medium and short-term timeframes.

Consequently, Gold Miners have emerged as the new preferred leader. This sector offers a sustainable trend profile, combining structural bullishness with a healthy "Neutral" short-term reading, indicating it is not currently overheated.


Elsewhere, deep weakness persists across Consumer facing sectors (both Discretionary and Staples) and Technology, which remain in the "Danger Zone."



2. Strategic Asset Allocation View

Suggested portfolio weighting relative to the JSE Top 40 Index based on current technical posture.


🟢 Overweight (Accumulate)

  • Gold Miners: The primary trend leader.

  • Hospitals: A tactical "Turnaround" opportunity for aggressive portfolios.


🟡 Neutral (Market Weight / Hold)

  • Banks: Stable, low volatility.

  • Diversified Miners: Base building.

  • Platinum Miners: Downgraded to Hold due to short-term overheating.


🔴 Underweight (Avoid / Reduce)

  • Retailers (General & Food/Drug): No clear catalyst for upside.

  • Technology & Luxury Goods: High bearish momentum.

  • Financials (Insurers): Lacking relative strength.

  • Resources (Coal, Chemicals, Paper): Weak or falling knife setups.


3. Detailed Sector Analysis by Tier

Tier 1: The Leader (Strongest Setup)

Sector: Gold Miners

  • Status: Preferred / High Bullish

  • Technical Profile:

  • Long Term: High Bullish

  • Medium Term: Strong

  • Short Term: Neutral

  • Analysis: This is the only sector currently combining "High Bullish Momentum" on a quarterly basis with a "Strong" monthly trend. Crucially, the weekly (Short Term) reading is "Neutral," suggesting the price is consolidating gains rather than extending into overbought territory. This trend is viewed as sustainable.


Tier 2: The Tactical Opportunity

Sector: Hospitals

  • Status: Aggressive / Turnaround Play

  • Technical Profile:

  • Long Term: Weak

  • Medium Term: Weak

  • Short Term: Strong

  • Analysis: A pure turnaround play for active traders. While the structural trend remains weak, Hospitals are the only sector flashing a "Strong" short-term rating. This divergence suggests a tradable bottom is forming.


Tier 3: The Safe Havens (Stability)

Sectors: Banks, Diversified Miners

  • Status: Defensive / Base Building

  • Technical Profile: Mostly "Neutral" across timeframes.

  • Analysis:

  • Banks: Scores "Neutral" across all three timeframes. It avoids "Bearish" tags, offering capital preservation with low volatility.

  • Diversified Miners: Similar to Banks, the lack of "Weak" signals in the medium/short term makes this a safer hold than declining sectors, though it lacks immediate upside momentum.


Tier 4: Proceed with Caution

Sector: Platinum Miners

  • Status: High Risk / Overbought

  • Technical Profile:

  • Long Term: Strong

  • Medium Term: Overbought

  • Short Term: Overbought

  • Analysis: While the structural trend is intact, the double "Overbought" reading is a classic warning sign. The risk-to-reward ratio for new entries is poor, and the probability of a pullback or consolidation is high. Investors are advised to hold or trim positions rather than chase.


Tier 5: The Drifters (No Trend)

Sectors: Telecoms, Food & Drug Retailers

  • Status: Range Bound / Avoid

  • Technical Profile: Neutral (ST) mixed with Weak (MT).

  • Analysis: These sectors are stuck in the middle. They lack the momentum to break out and are not oversold enough to be value plays. There is no clear catalyst for upside; best avoided unless range-trading.


Tier 6: The Contrarian "Punt"

Sector: Paper & Pulp

  • Status: Value Play / Falling Knife

  • Technical Profile:

  • Long Term: Oversold

  • Medium Term: High Bearish

  • Analysis: Ranked low for trend followers but high for value hunters. The "Oversold" Long Term tag suggests the sector is cheap, but the "High Bearish Momentum" in the Medium Term means the falling knife has not yet landed.


Tier 7: The Laggards

Sectors: Life Assurance, Coal Miners

  • Status: Weakness

  • Technical Profile: Dominant "Weak" ratings.

  • Analysis: These sectors show no redeeming momentum signals. They are underperforming the index and should be avoided.


Tier 8: The Danger Zone

Sectors: General Retailers, Technology, Chemicals, Luxury Goods

  • Status: High Bearish Momentum

  • Technical Profile: Weak (LT) + High Bearish (MT).

  • Analysis: These sectors are the least preferred in the market. They are flagged with "High Bearish Momentum," indicating that the path of least resistance is down. Investors should avoid these sectors until clear signs of stabilization emerge.


Lester Davids

Senior Investment Analyst: Unum Capital

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