The monthly chart certainly points to a longer term outlook, but in my view, a serious look at the bigger picture now is absolutely vital.
The JSE TOP 40 (#ALSI) has roughly doubled in value over the past 12 - 15 months or so and will, as I see it, now face an uphill battle to continue in that way. Apart from the fact that it seems that the price chart sits on the top line of an enormous megaphone, also called the Jaws of Death, a lot of technical indicators, of which two are shown here, support my view. The MACD has lost momentum quite seriously and might not be far away of taking a turn down. Also supporting this is that we are seeing a third shorter histogram already. On the Stochastic indicator the %K line has also already penetrated the %D line to the downside. To add insult to injury from these two indicators both of them are sporting a bearish divergence with the price line as well.
Even if price action to the upside in the immediate future makes it seem that there is nothing to be concerned about, I am of the conviction that the TOP 40 could be in for a rough and sustained ride to the downside, eventually reaching targets few people might at this stage see as a possibility.
The JSE TOP 40 (#ALSI) has roughly doubled in value over the past 12 - 15 months or so and will, as I see it, now face an uphill battle to continue in that way. Apart from the fact that it seems that the price chart sits on the top line of an enormous megaphone, also called the Jaws of Death, a lot of technical indicators, of which two are shown here, support my view. The MACD has lost momentum quite seriously and might not be far away of taking a turn down. Also supporting this is that we are seeing a third shorter histogram already. On the Stochastic indicator the %K line has also already penetrated the %D line to the downside. To add insult to injury from these two indicators both of them are sporting a bearish divergence with the price line as well.
Even if price action to the upside in the immediate future makes it seem that there is nothing to be concerned about, I am of the conviction that the TOP 40 could be in for a rough and sustained ride to the downside, eventually reaching targets few people might at this stage see as a possibility.