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Date: 23 May 2016

Contents (ctrl+click to follow link):

SP 500 ; Top 40 Chart ; Currency ; Charts of Interest ; Relative Rotation Graph ; Sector Analysis ; Weekly Perfomances

SP 500

The resistance level of 2100 still remains intact on the SP500. The neckline of the head and shoulder was broken; however, currently the neckline is being retested. If the SP500 fails to break above this line we could see more downward pressure to the 1990 level.

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Top 40 Chart

The Top40 continues to trade in its two year sideways price channel. The top40 bounced off the support line at the 45000 level, we mentioned last week. We are now trading once again at resistance and may see a pull back.

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CURRENCY

The Rand

After mentioning the break above the head and shoulder neckline, we did continue on a weakening trend for the Rand. We may move back and retest the neckline.

The Dollar GB Pound

The chart has formed a head and shoulder formation pointing to a stronger pound. This may be predicting that BREXIT will not occur.

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Charts of Interest

The charts we have included are: LHC, IVT, INL and APN

Life Healthcare is forming a large triangle and a break above the 3850c level could see the share move into the high forties. We are also seeing positive moving average cross overs.

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Invicta is forming a symmetrical triangle, a consolidation pattern. A break above the 5500c level could see a move up to the 7000c level.

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Aspen may have found support at the 30000c level. The stochastic indicator is also very oversold and so we may see a bounce from this level.

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Investec Ltd is trading in a downward price channel and currently we are approaching the upper price band and could see price weakness at these 11000 levels.

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Relative Rotation Graph

Below we have a few sectors relative to the Allshare Index. The sectors are based on the Business Day division of sectors.

Basic materials and healthcare are still losing momentum and healthcare has now moved into the low momentum quadrant. Many of the sectors are close to the mid point showing little relative outperformance of the JSE Allshare index.

Explanation on the RRG:

Note that each symbol on the chart is plotted as a dot with a “tail” extending backwards. The tail shows you the history of the symbol's position in the past. Each dot on each symbol's tail represents one period, in this case a week. The large dot at the end of the tail represents the current relative momentum values for that ticker symbol and the colour represents the current quadrant it finds itself in.

There are four quadrants on the chart:

·  Leading (Green) - strong relative strength and strong momentum

·  Weakening (Yellow) - strong relative strength but weakening momentum

·  Lagging (Red) - weak relative strength and weak momentum

·  Improving (Blue) - weak relative strength but improving momentum

Typically, indices progress through the quadrants in a clockwise manner.

Interpretation:

·  The longer the tail, the bigger the move and higher the volatility.

·  The further the index is from the benchmark (the cross hairs) the bigger the move in relative performance (up or down)

·  RS-Ratio (relative strength) is more important than RS-Momentum

·  The rotational patterns are not always perfectly circular and will not always rotate through all four quadrants in a clockwise manner. These are, after all, financial markets driven by fear and greed.

·  In general, a cross from the left half to the right half signals a new uptrend in relative performance. This means RS-Ratio has moved above 200. Conversely, a cross from the right half to the left half signals a new downtrend in relative performance. This means RS-Ratio has moved below 200.

·  The underlying trend-following model that powers RRG includes a lag period, as do all trend-following models. This means there will already be upward movement in the price relative before the RRG line actually crosses into the leading quadrant. Similarly, the price relative will peak and move lower before the RRG line actually crosses into the lagging quadrant.

·  Symbols in the leading quadrant should be on your buy list because they show relative strength. Symbols in the weakening quadrant should be on your watch-list for deterioration. Symbols in the lagging quadrant should be on your avoid list because they show relative weakness. Symbols in the improving quadrant should be on your shopping list as potential buys.

·  RRGs separate the market leaders from the market laggards and therefore great for channeling your attention to those areas of the market that deserve it.

·  Keep in mind that these are relative performance indicators, and there is still a risk that the rotation turns back or even reverses.

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SECTOR ANALYSIS

Percentage points of various Sectors above or below their various Moving Averages:

Previous week:

INDEX / 200 SMA / 100 SMA / 50 SMA / 20 SMA
Banks / -10.57 / -2.74 / -6.43 / -6.50
Gen Retailers / -1.74 / 2.34 / 0.49 / -3.10
Resource 20 / 0.66 / 10.69 / 1.37 / -2.41
Industrial 25 / 1.30 / 0.41 / -0.74 / -0.53
Financial 15 / -7.41 / -2.71 / -5.31 / -5.35
Property / 0.29 / 2.03 / -2.24 / -3.60
% price above moving average
% price below moving average

This week:

INDEX / 200 SMA / 100 SMA / 50 SMA / 20 SMA
Banks / -8.65 / -1.28 / -4.64 / -2.25
Gen Retailers / -3.54 / 0.37 / -2.23 / -3.29
Resource 20 / 4.10 / 12.20 / 3.31 / 0.45
Industrial 25 / 3.16 / 2.40 / 0.98 / 1.57
Financial 15 / -5.04 / -0.53 / -3.20 / -1.35
Property / 1.71 / 3.02 / -1.24 / -0.90
% price above moving average
% price below moving average

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Weekly Performances

The week’s best and worst performers:

JSE ALLSHARE:

MIDCAP:

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Compiled by Kevin Barlow-Jones and Simon Hobday

Disclosure

This report provides general information only. This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments mentioned in this report and should understand that statements regarding future prospects may not be realized. No security, financial instrument or derivative is suitable for all investors. Past performance and technical patterns and analysis is not necessarily a guide to future performance.

This report may contain a short-term trading idea or recommendation, which highlights a specific near-term catalyst, pattern or event impacting the company or the market that is anticipated to have a short-term price impact on the equity securities of the company. Short-term trading ideas and recommendations are different from and may not affect a stock's fundamental equity rating.

Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Constant Capital, trading as Sinayo Securities. Neither Constant Capital, trading as Sinayo Securities, nor any officer or employee of Constant Capital, trading as Sinayo Securities, accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.