The elections have once again come and gone.
I trust that you made your contribution to the country, which has left a memorable mark on your thumb which could help define our future.
Talking about voting, I was curious to see what effect the elections have had on the JSE over the last 17 years.
In today's article I want to discuss, two main points which you might find lucrative for your trading.
First, we will talk about how we can expect a rally with the JSE post elections.
And second, I want to share with you the next main sector I'll be buying into while the JSE rallies.
7 out of 9 Winning Trades and Counting!
That's right, since the 1st of January 2019 this system has pulled in 7 out of 9 winning trades!
The rate of winners over losers currently stands at an unbelievable 77.78% for the year and it's about to get better... News from the market indicates our most recent trade is set to take off.
Why president Cyril Ramaphosa could be the reason we will profit from the JSE after the elections
According to a recent survey among the top professional investors by Intellidex (the research group), around 63% of the participants believe that if the ANC party wins by a large majority then president Cyril Ramaphosa will give a mandate to push through the economic reforms.
Also, the majority believe that we will see Cyril Ramaphosa run as our president until 2022, and that finance minister Tito Mboweni and public enterprises minister Pravin Gordhan will remain on until at least the end of the year. With these positives, we could expect short term strength with the rand as well as a price rally in a number of sectors in the JSE.
After every election - the JSE rallies
Since 2004, history has shown that after each national election, we've seen a strong rally on the JSE.
Take a look at the chart below.
How the JSE reacts to elections
On the weekly chart of the JSE you can see that each time there's been an election (grey round circle), the JSE (All Share Index) has moved up in price over the next 12 months (yellow circle).
In 2004 just before the elections, the JSE was at 10,034. The JSE then rallied for the first 12 months all the way to 16,680. This gave us a 39.80% rally to profit from.
Then in 2009 just before the elections the JSE was sitting at 21,442. 12 months later after a decent rise to 28,602 the JSE made a 33.33% gain.
And in 2014 before the elections, the JSE's price was at 49,583. In just one year the JSE rallied to 53,739 making an 8.30% gain.
If history repeats itself, after this election, then we could be in for another profitable 12 months as traders, as we can expect another JSE rally.
You could be one step ahead of the average investor every time you make a decision
Look around you. Taxes are rising, independent, unbiased financial advice is disappearing, and mis-sold pensions and equities are taking their toll on people’s savings. In any given year, less than 20% of the more than 800 unit trusts in South Africa beat the market for their investors. So much for the abilities of ‘experts’.
Now more than ever, due to the current economic landscape, it’s only those with access to specialised knowledge and expertise who will really prosper in 2019 and in years to come…
So which JSE index will I be looking to buy into?
Out of all the indices on the JSE, my charts tell me that the retail sector is setting itself up for its next price rally.
Specifically, the JSE-General Retailers Index which measures the average of the 11 retailer companies listed on the Johannesburg Stock Exchange (JSE).
The index holds companies like Massmart (MSM), Truworths (TRU), Woolies (WHL), Lewis (LEW), The Foschini Group (TFG) and Mr Price (MRP) shares.
I have seen a number of retail stocks already reaching critical levels, where I expect a break out to the upside, where we can ride and profit.
If you're interested to see my chart analysis and reasons on why and what retail stocks I'm buying in the next few weeks, then keep reading here...
“Wisdom yields Wealth”
Analyst, Red Hot Storm Trader
Got a trading question or would you like to share your trading experience? I’m here to answer them in one of the Trading Tips
articles. Feel free to email me at Timon@FSP.co.za