The JSE ALSI is at it again!
As of last week, it broke through its side-ways range since January and hit an all-time high.
There were three main reasons for this.
First, over the last month, we've seen South Africa's COVID-19 cases drop from 14,000 to 1,200 average cases per day.
So President Cyril Ramaphosa, gave us the greatest economic giftand dropped the restrictions from Level 3 to Level 1.
Second, the COVID-19 vaccination roll-out started.
They are currently being distributed throughout the country to health care workers and other high priority members.
And third, South Africa is following the world markets as Wall Street also hit all-time highs last week.
And this is just the start.
In this article, I'm going to share an exciting prediction on where I expect the JSE ALSI to head next, and how we can profit from the rise.
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America is driving up world markets, with the economic relief package on its way
Investors are very optimistic about Joe Biden's $2 trillion proposed relief stimulus package.
This is illustrated by the (US Markit Composite Purchasing Managers Index (PMI) as it roseto 58.8 points last month.
Why this is significant is a reading above 50 indicates improving conditions.
And because South African markets go up when Wall Street rallies, we'll continue to see record highs on the JSE.
COVID-19 SA programme to the rescue
If you don't know by now, the COVID-19 vaccination programme took off last month.
This news saw markets fly last week.
The JSE Top 40 rose over 3.7% higher (at the time of writing this).
The mining index made a great recovery of over 3.45%.
And even the top retail markets flew up 3%.
It's only good news today! But it's about to get better.
Why the JSE Index is ready to rocket over 24% thanks to this flag
We're looking at the daily chart of the JSE ALSI 40.
It's clearly been on a strong uptrend since October 2020 (Green line).
And in the last few weeks it's formed what's known as a Falling Flag formation.
This is where the price moves in a sideways, but short-term downtrend, which resembles a flag shape.
Last week, the buyers won and decided to blast the price up through the top of the Flag pattern.
And with the good news flooding into South Africa it means we should see a huge amount of demand and buying, which will rocket the JSE further.
Now to calculate the next price target, we'll basically use the High-Low calculation.
This is where we take the difference between the high and low price and we add it to the high.
Price target = (High - Low)
= (62,115 – 47,031)
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Here's how we'll profit from the 24% JSE Rally
First, I'll buy the JSE ALSI 40s CFDs and hold it until it hits my price target.
Second, I'll be looking to buy a number of JSE companies that will push up the index.
I'm talking about companies like Anglo, Glencore, BHP Billiton, Sasol, Anglo Gold and other resources that are outperforming other sectors on the JSE.
Analyst, Red Hot Storm Trader