Wednesday, November 3, 2010

J154 daily and hourly chart


Let’s take a look at JSE’s J154 index or Other mineral extractor index, as two biggest companies listed on JSE, Anglo and BHP Billiton, are part of the index. Two of them, as well, make big part of J200, so those two indices are highly correlated.

First chart is end of the day chart from March 2008 and it shows clearly peak from 2008. After massive drop, index bounced and trended nicely. In April 2010 it broke trend line and retraced somewhat, making what can be seen as triple or quadruple bottom around 6800-6900 level. After last bottom was recorded at end of August 2010, market relied strongly and currently is at 8700 or some 2000 points from the bottom, what makes around 30% run. There is massive resistance on the same chart around 9100 that was tested already twice in January and April 2010. There are good chances that we are going back to it to test that level again. What is very symptomatic is that if J154 breaks above there is not much resistance all the way to all time high around 12700.

Second chart just shows how this 30% move from the bottom panned out. There are nice trend lines all the way that were not broken. J154 extended high above trend line, so we could see temporary pullback towards 8500 level. But, before this index clearly shows us some downside, I would not short J200.

Trade with trend!

EDIT:

As from 04.November J154 reached resistance at 9100. As you can see bump it's head three time today agains it.

There are two options now, first one is break above tomorrow where J154 will make new year to date high or second is small pull back and retest again.

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