Article / 14 June 2016 at 9:45 GMT

South Africa Watch: Top40, Discovery Holdings in retreat

Head of Private Sales / Saxo Capital Markets - South Africa
South Africa
  • Declining stocks at 93% of Top40 
  • Momentum triggers on local stocks 
  • Continuation of weakness in risky markets

Shares of Sandton-based Discovery Holdings appear weak. Photo: iStock

By Dylan Bester

Let's take a look at market breadth.

Momentum 14th
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 days that have closed higher or lower overall. 

The overall momentum has been down since Monday and increased significantly yesterday, while the amount of advancing stocks in the Top40 is next to none at 7%. 

This is a massive momentum swing from last week, showing a gaining in momentum for declining stocks.

Technical event triggered on Discovery Holdings:
Discovery 14th

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Source: Saxo Bank

Discovery Holdings failing to test resistance, keep upside momentum

Momentum: Crossover of momentum to the downside, with both the short and medium terms showing further downside potential.

Risk: Average true range and maximum daily moves against momentum is R3, which puts a move above R122 at risk of breaking momentum.

Stochastics: Has moved from the overbought area towards oversold; still at 50 and some room to move lower.

Volume: Shows support coming through on downward pressure, which could help on further downside pressure.

Chart: Ranging between resistance at R129 and support at R110, we recently failed to test support on the downside, looking for potential to test R110 again.

Technical perspective on FTSE/JSE Top40 index (ZA40.I):
ZA40 14th

Source: Saxo Bank

ZA40.I gapping lower off resistance

Momentum: Both short and medium term momentum pointing down for potential crossover, with excessive moves to the downside.

Risk: Average true range daily swings of around 525 points in either direction, provides possible further downside.

Stochastics: Around the weaker side of oversold and not much room to move lower, with momentum on the downside.

Volume: Massive volume spikes pushing from recent support have been on the buy side which does support price.

Chart: Failing to test recent highs the overall momentum shows further downside potential with support coming in around 45 508.

BHP Biliton (BIL:xjse): Moving lower to test bottom of the channel at R173, rejecting higher levels below R200.

RMB Holdings (RMH:xjse): Stochastics high at 80 near overbought region, potential to re-test low around R50 again.

— Edited by Michael McKenna

Dylan Bester is a trader on Saxo Bank's South Africa desk.
14 June
fxtime fxtime
I actually done the BHP trade via the FTSE...thx as a great scalp.


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