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<center><figure class="figure"><a class="lightbox" href="/onlinecourse/images/" data-plugin-options="{'type':'image'}"> 
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We have often drawn attention to the fact that the various stock markets of the world tend to move together – and generally, they follow Wall Street. If the S&P500 index is rising then you can be fairly certain the London, Amsterdam, and Tokyo – and the JSE – are also rising, and vice versa.
Because of this relationship between international markets, it is important to watch the daily market action on the S&P500 index where trading begins at 3.30pm South African time. In our summer, in South Africa, this time changes to 4.30pm due to daylight saving in the USA.
You can view the minute-by minute movements of that index at:
<a href="https://www.google.com/finance/quote/.INX:INDEXSP#scso=_OIBvXeSCL7aq1fAPq6m6iAw6:0" target="_blank" rel="noopener">https://www.google.com/finance/quote/.INX:INDEXSP#scso=_OIBvXeSCL7aq1fAPq6m6iAw6:0</a>
The following chart shows the movement in the S&P500 index on 4th November 2011:
 
CHART 1
 
<center>
<figure class="figure"><a class="lightbox" href="/onlinecourse/images/Screenshot_SP4nOv22.png" data-plugin-options="{'type':'image'}"> <img class="figure-img img-fluid" src="/onlinecourse/images/Screenshot_SP4nOv22.png" /></a>
<figcaption class="figure-caption">S&P500 Index - 4 November 2022. Chart by Google.</figcaption>
</figure>
</center>
 
And this, of course, is just one day’s trade. What you can see here is that the S&P began the day very strongly at around 3780 and actually went even higher to 3796 before falling back to the previous day’s close at 3719. Then, for two hours, the bulls and the bears wrestled with each other at this critical level – before the bulls took control in the afternoon to take the index up just over 50 points or 1,36% on the day. This chart demonstrates how important the previous day’s close is as a support/resistance level.
But the day’s action needs to be considered within the broader context of exactly where the S&P is now and where it has been. The following chart (CHART 2) below shows the S&P going back to the beginning of the year where it made its all-time high at 4797.56 on 3rd January 2022. Since then, it has been in a bear trend which is illustrated by the downward trendline. Over the past ten months, the S&P has been making a series of lower tops and lower bottoms which is a clear indication that it is in a bear trend:
 
CHART 2
 
<center>
<figure class="figure"><a class="lightbox" href="/onlinecourse/images/sp_5Nov22aRt.png" data-plugin-options="{'type':'image'}"> <img class="figure-img img-fluid" src="/onlinecourse/images/sp_5Nov22aRt.png" /></a>
<figcaption class="figure-caption">S&P500 Index: January 2022 - 4 November 2022. Chart by ShareFriend Pro.</figcaption>
</figure>
</center>
 
So, the all the action during the trading day of the 4th of November 2022 shown in CHART 1 above is summarized into a single candle in CHART 2 – but it is difficult to understand the forces that shaped the daily trade on Wall Street unless you consider them within the bigger picture.
So, the 4th of November came after the index had fallen back sharply from the long-established support/resistance level at 3900. The falls on 1st, 2nd and 3rd of November meant that some sort of rally was almost inevitable. Nothing in the markets moves in a straight line. But the one-day rally on 4th November does not change the direction of the downward move, nor does it alter the most important fact – which is that the market is in a bear trend.
So how does this impact on the JSE and the rand? Well, the JSE tends to follow Wall Street and last night’s action was followed in our market. But the upward move on our overall index (J203) was exaggerated by what happened to Prosus and Naspers. They both had very strong days on 4th November because the rumour that Prosus was going to sell its 29% stake in the Chinese company Tencent was scotched. As a result, by the middle of the trading day, both shares were up about 10% - and that exaggerated the rise on the JSE Overall index.
At the same time, the rand strengthened in tandem with the recovery on the S&P500. We examined the direct relationship between the rand and the S&P in our <a href="/index.php/the-confidential-report-november-2022" target="_blank" rel="noopener">November Confidential Report</a> published on the 2nd of November 2022. On the 4th of November, the rand strengthened all the way back to R17.98 to the US dollar - on the back of the S&P rally and the consequent shift towards “risk-on” in international markets.
So, this analysis shows how important it is for you as a private investor to follow what is happening on Wall Street. It impacts directly on our market and on the value of our currency.