Global markets typically have a good run in April before the “Sell in May and Go Away” period, but the spike in volatility in February and March has shaken investors. With global markets down year to date, we should see investors buy this dip and a potential run up in April that will make up for 2018’s rocky first quarter.
The below graph shows the S&P 500’s average monthly return for the past 10 years at 2.2%. April saw positive returns nine years out of 10.
With the All Share Index falling to a strong support level, we believe buying into the market at these levels will reward investors.
Over the long term, buying the dips consistently, rewards investors.
The week ahead:
- Local economic data releases: N/A
- Results Due: N/A
- Ex Div (04/04): AFX, BEL, CVH, CLR, CGN, FVT, HIL, LBH, NED, OML, OLG, PPR, RMI, SLM, SFNP, SBKP, SBPP, TPF
Last week’s movers and shakers…
Best Performers: MMG 10.4%, PAN 9.8%, MEI 7%, BTI 5.4%, HAR 4.7%
Worst Performers: TSX -29.4%, SLM -8.1%, NPS -6.5%, CVH -5.6%, CPI -5.4%
Other Economic data releases of interest…
- Tuesday: RBA Rate Statement; rate is unchanged (AUS) ; Manufacturing PMI (UK); Retail Sales (AUS)
- Wednesday: Construction PMI (UK); ISM Non-Manufacturing PMI, Crude Oil Inventories (USA); Trade Balance (AUS)
- Thursday: Services PMI (UK); Trade Balance (CAN)
- Friday: Unemployment Rate (CAN); Average Hourly Earnings, Unemployment Rate, Fed Chair Powell Speaks (USA); BOE Gov Carney Speaks (UK)
One to Buy
Short term Trade on the ALSI40 Future
The ALSI future has bounced a few times from the 48700-support level since last year August. We expect to see buyers continue to defend this level and a strong bounce materialise from here.
We could see an 8% bounce over the next few weeks if the market isn’t dealt any bigger blows. We are targeting the 200-day moving average (50747) on this trade and will re-assess once reached.
Long the ALSI at 49,200, stop–loss at 48599 and target 50,699
One to Sell
Mr Price bumping against too much resistance
Mr Price has had a good run since late October last year, with the share price rallying from the R170 level to above R290.
The share currently trades on a PE of 30.9 and its standard deviation is signalling over bought at 1.8 times normal variance.
The share price appears to be pricing in all the good news for 2018 already and selling at these levels would bank decent gains on open positions and provide capital to enter at more realistic prices.
Traders can short a CFD or future on the share above R290 with a stop–loss at R301.50 and a target price of 272.75
Short term Ideas
- Sibanye – Stillwater: Long at R11.50, target remains at R13.50
Long Term Ideas
- Shoprite: Buy below R257.50 with a target of R285.
- Anglo: Accumulate below R285
- Sasol: 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.
