Markets nearing 29500 level

If you thought that a week ago the markets were overbought, think again. We are nearing the previous 2010 high, and we can expect resistance at that level.

Today is the end of the quarter and also end of the reporting period for unit trusts and related funds. Around this time one should be on the lookout for "window dressing" by investors.

What happens is that a lot of buying action is seen so that fund performance will look good, only for investors selling their stock the day after to limit their exposure.

Jobless claims is out at 14:30 as well as the final quarterly GDP figure. Ben Bernanke will start his speech at 16:00, which usually also influences market sentiment and direction.

Expect volatility to rise pre 14:30.

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Markets advance, nearing previous highs

Yesterday rally kept the upward trend intact. As long as this trend holds, there is no reason to sell your shares just yet.

This mornings' trade is quiet with markets in the green, if only by a little.

The Rand remains strong at R7,10/$. The outlook for the Rand remains bullish for the short term.

We expect the market to continue it's upward trend and to test the short term high of 28900.

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Markets weaker on recovery concerns

The JSE All Share is down 0.42% so far today. We expect a bit of a pull back after the rally we've had the past two weeks.

The ALSI futures is also down 0.54% so far for the day. Gold made a new record high yesterday and the ZAR is trading at its best level in 3 years against the USD at around R7.08/US$.

There is no significant news expected today, with US unemployment claims released tomorrow afternoon.

With future close out tomorrow, heed caution in taking any new positions, since high volumes of trading is to be expected, although a lot of investors have already rolled or closed out their September 2010 contracts.

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Markets moving into overbought territory

Due to the lack of negative news, the market has recovered nicely during the past 2 weeks.

As can be deducted from the graph above, the MACD and RSI indicators indicate that the market is trading in overbought territory.

News out today is the British GDP at 10:30 and out of the US their retail sales figures at 14:30. The market doesn't really react to negative news at the moment, since the momentum is quite strong to the upside and it would take something significant to sway sentiment amongst investors.

We can expect resistance around the 28800 level. A break through there would pave the way for a movement up to 29500. Although we think this is a bit optimistic.

Futures close out is on Thursday and we expect the market to be strong up until then at least.

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Markets looking for direction

Looking at the chart of the JSE All Share this morning, it looks like the market wants to break up. I'll rather wait for the market to breach the 28000 level before going long.

The American futures are negative this morning in the region of -0.1%, but that could change quickly. The market is looking for some direction after the rally from last week, but at the moment news was thin the past few days.

The MPC will announce their decision on interest rates shortly after 15:00. The broad consensus in the market is that we'll see a 0.5% cut in the repo rate. A cut in the repo rate will affect the Rand, retail stocks, and stocks with foreign exposure like Richemont, Steinhoff and British American Tobacco.

At 14:30 the unemployment claims and US trade balance are released. We expect the market to trade range bound up until 14:00 after volatility and volume will start to rise.

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Market to open down

The world markets are under slight pressure this morning and our futures market opened down 100 points. The mining tax in Australia, with the resurfacing of the banking issues in Europe does make investors nervous. We prefer to trade short at the moment and will keep an eye on some blue chips that is showing decent value.

Some of our current positions are
Pairs
Long Reinet, short BATS
Long Pikwik short PIK
Long ABSA short ABIL

Other
Short ALSI future
Long Gold and selected IT stocks

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Your Rock Capital team

Up Up and away

After positive data out of the US yesterday, our market has reacted positively and is up 1.17% for the day so far.

Resource shares are leading the rally and therefore our market is pushing upwards sharply.

News that could influence the markets today is at 14:15 ADP Non-Farm Employment change and at 16:00 the ISM Manufacturing PMI.

From the above graph, it looks like our market has turned around and broken the downward trend.

Wait for the data out later today, before adding more to your long positions.

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