The Great JSE Reset

The market sold off strongly last week Wednesday, but only for the morning. This was an opportunity for the market to reset, find a bottom and allow buyers with fresh capital to come in. 

 

The ALSI future came within a couple points of its 200-week moving average, a level which it has bounced from strongly since 2014. Its seen a peak to trough pull back of over 14%, that’s a healthy correction and currently trading a little over 9% down from it’s recent high. 

 

Globally, investors feel a trade war that could impact corporate profits, this is creating uncertainty and we believe the potential  for a “Trade War” should be resolved more amicabily. 

 

This volitile period appears to have resolved to the upside, which we feel is bullish for a run to previous highs.  

 

The week ahead: 

  • Local economic data releases: Manufacturing and Mining: Production and sales, February 2018 
  • Results Due: GRF, NFP 
  • LDT (10/04): ABSP, ADH, ARI, BGA, IWE, MFL, EPP, SFN, SHG, SBK, TRL 

Last week’s movers and shakers… 

Best Performers: RES 18.7%, IAP 9.5%, MUR 8%, SAP 6.7%, REI 6.3% 

Worst Performers: TOR -12%, SLM -6.6%, SNH -6.1%, DRD -6.1%, DTC -5.2% 

 

Other Economic data releases of interest… 

  • Tuesday: PPI (USA) 
  • Wednesday: RBA Gov Lowe Speaks (AUS); ECB President Draghi Speak (EU); CPI, Crude Oil Inventories (USA); BOJ Gov Kuroda Speaks (JPN) 
  • Thursday: ECB Monetary Policy Meeting Accounts (EU); BOE Gov Carney Speaks (UK) 
  • Friday: Unemployment Rate (CAN); Average Hourly Earnings, Unemployment Rate, Fed Chair Powell Speaks (USA); BOE Gov Carney Speaks (UK) 

 

One to Buy 

 

MTN buy at support.   

 

For two years MTN has been trading in a range between R116 and R135. Trading this range has been very rewarding. The outlook for MTN has been improving with new management, resolution of Nigerian issues and continued expansion in all operating territories of their network and clients base 

 

Buy MTN below R117,50, with initial target of R124,50 and Stop Loss of R113,75, for an expected return of 6% on shares or 50% on margin. 

 

Short term Ideas 

  • Sibanye Stillwater: Long at R11.50, target remains at R13.50 
  • Mr Price: Trade closed at target for 6.03% gain (ungeared). 
  • ALSI: The ALSI future opened below our entry price on Wednesday, however the bounce we expected is materialising nicely. If you managed to get in around 47800 you will be up 62% on your margin in one week. Adjust stop loss to 49000 to lock in 34% profit and raise target to 51100 for a gain of 94%.  

 

Long Term Ideas 

  • Shoprite: Finding support, buy below R257.50 with a target of R285. 
  • Anglo: Accumulate below R285 
  • Sasol: Up over 5%, buy dips below R400 
  • Aspen: Accumulate below R260. 
  • Sygnia: Add below R12.50. 
  • Santova:  Buy below R3.00.  
  • Merafe: Accumulate below R1.55. Special Dividend on the cards. 
  • Jubilee: Bottoming out. Hold. 
  • MTN: Buy Dips below R120.00 Ex-Dividend today 
  • Glencore: Diversified Commodity exposure. Hold 
  • Wescoal: Long term buy. Add below R1.80 
  • Naspers: Increase exposure below R3,000

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