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  • Understanding Relative Rotational Graph (RRG) in Share Trading

    Introduction In the world of equity market analysis, traders and investors often seek to identify promising investment opportunities by evaluating the performance of various shares. One valuable tool that aids in this analysis is the Relative Rotational Graph (RRG). RRG is a graphical representation that helps investors understand the relative strength and momentum of different shares within a given market or sector. What is a Relative Rotational Graph (RRG)? A Relative Rotational Graph is a visual representation of the relative performance of shares in comparison to a benchmark index or a specific group of shares. The graph plots individual shares as data points and illustrates their movement over time, relative to the benchmark. The positioning of each share on the graph provides crucial insights into its relative strength, momentum, and potential investment opportunities. How RRG Works: The Four Quadrants The RRG chart is divided into four quadrants, each representing different stages of relative performance: Leading (Leading Quadrant): Shares in this quadrant are exhibiting strong relative strength and positive momentum compared to the benchmark. They are outperforming the broader market or sector and are considered leaders in terms of price performance. These shares are regarded as potential Profit takes or Holds candidates. Weakening (Weakening Quadrant): Shares in this quadrant are experiencing a decline in relative strength compared to the benchmark. While they might still be in an uptrend, their momentum is slowing down, and they may be losing some of their leadership positions. These shares are classified as potential Deteriorating candidates or short-selling. Lagging (Lagging Quadrant): Shares in this quadrant are underperforming the benchmark. They are experiencing weak relative strength and may be struggling compared to other shares or the broader market. These shares are classified as potential Avoid candidates. Improving (Improving Quadrant): Shares in this quadrant are showing signs of improvement in relative strength, indicating that they are gaining momentum and starting to outperform the benchmark. These shares are considered as potential Buy candidates. Interpreting RRG for Investment Insights When analysing a Relative Rotational Graph, traders and investors can draw several meaningful conclusions: Identifying Leaders and Laggards: RRG helps investors quickly identify which shares are leading the market's upward trends and which are lagging behind. Leading shares in the Leading Quadrant might be attractive investment candidates, while those in the Lagging Quadrant could warrant closer examination to understand potential weaknesses. Spotting Trend Reversals: A changing position of a share on the RRG can signal a potential trend reversal. For example, a share moving from the Weakening Quadrant to the Improving Quadrant may indicate a shift in momentum and an upcoming upward trend. Diversification Insights: RRG can assist in portfolio diversification by highlighting shares that exhibit a low correlation with the benchmark. Adding shares with diverse movement patterns can help reduce overall portfolio risk. Monitoring Sector Rotations: RRG is especially useful for sector rotation strategies, where investors rotate their investments based on the relative strength of sectors. It helps identify which sectors are currently leading or lagging in the market. Limitations of RRG While RRG is a valuable tool, it is essential to recognize its limitations: Historical Performance: RRG is based on past price data and may not always predict future movements accurately. Not a Standalone Indicator: RRG should be used in conjunction with other technical and fundamental analysis tools for comprehensive decision-making. Volatility Impact: Highly volatile shares may exhibit erratic movements on the RRG, making interpretation challenging. Conclusion Relative Rotational Graphs provide traders and investors with a powerful visual representation of the relative performance of shares compared to a benchmark index or a group of shares. By understanding the quadrants and interpreting the movements of individual shares, investors can gain valuable insights into market trends, identify potential investment opportunities, and optimise their portfolio allocations. As with any investment analysis tool, it should be used alongside other methods and within the context of a well-thought-out investment strategy. Top 40 Share constituent RRG chart: The output displayed below compares the individual constituents of the JSE Top 40 index against the index itself. This output undergoes daily updates, and to enhance clarity, various colour backgrounds are utilised for ease of reference. Leading (Leading Quadrant): Green background. These shares are regarded as potential Profit takes or Hold candidates. Weakening (Weakening Quadrant): Yellow background. These shares are classified as potential Deteriorating candidates or short-selling. Lagging (Lagging Quadrant): Red background. These shares are classified as potential Avoid candidates. Improving (Improving Quadrant): Blue background. These shares are considered potential Buy candidates. Assign ranking numbers to each share based on the overall RRG strength. The ranking of each share within a quadrant reflects the top selections. Leading quadrant Ticker RS_Current MOM_Current Quadrant_Current Quadrant_Previous 40 WHL 2.968158 1.394233 Leading Leading 34 SBK 2.296839 1.456861 Leading Improving 21 INP 2.282641 2.982659 Leading Weakening 31 PRX 1.746902 1.040354 Leading Leading 15 FSR 1.615931 1.086213 Leading Leading 24 MRP 1.408494 0.805577 Leading Leading 11 CLS 1.374972 0.807577 Leading Weakening 28 NPN 1.298141 2.620911 Leading Leading 1 AGL 1.256663 51.292101 Leading Leading 9 BVT 1.237251 0.960529 Leading Leading 8 BTI 1.005861 0.038118 Leading Lagging Weakening quadrant Ticker RS_Current MOM_Current Quadrant_Current Quadrant_Previous 7 BID 0.696101 2.640720 Weakening Leading 32 REM 0.581533 1.427273 Weakening Weakening 22 MCG 0.396085 7.052757 Weakening Weakening 18 GRT -0.102507 1.105422 Weakening Weakening 3 ANG -0.181211 1.130725 Weakening Weakening 29 NRP -0.659811 2.989521 Weakening Weakening Lagging quadrant Ticker RS_Current MOM_Current Quadrant_Current Quadrant_Previous 12 CPI 0.939518 -0.118376 Lagging Weakening 36 SLM 0.805486 -1.305917 Lagging Improving 13 DSY 0.694853 -2.910818 Lagging Lagging 19 IMP 0.686410 -2.266939 Lagging Improving 5 APN 0.654247 -6.394666 Lagging Improving 10 CFR 0.642479 -2.086108 Lagging Improving 17 GLN 0.579505 -0.173815 Lagging Lagging 37 SOL 0.562135 -2.434435 Lagging Lagging 14 EXX 0.393518 -1.276476 Lagging Lagging 6 BHG -0.127553 -1.472103 Lagging Lagging 23 MNP -0.219561 -2.713100 Lagging Lagging 33 RNI -0.769388 -1.076867 Lagging Lagging 16 GFI -1.769893 -0.443737 Lagging Lagging Improving quadrant Ranking   Share RS MOM 2 AMS 3.050698 -0.561068 Improving Improving 38 SSW 2.111528 -0.532133 Improving Improving 20 INL 2.031568 -28.492180 Improving Weakening 25 MTN 1.985938 -1.972519 Improving Improving 0 ABG 1.837361 -1.550243 Improving Improving 27 NPH 1.785470 -0.517930 Improving Improving 39 VOD 1.495715 -0.822666 Improving Weakening 4 ANH 1.363046 -1.878510 Improving Improving 35 SHP 1.329113 -1.111617 Improving Lagging 30 OMU 1.156227 -3.978359 Improving Improving 26 NED 1.070180 -1.449847 Improving Lagging Largest Changes in Relative Strength: Ticker RS_Change MOM_Change 20 INL 10.655385 -170.021246 21 INP 10.322609 16.512691 29 NRP 9.253732 -28.634199 34 SBK 8.524359 14.168605 35 SHP 6.985010 0.329756 Largest Changes in Momentum: Ticker RS_Change MOM_Change 25 MTN 6.627564 41.563803 5 APN -3.844789 36.423586 22 MCG 3.171269 24.486440 21 INP 10.322609 16.512691 34 SBK 8.524359 14.168605 Changes in Quadrants: Ticker Quadrant_Change 5 APN Improving to Lagging 7 BID Leading to Weakening 8 BTI Lagging to Leading 10 CFR Improving to Lagging 11 CLS Weakening to Leading 12 CPI Weakening to Lagging 19 IMP Improving to Lagging 20 INL Weakening to Improving 21 INP Weakening to Leading 26 NED Lagging to Improving 34 SBK Improving to Leading 35 SHP Lagging to Improving 36 SLM Improving to Lagging 39 VOD Weakening to Improving

  • Understanding Beta: A Key Metric for Share Investors

    Introduction When it comes to investing in shares, it's crucial to be armed with the right tools and knowledge to make informed decisions. One of the most important metrics that investors use to assess the risk and return potential of equities is beta. Beta is a numerical value that measures the sensitivity of a share's price movements relative to changes in the broader market. We will delve into the concept of beta and explore its significance for share investors. What is Beta? Beta, often denoted as "β," is a statistical measure used in finance to quantify the volatility or systematic risk of a share compared to the overall market. The market, in this context, is typically represented by an index, such as the Top 40 index. The beta value indicates how much a share's price is expected to move concerning the market's movements. It helps investors understand how closely the share's performance is tied to the market's fluctuations. Interpreting Beta Values β = 1: If a share has a beta of 1, it moves in perfect correlation with the market. Its price tends to rise or fall by the same percentage as the market index. Such shares are considered market-neutral in terms of volatility. β < 1: A share with a beta below 1 is less volatile than the market. In other words, it is expected to have smaller price swings than the overall market. These shares are often referred to as defensive equities and are perceived to offer a more stable investment option. β > 1: A share with a beta above 1 is more volatile than the market. It tends to experience larger price movements, both upward and downward, compared to the market index. These shares are considered aggressive or growth-oriented investments. Risk and Return Relationship Beta plays a crucial role in determining the risk and return profile of a share. Typically, higher beta shares offer the potential for greater returns but also come with higher risk. Conversely, lower beta shares may have more modest returns but tend to be less risky and more stable during market downturns. For example, if Share A has a beta of 1.5, and the market (represented by an index) increases by 10%, Share A might be expected to rise by 15% (1.5 times the market return). Conversely, if the market falls by 10%, Share A could be anticipated to decline by 15%. How to Use Beta in Investment Decisions Diversification: Beta can help investors build a diversified portfolio. By combining shares with different beta values, investors can offset the risk of high-beta shares with the stability of low-beta shares. Risk Management: Beta assists in assessing the level of risk an investor is willing to undertake. Conservative investors might opt for low-beta shares, while those seeking higher returns might favour high-beta shares. Market Timing: Understanding beta can help investors make better decisions about when to buy or sell a share. During a bullish market, high-beta shares may outperform, while during a bearish market, low-beta shares may hold up better. Limitations of Beta While beta is a valuable metric, it does have some limitations: Historical Data: Beta is based on historical price movements, and the past may not necessarily predict future performance accurately. Market Conditions: Beta assumes that market conditions will remain constant, which is often not the case. Single-factor Metric: Beta considers only market-related risk and does not account for other factors like company-specific events or changes in industry dynamics. Conclusion Beta is a useful tool for investors to gauge the volatility and risk associated with a particular share relative to the overall market. It aids in constructing a well-balanced portfolio and managing risk according to individual investment goals and risk tolerance. However, beta should not be the sole factor in investment decisions, as it's essential to consider other aspects of a company's fundamentals and the broader economic environment to make well-informed investment choices. As with any investment analysis, it's prudent to conduct thorough research. Top 40 share beta and selected markets: The chart below highlights the top 10 and bottom 10 changes in betting trends for the selected markets, providing a comprehensive overview of the most significant shifts. Download the Excel file here:

  • Correlation in Share Trading: Understanding the Impact of Relationships

    Introduction In the world of share trading, understanding correlation is vital for making informed investment decisions and managing risk effectively. Correlation plays a crucial role in assessing how different shares or assets move in relation to each other, providing insights into portfolio diversification, risk management, and potential investment opportunities. We will explore the concept of correlation in share trading, its importance, and how traders and investors can leverage this knowledge to improve their strategies. What is Correlation in Share Trading? In share trading, correlation refers to the statistical relationship between the price movements of two or more shares or assets. When two shares have a positive correlation, they tend to move in the same direction – when one share's price increases, the other share's price also increases. On the other hand, a negative correlation indicates that two shares tend to move in opposite directions – when one share's price increases, the other share's price decreases. Finally, if two shares have a correlation close to zero, it suggests that their price movements are not significantly related. Measuring Correlation in Share Trading The most common method of measuring correlation between two shares is by using the Pearson correlation coefficient, just like in general statistics. The correlation coefficient ranges from -1 to 1, with the same interpretation as before: r = 1 indicates a perfect positive correlation, where the two shares move in complete harmony. r = -1 indicates a perfect negative correlation, where the two shares move in opposite directions. r ≈ 0 indicates little to no correlation, suggesting that the two shares have independent price movements. Importance of Correlation in Share Trading Understanding the correlation between different shares is crucial for several reasons: Diversification: Correlation helps traders identify assets that have low or negative correlations with each other. Diversifying a portfolio with assets that are not highly correlated can help reduce overall risk. When some assets decrease in value, others might increase, which can mitigate losses. Risk Management: High correlations among shares can increase the overall risk in a portfolio. If all shares in a portfolio are positively correlated, they are more likely to experience simultaneous declines during market downturns. By knowing the correlation between holdings, traders can optimise their portfolios to manage risk more effectively. Identifying Investment Opportunities: Traders can use correlation analysis to identify potential investment opportunities. For example, if they notice a positive correlation between two shares, they might consider one as a proxy for the other. If the correlation is negative, they may see a hedging opportunity to protect against price declines. Sector Analysis: Correlation analysis can help traders understand the broader movements within specific sectors or industries. For example, in a technology-heavy sector, many shares might be positively correlated, and understanding this can influence investment decisions within that sector. Limitations of Correlation in Share Trading While correlation is a valuable tool, it has its limitations: Changing Market Conditions: Correlations between shares can change over time due to shifts in market dynamics, economic conditions, or company-specific events. Traders need to monitor correlations regularly and be prepared for them to evolve. Limited to Linear Relationships: Correlation measures linear relationships between variables. Some shares may have non-linear relationships, making it important to consider other forms of analysis alongside correlation. Causation Concerns: As always, it's essential to remember that correlation does not imply causation. Just because two shares are correlated does not necessarily mean that one share causes the price movement of the other. Conclusion In share trading, understanding correlation is a powerful tool for making informed decisions, managing risk, and optimising investment portfolios. By analysing the relationship between different shares, traders can diversify their portfolios effectively, identify hedging opportunities, and navigate changing market conditions more intelligently. However, correlation should always be used in combination with other forms of analysis, and traders must be cautious about drawing causal conclusions solely based on correlation. With a solid understanding of correlation, traders can navigate the dynamic world of share trading with greater confidence and success. Top 40 share correlation and selected markets The chart displayed below illustrates the most significant changes in correlations between various markets over the past 10 days. This detailed analysis highlights the dynamic relationships and interdependencies among different financial markets, offering valuable insights into recent trends and shifts in market behavior. By examining these correlation changes, traders, investors and analysts can better understand the evolving landscape and make more informed decisions. Largest Positive Changes in Correlation (Last 10 Days): Ticker Ticker GRT USDZAR 0.8 USDZAR GRT 0.8 APN BTI 0.7 SOL INL 0.7 BHG ANG 0.7 Largest Negative Changes in Correlation (Last 10 Days): Ticker Ticker RNI ANH -1.0 ANH RNI -1.0 MTN PRX -0.9 BID WHL -0.9 GRT SOL -0.9 Download the Excel file here:

  • Understanding Relative Price Strength (RPS) in Share Trading

    Introduction: Relative Price Strength (RPS) is a critical technical indicator used by traders and investors to assess the performance of an equity relative to the broader market or its industry peers. By understanding RPS and incorporating it into their investment strategies, individuals can gain valuable insights into an equity's potential for future price movement. We will delve into the concept of RPS, how it is calculated, and its significance in share trading. What is Relative Price Strength (RPS)? Relative Price Strength, also known as Relative Strength, is a momentum-based metric that evaluates an equity's performance relative to a benchmark index or a group of peers. It is used to identify equities that have outperformed or underperformed in their market or sector over a specified period. RPS Calculation: To calculate RPS, we compare the price performance of a particular share to the performance of a designated benchmark index or a group of shares. The RPS calculation typically involves comparing the price change over a specific time frame, depending on the preference of the trader or investor. The formula for calculating RPS is as follows: RPS = (Share's Price at date x / Share's Price at date y) / (Benchmark's Price at date x / Benchmark's Price at date y) date x = most recent price of the share or benchmark date y = price of the share or benchmark x periods ago Understanding RPS Values: The RPS value is represented as a ratio, and it indicates the stock's relative strength compared to the benchmark or peer group. A value above 1 suggests that the share has outperformed the benchmark or peers, while a value below 1 indicates underperformance. Significance of RPS in Share Trading: Identifying Strong Performers: RPS helps traders and investors identify shares that have demonstrated significant price strength compared to the overall market or their sector. These shares are often considered strong performers and may continue to exhibit positive price movement. Trend Confirmation: RPS can help confirm the prevailing trends in the market or sector. Shares with high RPS values are more likely to be in uptrends, while those with low RPS values might be in downtrends. Share Selection: Traders can use RPS to filter and prioritise their share selection process. A higher RPS value could make a share more appealing for trading or investment opportunities. Divergence Detection: RPS can also help identify potential divergences between a share and the broader market or sector. Divergences occur when an equity's price moves in the opposite direction to its RPS, which might signal a potential trend reversal or correction. Limitations of RPS: While RPS can be a valuable tool for assessing relative performance, it has some limitations that traders and investors should be aware of: Short-Term Focus: RPS is primarily a short to medium-term indicator. It might not accurately reflect a share's long-term potential or fundamental strength. Benchmark Selection: The choice of benchmark or peer group can significantly impact the RPS calculation. Different benchmarks can lead to different RPS values for the same share. Conclusion: Relative Price Strength (RPS) is a valuable technical indicator that provides insights into an equity's relative performance compared to a benchmark index or its peers. By understanding RPS, traders and investors can make more informed decisions, identify strong performers, and validate existing trends in the market or sector. However, like any single metric, RPS should be used in conjunction with other indicators and fundamental analysis to make well-rounded investment decisions. JSE All Share headline indices RPS: In the financial markets, certain headline indices have showcased remarkable outperformance, suggesting a notable influx of capital. This surge in capital inflow signals growing trader and investor confidence and interest in these headline indices. Whereas traders and investors seem to be reallocating their investments away from headline indices where there is an outflow of capital. Capital Inflow headline indices (in ranking order): 1. Industrials Capital outflow headline indices (in ranking order): 1. Financials 2. Resources JSE All Share share RPS: Understanding the performance of individual shares in comparison to the broader market is crucial for traders and investors seeking to capitalise on market trends. The table below highlights the top 20 and bottom 20 shares based on RPS, with a lookback period of the last 10 days, indicated by their ranking changes since the previous update. The table is updated daily. The Top 20 RPS Leaders: These are the shares that have exhibited the strongest relative price performance within the JSE All Share index over the past 10 days. The Bottom 20 RPS Laggards: These shares have shown the weakest relative price performance within the JSE All Share index over the same 10-day period. JSE All Share sector RPS: In this analysis, we will examine the top 10 and bottom 10 sectors based on RPS, considering the lookback period of the last 10 days. The table is also updated daily. The Top 10 RPS Leading Sectors These sectors have demonstrated the strongest relative price performance within the JSE All Share index during the 10-day lookback period. The Bottom 10 RPS Lagging Sectors Conversely, these sectors have exhibited the weakest relative price performance within the JSE All Share index over the same 10-day period.

  • Comparing Value Traded to the Daily Percentage Change for JSE shares

    What is a Heatmap? A heatmap is a graphical representation of data where individual shares are represented as colours. In this context, the heatmap below shows the top 60 JSE (Johannesburg Stock Exchange) shares by value traded and their percentage daily change. Share Tickers: Each block or cell in the heatmap is labelled with a ticker symbol, representing a particular share on the JSE. For example, "IMP" or "NPN" are tickers for specific companies listed on the JSE. Axes: The x-axis depicts the "Percentage Change", spanning from negative to positive values. It reflects the day-to-day fluctuations in a share's price, with positive values signifying an uptick in share price value and negative ones denoting a decline. Block size: The size of each block signifies the "Value Traded" for a particular share in a day. "Value Traded" denotes the total monetary amount of a specific share exchanged on the equity market within a given day. It is determined by multiplying the volume of shares traded with their average trading price for that day. Formula: Value Traded = Number of Shares Traded × Average Trading Price of the Share This metric is pivotal as it sheds light on the liquidity and activity surrounding a specific share. A higher value traded typically signifies increased interest and engagement with that share for a multitude of reasons. Conversely, a lower value traded might suggest diminished interest or activity in that particular share. How to Use the Heatmap: When analysing equity markets, both the "value traded" and the direction of the share price movement (percentage change) can provide critical insights into the sentiment and behaviour of traders and investors. High Trading Volume with Rising Share Price (larger block sizes and darker shading of green): Interpretation: This typically indicates a strong buying interest in the share. A higher volume of shares being traded, combined with an upward movement in price, suggests that the demand for the share is outstripping supply. This can be due to positive news about the company, better-than-expected earnings reports, or any other factor that boosts traders' and investors' confidence in the share's future performance. Possible Implications: The share may be in a bullish phase. This scenario might attract more market participants who want to capitalise on the upward trend, further pushing the price up, at least in the short term. However, traders and investors need to be cautious about potential overvaluations. High Trading Volume with Declining Share Price (larger block sizes and darker shading of red): Interpretation: This indicates strong selling pressure. Even though a large volume of shares is being traded, the fact that the price is declining suggests that there is more supply than demand for the share. Reasons can include negative news about the company, disappointing earnings reports, or broader negative market or sector trends. Possible Implications: The share might be in a bearish phase, signalling a potential downtrend. This can cause panic selling among market participants, which might further depress the share price. On the other hand, some market participants might see this as an opportunity to buy the share at a discounted price, anticipating a future rebound. High Trading Volume with Minimal Price Fluctuation (larger block sizes with a beige shading): Interpretation: When there is a large value traded with minimal share price movement, it suggests that there is equilibrium between buyers and sellers: A high trading volume with little change in price indicates that there is a balance between buying and selling pressure. For every trader or investor eager to sell, there is someone equally willing to buy at nearly the same price. Possible Implications: The share could be in a consolidation phase, where it is finding a stable price range after a period of significant upward or downward movement. This phase can often precede a breakout in either direction, depending on subsequent news or market sentiment. The share might be trading near a strong support (a price level where a share tends to find buying interest) or resistance level (a price level where selling interest tends to surface). Even with high trading volumes, the share might struggle to break these levels, leading to minimal price movement. Low Trading Volume with Significant Price Swing (Either Direction) (small block sizes with either a darker shading of green or red): Interpretation: When there is a small value traded combined with significant share price movement either upwards or downwards, the share might not be highly liquid, meaning there are not many shares available for trading. In such cases, even small buy or sell orders can cause disproportionate price movements. Possible Implications: Shares that are thinly traded or have low trading volumes can be more volatile, leading to larger price swings with fewer shares being exchanged. The share might be highly sensitive to specific news or events. Even if only a few traders and investors react to the news, it can cause a significant price movement due to the low volume of trades. Low Trading Volume with Minimal Price Fluctuations (small block sizes with a beige shading): Interpretation: There might be a general consensus about the share's value among the few participants, leading to little price movement. In the absence of any significant news or events related to the company or its industry, traders and investors might have no strong incentive to buy or sell, resulting in low trading volume and stable prices. Possible Implications: Market participants could be on the sidelines, waiting for a clear indication or event that might dictate the share's future direction. Until such an event occurs, there may be limited trading activity and minimal price change. The nearly unchanged price with low volume might indicate that the market is indecisive about that particular share at the moment, with no strong bullish or bearish sentiment driving it. Conclusion: When the bulk of the blocks are sizable and green, it signifies a largely upbeat market day, underscored by heightened trading activity. These shares could be potential candidates for a long position. On the other hand, if a majority of blocks are red and indicate robust trading, the market seems to have tilted towards a negative trend, suggesting possible short-sell opportunities. For shares represented by beige blocks, whether large or small, it might be prudent to exercise caution or steer clear In all the scenarios presented, it is crucial to consider other market indicators and conduct a comprehensive analysis before making investment decisions. External factors, such as macroeconomic conditions, industry trends, and geopolitical events, can also influence share price movements and trading volumes.

  • Value Traded to the Daily Average Value traded for JSE shares

    What is a Heatmap? This heatmap displays value trader data regarding the top 60 JSE (Johannesburg Stock Exchange) shares. It depicts how their last value traded compares to their average daily value traded over the last 20 days. Share Tickers: Each block or cell in the heatmap is labelled with a ticker symbol, representing a particular share on the JSE. For example, "IMP" or "NPN" are tickers for specific companies listed o the JSE. Axes: The x-axis represents the "Percentage of Average Value Traded", ranging from zero to positive percentages. It illustrates the daily variations in a share's trading volume (value traded), where increased positive values indicate an increase in the value of shares traded. Block size: The size of each block signifies the "Value Traded" for a particular share in a day, compared to its 20-day value traded, expressed as a percentage. The greater the block size, the more significant the increase in value traded. Furthermore, blocks with a reddish hue indicate that the value traded is associated with a volume spike. In essence, a volume spike refers to a sudden and notable increase in the number of shares traded in a short period, often signalling heightened traders and investor interest or activity in that particular share. "Value Traded" denotes the total monetary amount of a specific share exchanged on the equity market within a given day. It is determined by multiplying the volume of shares traded with their average trading price for that day. Formula: Value Traded = Number of Shares Traded × Average Trading Price of the Share Average Value Traded Per Share, is the average of the daily traded values for the last 20 trading sessions. It provides a more stable measure to compare against a single day's value traded. Formula: Percentage of average value traded = Value traded for one day ÷ 20-Day Average Value Traded How to Use the Heatmap: The presence of various colors from blue to red suggests that there's a diverse trading behavior among the top 60 JSE shares. Some share are experiencing a surge in trading activity, while others are seeing less than usual. The shares in the red zone might be experiencing significant events, news, or developments leading to heightened trader and investor interest, resulting in higher trading volumes. Conversely, the shares in the blue zone could be in a consolidation phase, or there might not be any significant news driving the share, leading to decreased interest and trading activity. Interpretation Liquidity Indicator A higher average traded value suggests that the share is more liquid, meaning it can be bought or sold in larger quantities without causing significant price movements. This can be beneficial for large institutional investors who need to make big trades without impacting the price too much. Trader and Investor Interest A sudden spike in the daily value traded compared to the 20-day average can indicate heightened trader and investor interest, either due to recent news, earnings announcements, or other market events. Value Traded Per Day > 20-Day Average (large red blocks): When the value traded on a particular day is significantly higher than the 20-day average, it could signify increased buying/selling activity. This could be due to recent positive/negative news, earnings beats/misses, or sector-specific developments. Such spikes warrant further investigation into why traders and investors are showing increased interest. Value Traded Per Day < 20-Day Average (large blue blocks): If the value traded on a particular day is much lower than the 20-day average, it might indicate decreased interest or a potential consolidation phase. In such cases, traders and investors might be in a "wait and watch" mode, or there might not be any significant news driving the share. Consistency (small red and blue blocks) If the daily traded value remains consistently close to the 20-day average, it suggests stability in the share's trading patterns. However, small red blocks signify that traded values for these shares are also higher than their respective averages. Conclusion This heatmap provides a visual snapshot of the trading activity of the top 60 JSE shares relative to their average daily values. Traders and investors can use such visualisations to quickly identify shares with abnormal trading volumes, which might warrant further investigation or present potential trading opportunities. In all the scenarios presented, it is crucial to consider other market indicators and conduct a comprehensive analysis before making investment decisions. External factors, such as macroeconomic conditions, industry trends, and geopolitical events, can also influence share price movements and trading volumes.

  • JSE Volume Analysis

    Introduction: This graph is a scatter plot presenting volume analysis for the Johannesburg Stock Exchange (JSE). The horizontal axis (x-axis) represents the "Volume multiple of the last 200 trading days", indicating how much the volume of the day’s trading compares to the average of the last 200 days. A value of 1 would mean the volume is equal to the 200-day average, values greater than 1 mean more than average volume, and values less than 1 mean less than average volume. The vertical axis (y-axis) shows the "Percentage daily change", which represents the percentage change in the share price compared to the previous day. Positive values indicate an increase in share price, while negative values indicate a decrease. The points on the graph are labelled with ticker symbols representing different companies. Points above the horizontal axis represent shares that have increased in price, and points below it represent shares that have decreased in price. Similarly, points to the right of the vertical axis represent shares with higher trading volumes than the average, and points to the left represent shares with lower-than-average trading volumes. Interpretation: Shares in the upper right quadrant (green dots) could be considered strong performers as they are experiencing both a high volume of trading and an increase in price. This could indicate positive investor sentiment and possibly a good buying opportunity if the momentum is expected to continue. Shares in the lower right quadrant (red dots) might be experiencing a high volume of trades but are decreasing in price. This could signal a selling pressure or negative sentiment, and investors might want to investigate further before making a decision, as they could represent either a potential for buying at a lower price (if the fundamentals are solid) or a risk if the price continues to decline. Shares in the lower left quadrant (red dots) are seeing both lower volumes and a decrease in price, which could be a sign of weak investor interest or a negative outlook, suggesting caution. Shares in the upper left quadrant (green dots) are experiencing an increase in price despite trading at lower volumes, which could indicate undervalued opportunities but also might suggest lower confidence among investors, thus these would require careful analysis. Before making any investment decisions, it is important to consider other factors beyond just the volume and price change. These can include fundamental analysis of the company's financial health, news, industry trends, and overall market conditions. Additionally, past performance is not necessarily indicative of future results. Always conduct thorough research.

  • Market Overview

    The market overview serves as a comprehensive snapshot of the financial markets, providing a summary of various asset classes, sectors, and indices. Its primary purpose is to showcase the performance of different financial instruments over a specific period.

  • Analyst Thoughts: Bitcoin Medium-Term

    THE BULL FLAG PATTERN IS MATURING The overall bullish stance is materialising, as illustrated. The impulsive bull trend from point 0 has further potential to T1 and eventually T2. Gains are likely to be volatile with intermittent corrections as the trend starts to unwind. The expected PK flag pattern is in a mature stage of development but could have another down leg to S1/K* as an interim view adjustment. The W,X,Y type correction off T1 to S1* will still be part of the general bull trend that is expected to be completed around T2. The eventual meaningful downside to S2 and beyond is likely on the completion of the bull trend to the eventual T2 target. Target and Re-assessment Levels: Pivotal Levels: K* Primary Trend: Gains to T1, and eventually to T2 followed by downside to S2* Prevailing Trend: Ongoing PK* correction Technical Rating: Medium

  • Analyst Thoughts - USD/ZAR Medium-Term

    PRICE ACTION IS AT A KEY JUNCTURE Summary: Expected upside off S1*/K to RA1 remains in line with the preferred view of impulsive upside to T1 and T2 over time. The recent definitive upside off S1*/K confirms the illustrated bullish outlook and could have completed the PK triangle pattern. A sustained break of RA1* is, however, required to activate these gains. Alternative: Failure to break RA1* over the next trading period will suggest a deeper P/L correction to L/S2 (perforated arrow). Important levels: S1* and RA1*. Target and re-assessment levels: Important levels: RA1* and S1* Primary trend: RA1*/S1* consolidation, followed by a bull trend to T1/T2 Current trend: Gains off S1* to RA1* Monthly Range: RA1*/S1* Technical rating: Medium

  • Market Overview

    The market overview serves as a comprehensive snapshot of the financial markets, providing a summary of various asset classes, sectors, and indices. Its primary purpose is to showcase the performance of different financial instruments over a specific period.

  • Understanding Linear Regression Channels and Standard Deviation in Price Action Analysis

    Introduction In the world of technical analysis, traders and investors often use various tools and indicators to gain insights into market trends and potential price movements. One such tool is the Linear Regression Channel, which utilises statistical concepts like standard deviation to help identify the potential range of price action. Understanding how to interpret and use the Linear Regression Channel in conjunction with standard deviation can provide valuable information for traders to make informed decisions. What is Linear Regression Channel? The Linear Regression Channel is a technical analysis tool that plots a straight line based on the linear regression of the price data over a specific period. This line serves as the central axis of the channel, with two parallel lines drawn above and below it, representing the upper and lower ranges. The channel helps traders visualize the general direction of the trend and possible areas of support and resistance. Calculating the Linear Regression Channel involves fitting a linear regression line to the price data, usually based on the closing prices, over a defined look-back period. The resulting line represents the average or mean of the price data over that period. Understanding Standard Deviation Standard deviation is a measure of the dispersion or variability of the price data around the linear regression line. In the context of a Linear Regression Channel, standard deviation helps determine the width of the channel, which indicates the potential volatility or uncertainty of price movements. When the standard deviation is high, it means the price data is spread out widely from the regression line, indicating higher volatility. Conversely, a low standard deviation suggests that the price data is closely clustered around the regression line, indicating lower volatility. Using Scoring to Assess Proximity to the Linear Regression Channel The term "scoring" in this context refers to a numerical value representing the distance of the current price from the linear regression line. This score is typically normalised to a scale between 0 and 10, with 1 indicating the lowest proximity to the regression line and 10 indicating the highest proximity. The relationship between the scoring and the Linear Regression Channel is as follows: Scoring Close to 0: When the scoring is closer to 0, it suggests that the current price is near the lower range of the Linear Regression Channel. This indicates that the market is potentially oversold, and the price may be due for a correction or bounce towards the mean or central axis of the channel. Scoring Close to 10: Conversely, when the scoring is closer to 10, it suggests that the current price is near the upper range of the Linear Regression Channel. This indicates that the market is potentially overbought, and the price may be due for a correction or a bounce back towards the mean. Interpreting Linear Regression Channel and Standard Deviation Together Combining the Linear Regression Channel and standard deviation provides a more comprehensive picture of the market's behaviour. When the standard deviation is wider, the channel broadens, indicating higher volatility. In contrast, a narrower standard deviation results in a narrower channel, suggesting lower volatility. Traders can use this information to: Identify Potential Reversal Zones: When the price action reaches the upper or lower range of the channel, coupled with high standard deviation, it may indicate an overextended market and a potential reversal in the opposite direction. Recognise Trend Strength: If the price remains within a narrow channel and the standard deviation is relatively low, it suggests a stable and well-defined trend, while a wide channel with a high standard deviation indicates a more erratic or uncertain market. Conclusion The Linear Regression Channel and standard deviation are valuable tools for traders to gain insights into the potential range of price action and market volatility. When combined, they can provide a clearer understanding of trend direction, potential reversal points, and overall market sentiment. By using the scoring system to assess proximity to the channel, traders can make more informed decisions, enhancing their ability to navigate the dynamic world of financial markets. However, as with any technical analysis tool, it is essential to use these indicators in conjunction with other forms of analysis and risk management strategies to make well-rounded and informed trading decisions. Top 40 share scoring and selected markets The bar chart displayed below presents the constituents of the Top 40 index. This dynamic bar chart is updated weekly, providing valuable insights.

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