Let's take a look at market breadth, and review recent technical events on the JSE Top40 and Reinet Investments SCA.
Momentum Up and Down shows the previous day's Top40 stock direction and short-term moving averages direction.
Advancing and Declining stocks in the Top40 shows the amount of stocks for the previous day that have closed higher or lower overall.
The Top40's overall momentum during the last week has been to the upside, driven higher by sentiment. A majority of Top40 stocks are advancing and continue to push the index higher.
Currently, we are at the extremes of positive upside momentum, and we need to start looking for possible turning points or change in sentiment.
JSE Top40 (ZA40.I): Heading to close a gap formed during Brexit
The JSE Top40 is breaking out of the range, and its inability to hold gains at the highs around 47,060 shows some selling pressure coming in. Another day of positive upside could provide further potential to break and hold above resistance.
Momentum: Positive and pushing higher towards psychological and technical resistance at 47,060.
Risk: The average true range is roughly 550 points per day. On the downside, this move would cause concern of a possible change in momentum.
Chart: The wedge formation and upside trendline has been broken to the upside, and now forms support at 46,550.
JSE Top40 (ZA40.I)
Reinet Investments SCA (REI:xjse): Reaching support levels
There is an opportuntiy to start looking at a small position in REI as the stochastics indicate it is oversold at the moment, and reaching support levels mimimises the risk.
Momentum: Still on the downside on both the short- and medium-term trend.
Risk: The average true range at lows of 0.60c limits the risk below support levels.
Volume: Increased volume around the support area, and overall higher in the last few days.
Chart: Ranging between 31.32 and 35 level, with trendline support coming in around these lower levels.
Reinet Investments SCA (REI:xjse)
— Edited by D. Deacon