ARTICLES

Wall Street and the JSE

23 March 2018 By PDSNET

The shock 2,5% drop in the S&P500 last night is a clear indication that the correction, which has been in progress since 26^th January 2018, is not yet over. President Trump imposed about $50bn worth of tariffs against China, reigniting the prospect of a trade war between the two largest economies in the world. The point to notice is that this is a new issue in the correction which was not there on 26^th January. At that time the correction began because of better than expected employment figures and the fear of a more rapid rise in interest rates. From a technical perspective, the S&P has corrected 10% - but it took only 9 days to do that and since then it has been hovering in a sideways to upwards pattern � before last night�s drop:

S&P500 Index December 2017 to March 2018 - Chart by ShareFriend Pro

We still believe that this correction will be both shorter and sharper than the 14% correction which occurred between August 2015 and February 2016. We also do not see this radical move by Trump as sufficient to negate the rising evidence that the US economy is booming. In other words, we expect some further �backing and filling� as the market absorbs this new development � and then a strong upward move to a new all-time record high. Our market has felt the direct effects of these moves on the S&P � as you can see from the following chart:

JSE Overall Index December 2017 to March 2018 - Chart by ShareFriend Pro

We had a very similar correction starting at the same time and ending at the same time. And you can clearly see how our market responded yesterday to the prospect of a trade war between America and China. This shows that the markets of the world are more-or-less in lock-step with Wall Street. Of course, we have our own local dramas like Steinhof, Capitec and Resilient � all of which responded negatively to the bad news coming out of the US. All of these shares which have been hammered down over the past few months represent potential buying opportunities. The challenge is to choose the right time to get in. Steinhof fell to a new low of just 309c while Resilient continues to fall and Capitec (arguably the best of them) dropped below R900 again. Try superimposing a 65-day exponential moving average and waiting for a clear upside break � especially with Resilient and Steinhof.

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

The Debtors' Book

A BIT OF HISTORY

Many years ago, in 1982 when I started this business (which became “PDSnet”), I ran advertisements in both the Rand Daily Mail (RDM) and in the Star – which were the two most widely read newspapers in Johannesburg at the time. At that time, we were a very small business and had no credit rating at all. Despite this the RDM immediately

WeBuyCars - Results

The financial results of companies show how profitable they are and give a good indication of their share’s risk and potential return. WeBuyCars (WBC) is a recent listing which came to the JSE on the 11^th of April 2024. Unlike other listed motor vehicle companies, it is a company which specialises in the purchase and sale

Choosing Winners

We are often asked how we go about selecting the shares to put on to the Winning Shares List (WSL). Right now, there are 102 shares on the list with 5 having gone down since they were added, 94 are up and 3 are unchanged. On an annualised basis, 24 of them are performing at above 100% per annum.   

As a private investor,

Kore Revisited

Kore (KP2) remains at once the most exciting and most risky investment on our Winning Shares List (WSL) at the moment. We originally added it to the list just over a year ago on 16^th May 2024 at a price of 20c. It subsequently rose to a high of 83c on 3^rd October 2024 and we published an article

Rand Strength 2025

The strength of the rand is both a critical and a complex issue for private investors on the JSE. Our currency is influenced by two primary forces:

1. Our local economy’s prospects
2. The rand’s role as a leading emerging market currency

These, in turn, are

Sibanye Revisited

In these uncertain times, when nobody really knows to what extent Trump will back down on the international trade war which he has initiated, many investors are moving into precious metals as a hedge against the weakness of paper currencies (especially the US dollar) and paper assets like equities and bonds.

The problem

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,

Jerome Powell

The Federal Reserve Bank (“the Fed”) is completely outside the control of the President and Executive Branch of the US government. The chairman of the Fed is appointed for a renewable 4-year term by the President. The President cannot remove the Chair without cause. The current chairman, Jerome Powell was appointed by Trump during his first term as President and reappointed by

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500

Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19^th February 2025 to Friday’s