SA40 Cash Index call and review

The latest on the SA40.

In the last SA40 Cash Index video, we continued to respect the upward trend in place with 48260 and 48650 as the next upside targets considered. We did however note the index trading in overbought territory and were hoping to get a second chance at long entry should a price pullback occur.

Since the last video, the index has rallied through both upside targets although not afforded the pullback for long entry opportunity.

The move up has taken the index past the all-time high at 49300, reiterating the firm uptrend currently in place. Significant highs are often used as stop levels for those trying to short the market. A move above this high could be triggering some forced buying from those covering their short positions at present aka we are in short squeeze territory it would seem. 

While waiting for a pullback has kept us out of the index for the last few weeks, it has served us better than trying to pick a top and shorting the index. The guidance for this week remains the same as previous in that we continue to wait for a pullback from overbought territory to initiate new long positions. 48260 and 48050 are levels we will consider for such a long entry opportunity. 

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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