The State of the Allshare – October 2017

The Allshare Index trend is Up on the weekly analysis and still has a Weak price relative to the Dow Jones Industrial index.   It currently trades below its 50 week moving average of 54607.86 which would form the short term support level in the case of a pullback.

Overview of the Allshare Index

Recent movements indicate a potential pullback on a bearish divergence which can be seen between index levels and the current momentum.  The Medium-Term trend is Down on the weekly chart and the Short-Term daily trend is Down. The volatility on the Allshare Index is currently 2.95% and is trading at a level of 55 579.92 points.

The 12 month high of the Allshare Index is 56655.88 points. A breakthrough from this level would suggest further upside movement in stock prices. A much lower support level in the large consolidation pattern is at 48935.9 points. The range difference between the 12 month high and low is 7719.98 points. The volume traded in equity is considerably lower relative to the rising index prices and basic fundamental analysis does not indicate potential for growth in the remainder of this year. It remains a difficult time for investors, who are most likely to hold their current positions in a low volatility environment and political economic risk in South Africa.

Allshare Index Subsectors

JSE Sub-Sectors show that 77% of the market is neutral, 10% is bullish and 13% are bearish. Investors are inclined to hold strength and sell weakness which is dependent on their perception at the time. Where a sector is neutral, this is a clear HOLD indication, depending on the major prevailing trend. The more stocks and sectors are neutral, the more the market remains in consolidation and therefore caution should be taken.

ROI and Value

The year on year return on the Allshare Index is approx 8%. (Excluding dividends paid to shareholders). We continue to monitor the US and other global markets as a benchmark for our emerging market stock performance in addition to other political and economic factors which are inherent in our local markets.

The Benchmark index price-to-earnings ratio is at 19.22 times the earnings expected currently. The average dividend yield is 2.93 percent. The estimated fair value of the Allshare index is 41 700 points or a PE ratio of 15.94 which suggests that the market is overvalued by 1.3 times its average earnings.

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