Saturday, 10 November 2018

ALSI, J200 and the TOPI

The All Share Index (ALSI), is the overall market barometer and found in the J203 index. The J200 is a JSE index derived from Top 40 shares and the TOPI is the trading instrument based on the top 40 shares, with a little tweak.
 
When trading the Top40 instruments CFD's or Single Stock Futures, you need to zoom in on behavior.  Below we have created two graphs based on the daily high and low price movement on the J200 index.  This can be used as a volatility indicator or just to find the average to set expectancy when trading the instruments.  It also highlights the change over time.
 
 
 
More information about the constituencies can be obtained at the JSE on their website at: https://www.jse.co.za/services/market-data/indices/ftse-jse-africa-index-series
 
Another method might be helpful to draft a correlation graph on the differences between the price chart and the moving average. From this we can find or determine when to change direction or not to get involve on the wrong side of the market. From the data below (up to 14 June 2018) we can clearly seen not to get involved on the long site, but rather change direction from long to short.
 
 
Taking the Big 5 from the index, the market movers, we can clearly notice the impact they could have. About 50% of the movement.  The top 10 or 12, 75%.  These stocks needs a close eyeball.
 
 
 
When adding the top 5 stocks together and creating a referential index, the following graph represents the below result.  Though this picture is very bearish, it did not implies no short term retracements. Rather what to expect in the days / week to come.  The correlation graph is more reliant to short term trading where we can use the below info as the underlining direction.
  
 
When comparing the Top5 to the J200 we notice the same picture differently.    But compared to Naspers, the correlation is quiet clear.


 
Playing around with the data and information, all add up to a picture and feeling for the market.

 
At first we need to enlarge the picture in order to put everything in perspective. From the monthly view we noticed the ten year upward channel was finally broken.  We've have had a long consolidated period before the last euphoria and greed took place, ending the bull trend at a high.

 
On the weekly chart we can clearly see the double top and sharp pullback, back in to the consolidation channel area.  Recently the price has traded back to test the new resistance.  It's now believed that we will continue sideways in the channel constructing a possible top Head-and-Shoulder pattern, before the next down move to match lower levels. But time and price will tell.  The market is never to be forecast, always correct and price is the only truth.

Trade with caution as the markets are very unstable and uncertain.
@Duplo123 or join us on Skype

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