Market Overview

25 July 2017 By PDSNET

Over the past few weeks there have been a number of interesting developments. There have been more revelations coming out of the leaked Gupta e-mails which show just how far state capture has gone, but as yet there is no action from the government or even an official position on this matter. It is as if their attitude is that if they ignore it for long enough it will disappear. The Zuma camp is struggling to progress any of their radical populist agendas because of strong opposition from within the ANC and without.

The political dilemma is best evaluated by watching the progress of the rand against the US dollar: Rand Dollar Chart

Rand Dollar - Chart by ShareFriend Pro

The above chart shows that the effect of the political turmoil in South Africa has been to temporarily arrest the strengthening trend in the rand rather than to halt it. The international currency traders who dominate this market appear to be positive about the long-term outcome, which can only meanthat they see positive regime change in the not-too-distant future. It is almost as if the Zuma camp, like the Trump camp, is becoming less and less relevant to the progress of the economy and the markets. It is as if the forces which are now playing out, and which were set in motion long before the current political incumbents came into office, are linked together and are set to play themselves out more-or-less irrespective of the shenanigans of the current unfortunate leadership. The JSE is showing clear signs of following other world markets into new record territory. The JSE Financial and Industrial index, which has been trapped in a sideways market for more than two years looks ready to break upwards. Consider the chart: JSE Overall Index

JSE Overall Index - Chart by ShareFriend Pro

A strong upside break would herald further gains and perhaps a"catching up" with other world markets. We have seen an increasing number of new listings which suggests that we may be heading into some sort of listings boom. Most notable among these are:

  • Dischem, which we have written about in previous articles:

Dischem Chart

Dischem Pharmacies (DCP) - Chart by ShareFriend Pro
  • And Long 4 Life, which we have written about in a previous article:

Long 4 Life Chart

Long 4 Life (L4L) - Chart by ShareFriend Pro

Both are doing very well and show promise of continued steady growth. Underlying these developments is a steady rise in the S&P500 index which has made a series of new record highs. We believe that the S&P will continue to perform well, driven mainly by improving corporate profits in an economy that is now growing strongly as confidence levels return and consumers and businesses begin spending some of the cash they have been hoarding since the sub-prime crisis in 2007/8. Consider the chart: S&P500 Index Chart

S&P500 Index - Chart by ShareFriend Pro

Here you can see the S&P500 index climbing steadily between its two long-term channel lines. This index is driving the progress of all markets around the world, including the JSE. It is approaching its upper channel line, which implies that some sort of pull-back or correction may be imminent. You should bear that in mind, as an investor and recognise it, when it happens, for what it is - a healthy correction in a powerful long-term bull trend.  


DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.



Share this article:

PDSNET ARTICLES

Gold and Harmony

In our last Confidential Report, published on 6th March 2024, we drew your attention to the fact that the US dollar price of gold was about to break up through a critical resistance level at $2060. Gold has now moved up to $2166 so this observation provided an opportunity for private investors to make a significant capital gain, either in actual gold

Reverse Takeover

At the end of October 2023, Mix Telematics (MIX) was a relatively small fleet management company with a market capitalisation of just R2,3bn listed on both the JSE and the American NASDAQ. Its shares on the JSE were wallowing at a low of 380c. This compares with its competitor, Karoo (KRO), also listed on the JSE, but which was at the time, more

Rare Opportunity

You may not have been aware of it, but last week, between Monday and Friday, there was an opportunity to make an 80% profit on your capital. This opportunity occurred because of insider trading on a little known and traded share called Quantum Foods (QFH) in the poultry and animal feeds business.

Generally, the poultry business is

Excessive Bullishness

On Friday last week, the S&P500 index posted yet another new record closing high, but this time just one point higher than the previous day at 5088. This means that the index, which measures the progress of the 500 largest companies on Wall Street, has been climbing without a significant correction for nearly four months. Consider the chart:

Lessons from Transcap

As a private investor it is very important that you study what has happened in the past and learn from it. The progress of Transaction Capital (TCP) has provided us with an excellent opportunity to examine and learn from a complete cycle in an institutional favourite share. We can examine the entire cycle and see how to profit from it. In this regard, it is important

Sasol

Sasol is a company originally established in September 1950 by the National Party, to counter the possibility of petrochemical sanctions against the old South Africa. Essentially, Sasol used South Africa’s enormous coal reserves to generate about one third of its fuel requirements. Subsequently, Sasol became involved in the chemical industry which now accounts for about

4Sight

The world has, in the last twenty years, entered what has been characterised as the 4th Industrial Revolution (4IR). It has been described as “... the biggest structural change of the past 250 years — a transformation of scale, scope and complexity unlike anything humankind has experienced before.” In simpler terms, 4IR refers to the digital convergence of

The Great Bull Resumes

On the 12th of June 2023, we published an article, headed "Bull Trend?". In that article we suggested that, after a 25% correction, the great bull market on the S&P500 which began in March 2009 was still intact and would, in time break to a new all-time record high, above the high

CA Sales

In recent years, the JSE has not seen many high-quality, exciting companies listing on the exchange. One of those few is CA Sales Holdings (CAA), which offered both fund managers and private investors an excellent opportunity to make a significant capital gain last year.

CAA is a company which has grown

Two Elections and Two Wars

As the New Year begins, private investors should consider the most important factors which are likely to impact on the prices of shares and the profits of companies listed on the JSE. Some of these factors are local, like the general election which is expected to take place sometime in May, and some are international like the oil price, the