October, Not the scary month it’s made out to be!

October, Not the scary month it’s made out to be!

While October was the month we had Black Tuesday in 1929, Black Monday in1987 and a big sell off in October 2008 post Lehman’s collapse, it generally ends the month up. 

 

Over the past 100 years the Dow and S&P have ended positive 62% of the time with an average gain of 0.4% but with heightened volatility. The JSE follows a similar pattern so we expect some increased volatility, which will give investors better buying opportunities as the market is down over 5% to the end of September. 

 

The top performers in September were Implats, Kumba, Lewis and Sun International. And the worst performers being Choppies, Aspen, Trustco and Blue Label. 

 

Investors should wait patiently to deploy capital into the market and buy the dips, traders should be buying the dips and shorting the rallies. 

 

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The week ahead: 

  • Local Data:  Gold and Foreign Exchange Reserves, Assets and Liabilities of the SARB (05/10) 
  • Results Due GRF (02/10); EOH (03/10); ACE, EUZ, TLM (04/10); CHP, PHM (05/10) 
  • LDT (02/10): AFX, APN, ATT, BTI, CRP, CLR, DSY, EPP, FVT, FSR, MUR, MFL, OLG, RMH, SAC, TRL 

 

Other Economic data releases of interest… 

 

  • Tuesday: RBA Rate Statement (AUS); Fed Chair Powell Speaks (USA) 
  • Wednesday: Services PMI (UK); ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, Fed Chair Powell Speaks (USA) 
  • Thursday:  
  • Friday: Retail Sales (AUS); Unemployment Rate, Trade Balance (CAN); Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate (USA) 

 

Short Term Ideas 

  • Goldfields: Strong support at R34.00. Long below R35.25, hold for a move back above R40. Target it R43.75 with stop loss of R32.55. 

 

Long Term Ideas 

  • Lewis: Buy below R30, target R47.50. 
  • Remgro: Buy below R200 for a run to R250.  
  • Discovery: Resistance building at R178. Keep stop loss at R160.00. 
  • Coronation: Taking a leg lower. Buy below R60.00 for a move back to R80 
  • Dischem: Closed at R32.00 for a 12.5% gain. 
  • Shoprite: A break above R200 is needed to curb further declines. Hold. 
  • Aspen: Wait for selling pressure to subside before buying more. Hold 
  • Sygnia: Support building above R10.00. Add 
  • MTN: Average price R92.50. Resistance building at R90. Hold  
  • Glencore: Up just under 20%. Hold 
  • Naspers: Negative sentiment sees NPN fall to R3,000. Accumulate on dips below R3,000. 

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