JSE Top 40 Index: Oversold Reading Unwinds + Closing Well Off The Lows
- Lester Davids
- 12 hours ago
- 2 min read
Trade the Top 40 Index with Unum Capital.
To get started, email lester@unum.co.za
The index close well off the lows of the day, with the oversold conditions as of Friday's close unwinding. We also saw the index rebound sharply off the channel support, as highlighted in the previous note (scroll down to view). Our nearest, next-best probability price action as per the price action model was to buy on a pullback. Today's move was in line with this view as the index traded lower before rebounding sharply.
Previous Post (Saturday 05 April at 14h37) : JSE Top 40 Index: Weekly Chart Analysis
JSE Top 40 Index Analysis:
Short Term (1 to 10 days): The short-term reading is Oversold. This suggests that the index has likely experienced a significant decline and may be due for a rebound or consolidation. However, being oversold alone doesn't guarantee an immediate reversal.
Medium Term (2 to 4 weeks): The medium-term reading is Weak. This implies that the index has been trending downwards over the past few weeks, indicating underlying selling pressure.
Long Term (5 to 8 weeks): The long-term reading is Neutral. This suggests that over a broader timeframe, the index hasn't established a clear upward or downward trend.
Overall Assessment:
Taking into account the weighted importance (short-term being the most significant), the JSE Top 40 Index exhibits deteriorating price action. While the oversold reading in the short term might offer a temporary bounce, the weakness in the medium term, coupled with the lack of a strong long-term trend, suggests caution. The recent price action is more aligned with the medium-term weakness than the potential for a short-term recovery.
Lester Davids
Analyst: Unum Capital
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