Underneath The Surface on the JSE: 10 Things You Need To Know

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

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1. 📊 A comprehensive analysis of the JSE universe across 115 tickers reveals a market characterized by high-velocity momentum in core sectors, though significant exhaustion is beginning to manifest in the 'Leading' quadrant. Breadth remains relatively healthy, but the dispersion between performance leaders and laggards suggests we are transitioning from a broad-based rally into a more selective, tactical phase where execution timing is paramount.

   
   

2. ⛏️ The Basic Materials sector continues to dominate the leading edge of the RRG, though it simultaneously flashes the most 'At or approaching sell/reduce' signals. While giants like AGL and ANG (trading at 162,637 ZAC) have driven index returns, their current 'NO' Buy verdict underscores a localized exhaustion. In contrast, the Financials sector is exhibiting the healthiest internal breadth, with a high concentration of 'Buy on pullback' setups in heavyweights like SBK and NED, suggesting a rotation of capital into value-oriented banking.

   
   

3. 🚀 Momentum remains the dominant factor, clearly visible in the 'Buy continuation' success of the Technology and Telecommunications sectors, where NPN and VOD maintain strong upward trajectories. However, the 'Improving' quadrant is beginning to see a resurgence in the Real Estate and Consumer Services sectors. This shift indicates a broadening of the market's internal structure as investors hunt for laggard plays with favorable Risk:Reward profiles.

   
   

4. ⚖️ The internal tally of the 115-stock universe shows a significant tilt toward selective entries. Currently, there are more 'Buy continuation' and 'Buy on pullback' opportunities than outright 'Sell' signals, but the quality of these buys is highly bifurcated. The high-conviction 'YES' verdicts are largely found in names like DSY and FSR where momentum is cooling into support, whereas the 'NO' verdicts are concentrated in parabolic moves that have hit statistical "walls."

   
   

5. 🛑 Signs of institutional exhaustion are prominent in the Materials and Staples sectors. When leaders like BHG and SOL reach 'At or approaching sell/reduce' status, it typically precedes a period of range-bound consolidation. This exhaustion is not necessarily a precursor to a crash, but rather a mandatory cooling period that allows the internal plumbing of the market to reset before the next major leg.

   
   

6. 🎣 The 'Lagging' quadrant offers the most aggressive upside for contrarian traders. Names like MRP and SHP are categorized as 'At or approaching buy/add', representing a capitulation play where the selling pressure has likely peaked. While these carry higher risk, the R:R ratios in this group are among the highest in the 115-stock table, often exceeding 6.0, providing a significant buffer for those looking to catch the turn.

   
   

7. 🎯 A quantitative scan of the table shows that the best Risk:Reward (R:R) setups are currently found in the Technology sector, specifically PWR and NPN, where the distance to the logical stop is small relative to the upside target. Conversely, the Basic Materials leaders have seen their R:R compress significantly below 3.0, suggesting that the "easy money" has been made and protective stops should be trailed aggressively.

   
   

8. 💧 Trading internal market shifts requires precise execution, especially in high-priced counters like CPI (418,721 ZAC). The 'Buy Now' column serves as a liquidity filter; only those stocks with active momentum or confirmed support levels are cleared for immediate entry. This prevents capital from being tied up in 'Improving' names that haven't yet found a definitive floor.

   
   

9. 📖 Overall, the market internals suggest a "Tale of Two Markets." The outer layer—the indices—is being propped up by extended Materials, while the inner layer—the individual setups—is offering rich 'Buy on pullback' opportunities in Financials and Industrials. The transition from AGL/ANG leadership toward SBK/FSR and NPN represents a healthy internal rebalancing.

   
   

10. 💡 Investors should focus on the 'Buy on pullback' setups in the Financials sector for stability, while maintaining a presence in Technology for growth. The high number of 'At or approaching sell/reduce' signals in the Materials space should be used as a signal to harvest profits and redeploy into the 'Improving' and 'Lagging' sectors that are showing signs of structural support.

Lester Davids

Senior Investment Analyst: Unum Capital