Research Note for the ALSI Top 40

24 May 2017 / Research Notes Posted by: GT247 Trading Desk

ALSI TOP 40 CHART.png

The ALSI Top 40 is a very popular instrument to trade, even though the name is ‘Top 40’ the Index holds 43 shares.

The Situation:

Looking at the Alsi Top 40 In recent weeks, the domestic market has been kept afloat by rand hedges, particularly Naspers and Richemont.

The Chart

The Top 40 is currently breaking down out of a rising wedge formation, and is at risk of slipping lower as Naspers has taken a tumble due to weak Chinese macroeconomic data.
The oscillator at the bottom of the chart indicates negative divergence, which confirms the breakdown of the price. Negative divergence is when the oscillator is moving lower whilst the price of the instrument is moving higher.

Potential Trade setup

If the ALSI closes below the significant 48000 level we could expect to short the index with a first minimum target of 47000, this formation has a full target price 2000 points lower at 46000.

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