JSE Top 40 Index: Running +25%

Research Notes For 02 to 06 June > https://www.unum.capital/post/r0206june

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JSE Top 40 Index: The index is higher by 25% versus the low on Monday 07 April. The move is in line with the price action model reading at the time (included in the original note) where the long term reading (approximately 5 to 8 weeks) stated the following: "Aggressive selling is underway following a steady upward trend. Look for support at the prior swing lows to capture minor rebounds".

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Previous Post (Sunday 06 April): JSE Top 40 Index: Weekly Chart Analysis

JSE Top 40 Index Analysis:

Short Term (1 to 10 days): The short-term reading is Oversold. This suggests that the index has likely experienced a significant decline and may be due for a rebound or consolidation. However, being oversold alone doesn't guarantee an immediate reversal.

Medium Term (2 to 4 weeks): The medium-term reading is Weak. This implies that the index has been trending downwards over the past few weeks, indicating underlying selling pressure.

Long Term (5 to 8 weeks): The long-term reading is Neutral. This suggests that over a broader timeframe, the index hasn't established a clear upward or downward trend.

Overall Assessment:

Taking into account the weighted importance (short-term being the most significant), the JSE Top 40 Index exhibits deteriorating price action. While the oversold reading in the short term might offer a temporary bounce, the weakness in the medium term, coupled with the lack of a strong long-term trend, suggests caution. The recent price action is more aligned with the medium-term weakness than the potential for a short-term recovery.

JSE TOP 40 WEEKLY CHART

Lester Davids

Senior Investment Analyst: Unum Capital