Is this JSE market correction over?

Is this JSE market correction over?

That is always a difficult call to make. The JSE All Share Index fell 4,000 points or 7.4% in 6 weeks from 24 April to 9 June. The low on 9 June briefly breached the 200 Day Moving Average (red line on the price chart), but fortunately bounced back the next day. Since then we started to see higher and higher highs as well as higher and higher lows, the definition of a Bull market. The Stochastic indicator also broke nicely upward. We are therefore cautiously optimistic that a recovery has started and that a new all-time high is possible in the next few months.

ALSH 22 Jun

With this in mind we also looked at the top 4 shares in each sector you voted for in the iTrade Fantasy League. Fortunately we sold most of the shares we had as their stop-losses triggered, saving the portfolio a lot of capital. Most of the shares look good on technical analysis and prompted us to buy again.

In the Resources sector we bought Sasol and Billiton. We will wait a bit for better technical indicators for AngloGold and Glencore. In the Financials we added Discovery to our Old Mutual position. Both PSG and Capitec are still in a downtrend, so we will monitor them. In the Retail sector we added Woolworths and SAB Miller to the existing holdings in Steinhoff and Naspers which are both still in profit despite the market decline. We had no shares in the Industrial group, so we added all four shares according to your votes: Remgro, Bidvest, Aspen and Mondi.

We trust you voted wisely and we hope our cautious optimism bears fruit so that the winners in the iTrade Fantasy League can get big prizes. The previous winner in the “Predict the Portfolio” competition won more than R100,000. You can make one prediction every month, increasing your chances to win. You can also win R2,000 in the monthly competition, just by voting for shares to be included in the top 4 in each sector.

For new traders: Have you done our online Shares Made Simple course yet on www.SanlamiTrade.co.za? You are bound to learn a lot there. The best way to gain experience of how the JSE reacts to events is to enter the Sanlam iTrade & Moneyweb R1m Challenge. You will get a R1m virtual portfolio to invest and stand a chance to win R100,000.

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