Tag: Indicators

Volatility


During a strong bull trend 80% of investors are bullish and 20% are bearish – which is why the market rises quickly. The opposite is true of a bear trend. But during both bear and bull trends there is far less uncertainty among investors as to what will happen next. Uncertainty usually expresses itself in sideways markets. During a sideways market (sometimes called a period of “consolidation”) opinion about the future direction of the market is evenly balanced between bulls and bears.

From a technical perspective, the further that a chart departs from its average, the more volatile it becomes and the less certain the future becomes. The most predictable chart is a straight line – the further a chart departs from that, the less predictable it becomes. At the same time, the more volatile a share becomes, the more opportunity there is for capital gain. So, we can reduce this discussion to three words:

Volatility = Unpredictability = Risk

And risk is not necessarily a bad thing because it brings with it the opportunity for profit.

For the private investor it is important to be able to gauge the level of volatility in the market. One of the best ways to do this is by using Bollinger Bands. Read More

Horizontal Count on Afrimat


Afrimat was originally a construction company which specialised in the supply of what are known as “aggregates” to the road-building industry. With the collapse of the construction industry following the 2010 Soccer World Cup, Afrimat set about re-inventing itself to become a mining company.

The decision to rely less on the road-building industry has paid handsome dividends. It began with the acquisition of the Demaneng iron ore mine in the Northern Cape. More recently (on 8th April 2019) it announced that it had put in a firm offer to buy Universal Coal Plc., a company listed in Australia but which has operations in South Africa. Afrimat has offered R2,1bn for the business which mainly supplies coal to Eskom through contracts valid until 2023. Read More

Relative Strength


Analysing the market is mostly about trying to determine where the best opportunities lie. There are about 400 shares listed on the JSE, but which of these offer the best opportunity for profit? So finding the best share invariably means comparing one opportunity with another.

There are very few indicators which do this better than the comparative relative strength.

This indicator (found at the bottom of a chart in ShareFriend as “CRSI”) is simply a formula which divides one datastream by another and then draws a graph of the result. For example, the price of Dischem was 2694c at the close of trade on 14th February 2019. On that day, Clicks closed at 17700c. So if you divide 2694 by 17700 you would get 0,1522 – that is a relative strength point. Read More

Sasol: Resistance Becomes Support


Two years ago we wrote an article in which we drew your attention to the fact that Sasol, following its precipitous fall in 2014, had entered a sideways market bounded by support at R360 and resistance at R492. In September 2016, we suggested in another article that:

“It now looks, technically, as though the Sasol share price should move back up towards resistance at around R490”

And that is what happened – but only this year. Not only did the share reach that level (R492) but it broke above it giving a clear technical buy signal.

So what happens next? Well, in technical analysis, once a well-established resistance line like this is broken, it then usually becomes a support line. Typically the share’s price, having broken convincingly above the resistance, comes back to find that exact same level and bounces off it. Consider the chart:

Sasol (SOL) March 2018 to July 2018 – Chart by ShareFriend Pro

Read More

Resilient and the 65-day EMA


The tactic employed by overseas short-sellers to take a short position in a well-traded share, publish a damning report and then close out the short position for a substantial profit is not exclusive to Viceroy. Our own 36ONE Asset Managers have done the same with the Resilient group of companies (including NEPI, Greenbay and Fortress), claiming that the company only achieved its impressive market rating by buying and selling shares between members of the group to enhance both volume and price. Read More