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JP Morgan just upgraded South Africa stocks - here's why I expect another 11.15% JSE rally this December

by , 08 December 2020
JP Morgan just upgraded South Africa stocks - here's why I expect another 11.15% JSE rally this December
Since Joe Biden won the US presidential elections, there's been good news flooding both local and global markets.

Look at the JSE…

In the last month alone, it's rallied over 11% erasing the 2020 losses for the year…

We have an excellent chance of finishing off positive in 2020, despite all we've been through!

And that's just the JSE…

We also saw France up 21%, Italy up over 25%, the S&P climbed over 10%.

And I can continue.

In today's article, I'll be showing you why I expect the JSE to rally another 11% And what we can do to profit from the rise.

Let's get to it.

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JSE stocks are flying thanks to the Covid-19 vaccine 
 
Since Pfizer and Moderna made announcements that they've confirmed two Covid-19 vaccines, with an effective rate of over 90%, we've seen both global and local markets rally.  
 
However, investors were still concerned that South Africa would have a delay as other countries were on a higher priority list.  
 
That was until last week! 
 
Aspen has recently announced it will bring the Johnson and Johnson vaccine to SA. 
 
And it will be done on a large manufacturing scale. 
 
This led to a rally in a number of areas:
 
The South African rand +2.5% 
First rand + 13%
Standard Bank +7.7%
Absa +7%
Investec +10% 
Food and drug +7.3%
Most top retailers over 3% 
 
Here's what Lester Davids, investment strategist at Sharenet Securities, had to say:
 
“The announcement of a highly effective vaccine removes some of the long-held concerns that the economic disruption caused by the Covid-19 pandemic would persist indefinitely,”
 
“On this basis, we are seeing mass buying across most risk assets, in both developed and emerging markets.”
 
Clearly, things are looking up and I believe with more positive vaccine news coming out, it will help push the JSE up further.  
 
JP Morgan has just upgraded JSE stocks!
 
If anything will attract foreign investments to the JSE it's this. 
 
Respected JP Morgan Chase & Co, upgraded its view in SA stocks to overweight from underweight. 
 
The company said with a weaker US dollar, stronger commodity prices and fewer trade tensions with Joe Biden becoming president, this will help boost emerging countries and domestic stocks i.e banks.  
 
According to JP Morgan Chase & Co. 
 
"It may be time to drop gold and tech stocks and buy into South Africa’s domestically focused stocks". 
 
And when we look at the chart, it shows a fantastic end of year rally coming. 
 
Why this Rounding Bottom will send the JSE up over 11%
 
 
 
In the above daily chart of the JSE Top 40 index (ALSI 40), it's been moving in a sideways pattern since 14 Sep 2020. 
 
During that time, it's formed what's known as a Rounding Bottom pattern. This is a breakout pattern that looks like the shape of the letter U. 
 
It moved from a high of 52,971, down to a low of 47,060 and back up to its high price. 
 
This move down and then sudden move up tells us the buyers are outweighing the sellers.
 
And with it breaking up and out of the Rounding Bottom formation, it shows momentum is picking up for further upside…
 
To calculate the next target, we'll use the High-Low formula. This is where we subtract the high and low price and add the difference to the high.  
 
Price target = (High - Low) + High 
                  = (52,971 - 47,060) + 52,971
                  = 58,882
 
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Here's how we'll profit from the next 11.15% JSE rally 
 
First, I'll buy the ALSI 40 CFDs and hold it until it hits my price target.  
 
Second, I'm looking at a number of trade ideas in Pharmaceutical companies, Banks, retailers and industrials.
 
However, the only way you'll be able to see these trade ideas is by joining my most elite group of traders via Red Hot Storm Trader.
 
Don't get left in the dark! 
 
Trade well, 
 
Timon Rossolimos
Managing Editor, Trading Tips


JP Morgan just upgraded South Africa stocks - here's why I expect another 11.15% JSE rally this December
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