ARTICLES

Smart Local Investors

The last two months have been wild on the markets – mainly because of Trump’s ill-advised, on-again, off-again tariff policies. The issue now is:

Will this morph into a full-blown bear trend? Or is this correction almost over?

From his election victory on the 6^th of November 2024, the markets went through a period of post-election euphoria which lasted until the 19^th of February 2025. The S&P500 index peaked at 6144 on that day and then began a 19,23% correction which took it down 1162 points to a cycle low of 4982 on the 8th of April 2025. Consider the chart:

This correction was entirely a result of Trump’s absurd tariff policy and not a reflection of the American economy which was booming at the time.

Technically, major downward trends like this often go through what has become known as an A-B-C pattern. “A” is the initial downtrend, “B” is a 50% rally from that low point and “C” is the final leg down - taking the market to a point known as a “capitulation” where most investors simply give up on the market.

In the area where we are now and where the S&P closed last Friday at 5525 is critical. From the low point we have now recovered 47% of what was lost in the correction, so if we are going to have a further “C” downward leg, it will begin soon. Indeed, the further the index climbs above that 50% level (which in this case is 5563 on the S&P) the less likely that third leg becomes and the more likely it is that the previous record high of 6144 will be broken and the great bull market will resume.

By luck, we actually did call the intraday low point of this correction on the day that it happened – the 7^th of April 2025. Early on that day, before Wall Street opened, we tweeted:

“The continuing weakness of the #rand indicates that the #riskon sentiment generated by #Trump's #tariffs is not yet over. Our expectation is that the #SP500 will fall by a further 5% to somewhere around 4800. At around that level we might expect at least a temporary bottom”.

Later that same day the S&P500 index did indeed make an intraday bottom at 4835.

But what has been very interesting throughout this correction is that South African investors operating on the JSE have never really believed in or followed this correction on Wall Street. Consider the chart of the JSE Overall index over the same time period:

What you will notice here is that our Overall index has uncharacteristically taken almost no notice of this correction on Wall Street. Immediately following Trump’s infamous Liberation Day announcement, the Overall index did fall for a couple of days, but quickly recovered to reach a new all-time record high (last Friday).

This means that local investors focused on the underlying bull trend and were not much impressed by Trump’s shenanigans. They surmised that sooner or later he would be forced to back down and the well-established bull trend would resume – and that is exactly what is happening.

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.

PDSNET ARTICLES

Gold Fields

For the past month, the US dollar price of gold has once again encountered some resistance – this time at around $4000. Despite this, in our view, the gold price is in a strong upward trend which should continue. One of the major factors is the steady decline in the US dollar value against a trade-weighted basket of currencies, but the main reason for the

Top Winning Shares

Last Thursday, the JSE reached a new all-time record high of 114046. This, combined with the fact that the rand went below R17 to the US dollar for the first time since the beginning of 2023 suggests that emerging market investors are increasingly bullish. Consider the chart:

Overview - 10th November 2025

Wall Street

Two weeks ago we suggested in an article that a stock market bubble was developing in AI and predicted that a significant correction was imminent. We repeated that view in the Confidential Report

Bubble

Last Friday the S&P500 reached another new all-time record high, closing at 6791 and reaching a new intra-day record high of 6807. This is obviously an exciting time for private investors, but with each new record high the systematic risk of a bear trend or crash increases. Consider the chart:

The PEG Ratio

Since the government of national unity (GNU) came into power in June 2024, there has been a definite improvement in the South African economy. Perhaps the improvement is not as dramatic as some people were expecting, but the progress cannot be denied.

Possibly the best indicator of that is the 28% rise in the JSE Banking index which, before the GNU had

Rare Earth Elements

Investors worldwide had been of the opinion that Trump’s ability to impact markets was on the decline. His erratic, on-again, off again tariff policies had either disappeared or had been mostly discounted into share prices. His attack on the second largest economy in the world, China, seemed to have been largely resolved, and a meeting with

US Shutdown

There has been much in the media recently about the US government shutdown and the fear among investors that it might begin to affect the stock market, depending on how long it lasts.

A shutdown occurs when the US government reaches its budget limit and requires a bill to be passed through both Houses to extend the government’s spending limits.

New Listings

Two new companies, ASP Isotopes and Greencoat Renewables, have recently come to the JSE. Both are developing companies that have recently made losses and have been funding those losses by raising capital and selling assets. They both have substantial “blue sky” potential but also carry substantial investment risk. This is probably truer of ASP

Exponential Growth

The  S&P 500 index is important because all the stock markets around the world tend to follow it. If the S&P is in a bull trend then London, Tokyo and the JSE will also be in a bull trend – and vice versa.

The S&P500 index began 68 years ago on 4 th March 1957 with an initial value of 43,73. It took nearly

The US Jobs Market

International investors who trade on Wall Street are generally negative about any good news from the economy because it tends to make the monetary policy committee (MPC) more hawkish and less likely to reduce interest rates. The opposite is also true. But there comes a point where bad news is so bad that investors begin to fear that the US economy is heading