Talking Technicals
GARTH MACKENZIE: Bucking the season trend
A pullback from unusual winter highs on the JSE top 40 index could still set up a base for a year-end rally
The JSE top 40 index has been trapped in a sideways range of between 42,000 and 49,000 for the past three years. However, from the middle of June, the market rallied powerfully, resulting in the index gaining 10% in a straight line in just a few weeks. The top 40 briefly pierced the 49,000 area and touched the magical 50,000 mark in the first week of August. But that breakout was met with profit taking, and a weekly reversal occurred, which brought the market back under the 49,000 level.
This suggests that the market may need to consolidate recent gains before making another concerted effort to break above the 49,000 area. If a breakout above the three-year trading range is to have a decent chance of being sustained, it would be ideal if the market were to consolidate below 49,000 in a controlled fashion first. That would establish a higher base from which the market could attempt a breakout. From a seasonal perspective, August and September are typically soft months for globa...
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