When the market opens today it will officially be in a bear market as the JSE extends the recent sell-off on overnight weakness offshore. Most of this sell-off has been driven by global politics and rising interest rates in the US, with other developed markets to follow suit.
Retail investors are yet to “Panic” about the value of their portfolios. Panicking here is akin to locking the door after the horse has bolted. We’re experiencing the biggest peak to trough sell-off since the bull market began in 2009.
We expect volatility to spike further from here giving astute investors a good buying opportunity.
Investors should be placing buying orders on shares at levels they want to buy at and waiting for them to match as share prices spike lower.
We could see a further 5% decline towards the long–term support, see a chart on the Top 40 future. This would be the perfect level to accumulate shares or build a geared portfolio. A reversal from here would quickly deliver 10% returns in a few weeks.
The week ahead:
- Local Data: PPI (25/10)
- Results Due: AEL, RPL (25/10); CLS, NUT, WIL (26/10)
- Ex Div (24/10): CGR, BCF, COM, CSP500, GLPROP, NTCP
Other Economic data releases of interest…
- Thursday: Main Refinancing Rate, ECB Press Conference (EU); Core Durable Goods (USA)
- Friday: Advance GDP (USA); ECB President Draghi Speaks (EU)
Short Term Ideas
- Goldfields: 20.17% open gain, increase target to R45.25, stop loss remains R38.25
Long Term Ideas
- Dischem: Full year guidance looks on track, buy below R28.05
- Lewis: Buy below R30, target R47.50.
- Remgro: Buy below R180, MEI recovery will support rise.
- Coronation: Accumulate below R50.00 for a move back to R80
- Shoprite: A break above R200 is needed to curb further declines. Hold.
- Aspen: Add below R165.00, keep exposure appropriate.
- Sygnia: Trading below R8. Add
- MTN: Average entry price R92.50. Support building above R80. Hold
- Glencore: Pulling back, buy below R52.50
- Naspers: Support building at R2,850. Buy below R2,900.
