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Article / 31 May 2016 at 14:00 GMT

South Africa Watch: Top40 in limbo, Nedbank update

Head of Private Sales / Saxo Capital Markets - South Africa
South Africa
  • Johannesburg Top 40 outlook approaching all-time high
  • Nedbank shares remain in a technical downward channel
  • Overall market momentum presently sideways, inconclusive

Activity on Johannesburg's Top40 index appears to be slowing of late. Photo: iStock

By Dylan Bester


Momentum “up” and “down” shows the previous days' Top40 stock direction as well as the direction of the short-term moving averages. 

Advancing and declining stocks in the Top40 shows the amount of stocks that have closed higher or lower overall in previous days. The overall momentum has been sideways over the last week, while the amount of advancing stocks in the Top40 has dipped below 50%.

This reading, then, comes in lower than last week, showing both a broad slowdown and a few bigger stocks pushing the overall index higher.

Technical event triggered on Nedbank Group, testing upside of downward channel:
Nedbank Update

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Source: Saxo Bank


Crossed over to the upside, still in sideways range with technical levels taking preference (downward channel) given the longer-term channel.


Currently R5.60 from current price and provides a good stop loss above the resistance level of R184, with the downside pressure.


Above 80 showing overbought territory and a need to move back into the middle section off this oscillator


Volume has been thin at the upper end of the resistance, showing less willingness at higher levels.


Downward channel is still functional and next target is the bottom end of the range and serious support at R165.

A technical perspective on the JSE Top40 index (ZA40:xjse):
Source: Saxo Bank
Overall we are seeing a breakout of resistance and running towards resistance...


currently showing wide separation and strong possibility of continuation in momentum to the upside


Currently daily swings are low and around 650 points, which could be used as a stop on a down day from current price of 48 332.


Above 80 and heading towards 100 as the index moves higher and extends on overall market positivity


Volumes have been declining overall on the underlying stocks in the index as we approach potential new highs


Heading towards resistance all-time highs around 48 863, momentum on the overall index is still weak which shows the bigger constituents of the Top40 are pushing the index higher

Last week's trade updates:

Remgro Ltd (REM:xjse) – Currently holding up around R250, still expecting a test of resistance around R260 and momentum slowly confirming a crossover to the upside; only concern is the stochastic indicator.

Nedbank has been updated in the charts above.

— Edited by Dylan Bester

Dylan Bester is a trader on Saxo Bank's South Africa desk


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