Ticker(s): MNP, J200
Relative, or ratio charts as it is sometimes known, helps market participants to compare the performance of two instruments with the primary aim of ascertaining whether one is outperforming the other. For example, a ratio chart can help understand whether Banks or Insurers are underperforming or outperforming the Top 40 index. This can help a trader/investor recognize the potential risk or opportunity and help position to be underweight, overweight or equal weight.
Considering the ratio chart of MONDI vs the JSE TOP 40 INDEX (first chart below), the following is observed: (1) the current trend is gradual, with the price nearing an entry to a high bullish momentum regime (2) the ratio has been trading all-time highs, however 'only' in a sideways range since December (2023).
Takeaway: Going forward, on a medium term basis, Mondi is likely to outperform the JSE TOP 40 INDEX / broader market.
The slide below is an extract from my report on Monday, 15 July 2024.
To access the full report, e-mail lester@unum.co.za
Lester Davids
Analyst: Unum Capital
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