JSE Top 40 Index: Slowdown In Short Term Upward Momentum

Friday, 04 October 2024

Time Published: 08h03

Last week Friday, a manual and automated analysis of the index highlighted short term overbought conditions with the model indicating that there was a high probability of a pullback. Subsequently, the index has traded in a sideways to downward range over the week, where the candle structure has reflected selling following a significant advance over the preceding two weeks. At current levels, the index trades just above it's rising 8-day EMA, which acted as intraday support on Thursday. Considering that the index is possibly nearing a medium term overbought range (currently high bullish momentum), it is possible that the 8-day EMA could be breached which would open up room for a test of the (currently rising) 21-EMA. This is just above the breakout level, which is also the prior lower swing high.

Previous Post: Wednesday, 02 October 2024

Time Published: 06h15

On Friday morning I highlighted the index in overbought conditions, from which we have since seen no advancement. In fact, a slight pullback following a strong multi-day advance has been underway.
The trend line resistance slightly higher at the top of the channel remains a possibility (from which we could see a pullback)
For now, the index remains supported by the rising 8, 21 EMA.
The model reading + the daily chart as of yesterday's close is shown below.

Previous Post: Sunday, 29 September 2024

Time Published: 20h19

Updated Chart - please refer to my comments in the previous post below.

Daily Chart

Weekly Chart (a clearer view)

Friday, 27 September 2024

Time Published: Pre-Market

The buy/long re-entry idea off the rising 21-week EMA has resulted in a +6200 point rally
All-time high supported by broad-based buying
High bullish momentum as per the weekly and monthly charts
The short term reward-to-risk on the buy/long side is becoming unappealing i.e. wait for a pullback if you are looking to re-enter a buy/long position.
In terms of key price levels, an inflection in the form of resistance is just ahead.
As of yesterday's close, here's what the price action data says:

Previous Post: Wednesday, 25 September 2024, Pre-Market

The buy re-entry range at the rising 21-week EMA is likely to return close to 4000 points should the positive sentiment from the Chinese government stimulus translate into strong buying. In total the, both the short (1st) and then long side has generated roughly 8000 points over the month. At current levels, the price action/candle structure remains strong, with the current short term rating being high bullish momentum / approaching overbought.

Previous Post: Friday, 20 September 2024

REAL-TIME: 12H49

Ticker: J200 or SA40

Short Term Update + Analysis. On Monday 09 September, the rising 21-week exponential moving average was flagged as a buy/long re-entry. The index then traded into this level, which was followed by a bullish V-shaped reversal which reflected strong interest from market participants who have looked to re-accumulate following the previous unwind from a short term overbought range. From 73000, the index advanced to test a short term high of a 76278 on Thursday, which was just below the previous breakout level. The technical trend rating has since shifted from 'high bearish momentum/approaching oversold' to 'strong'.