Welcome to Themarket

Welcome to TheMarket.co.za Weekly Analysis Report Date of Issue: 24 March 2010 By Colin Abrams

Contents:

Intro and Exec Summary 3. Relative Strength 6. Overall Summary 1.Market Charts 4. Notes & Updates 7. Glossary (in first letter of each month) 2.Small-Cap Chart 5.“Shortable” Stocks/Indices

Classic Trading Rule:

“Do what is right, not what is comfortable.”

JSE GIVES TEMPORARY PULLBACK Introduction: We're finally seeing some sort of a pullback on the local market after a strong run-up over the past month, with not much in the way of a significant pullback. The more the price pulls back at the moment the better. It will allow for better buying levels again. Expect this pullback to not last long, before we get another up-leg, to new highs for this bull market. This pullback is therefore a good chance to line up new ' buys' (for traders). We update the Dow Jones chart, which has now reached its minimum short- term target. It is overbought, and any pullback will be welcomed, to allow a chance to buy again. Staying overseas we also look at a chart of Japan's Nikkei 225 Index. It is still pointing to a higher short-term target for buying. The JSE All Share index is updated as usual, indicating buying levels for the current pullback. We also look at a chart of the USD/ZAR (rand). It has recently tested important dollar support. The bias there remains one of going long the rand on bounces. The stock charts shown are ARM (preparing for a new buy signal), Sanlam (also pausing before another upside breakout), and Aspen (giving a minor pullback for buying).

The small-cap chart is Zeder, in the financial sector that is steadily making its way higher. Overall, view the pullback over the past few days as a welcome breather after a solid run-up. Use it as a chance to line up new buying opportunities for traders. The bigger uptrend remains very much intact. Executive Summary:

 Dow (chart 1): Expect a minor correction from the 10 980 level down to 10 650 to buy again.  Nikkei (chart 2): Buy some now, and buy more on a pullback to 10 600.  All Share Inx chart 3): Buy a reversal day up from the 28 200-27 900 zone.  USD/ZAR (chart 4): Go long the rand on a bounce to 7.48.  ARM (chart 5): Traders prepare to buy again.  Sanlam (chart 6): Traders prepare to buy again.  Aspen (chart 7): Traders buy a bit lower down.  Zeder (chart 8): Buy as close to R1.85 as possible. Leading Stocks (3-mths): Top 40 – Exxaro, Abil, Shoprit, InvPlc, Richemont, ARM, Kumba. Resources 20 - Petmin, Exxaro, Merafe, ARM, Kumba.  Shortable stocks/indices: 7 stocks, 0 indexes, 0 commodities, 6 currencies.

THIS NEWSLETTER IS TO BE READ ONLY BY THE SUBSCRIBER. COPYING, ELECTRONIC TRANSMISSION (EMAIL), REPRODUCING, AND/OR DISSEMINATING THIS DOCUMENT, OR PART THEREOF, IN ANY OTHER MANNER WITHOUT THE WRITTEN CONSENT OF THEMARKET.CO. ZA IS A VIOLATION OF THE COPYRIGHT LAW - AND IS ILLEGAL. 1. MARKET CHARTS

DOW JONES – Reaching short-term target

Broad Recommendation: WAIT FOR A PULLBACK TO BUY AGAIN Trend: Up, but still short-term overbought. Strategy: Expect a minor correction from the 10 980 level down to 10 650 to buy again.

Chart 1. (Daily) 100 Stochastic Oscillator (93.8041) OVERBOUGHT 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 OVERSOLD 10

11000 I-DJ-INDU (10,787.18, 10,893.89, 10,784.76, 10,888.83, +102.940) 11000 10950 10950 MINIMUM TARGET 10900 10900 10850 10850 10800 10800 10750 10750 10700 10700 10650 10650 10600 10600 10550 10550 10500 10500 10450 2 10450 10400 10400 10350 10350 10300 1 10300 10250 10250 10200 10200 10150 S 10150 10100 10100

10050 10050 10000 S 10000

9950 9950

9900 9900 20-DAY MOVING AVE 9850 9850 9800 H 9800 9750 9750

9700 9700

26 2 9 16 23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 22 29 5 November December 2010 February March April Chart Setup: The Dow is now within a few points of its minimum upside target of 10 900 from an inverse head and shoulders (labelled S-H-S). I'm expecting some resistance at the 10 980 level and then a minor sell off to allow for buying again.  The short-term Stochastic Oscillator (on top) is still overbought, which is a good example of how it can remain overbought for an extended period in a strong trend. Nevertheless, at some point we will get the pullback. Strategy Details: Traders re-enter long (buy) on a reversal day up from the 10 650 level after a pullback. Line 1 support is currently at 10 700 but it will most likely get broken on the pullback.  Note, aggressive traders only: if we get a clear reversal candle down from the 10 980 level or higher then sell short, with caution, for the drop to 10 650.  Investors keep holding US/overseas stocks. This bull market still has a reasonable distance to go. Target: Upside targets are 11 230, and 11 550. Larger target is still 12 350. Stop-loss: When buying after a pullback to the 10 650 level, place your stop as a breaking of the reversal day up's low from 10 650, or a close below 10 470 if that's easier to track. Take trading profits in the 11 350-11 550 zone. ii NIKKEI – Higher short-term target

Broad Recommendation: BUY Trend: Up, but short-term overbought. Strategy: Buy some now, and buy more on a pullback to 10 600.

Chart 2. (Daily) 100 Stochastic Oscillator (72.6445) OVERBOUGHT 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 OVERSOLD 0 11150 I-NIKKEI (10,793.05, 10,817.78, 10,766.65, 10,774.15, -50.5693) 11150 11100 MINIMUM TARGET 11100 11050 11050 11000 11000 10950 10950 10900 10900 10850 10850 10800 10800 10750 10750 10700 10700 10650 10650 10600 10600 10550 2 10550 10500 1 10500 10450 10450 10400 10400 10350 10350 10300 10300 10250 10250 10200 10200 10150 10150 10100 S 10100 10050 S 10050 10000 10000 9950 9950 9900 9900 9850 9850 9800 H 9800 9750 9750 9700 9700 9650 9650 9600 9600 9550 9550 9500 9500 9450 9450 9400 9400 9350 200-DAY MOVING AVE 9350 9300 9300 9250 9250 9200 9200 9150 9150 9100 9100 9050 9050 9000 9000 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 23 29 5 November December 2010 February March April

Chart Setup: The Nikkei (which is closely correlated to the Dow) has formed a nice-looking inverse hand and shoulders (as labelled). While the price has already moved quite a way, it still has a higher target.  The short-term Stochastic Oscillator (on top) is overbought, so a minor pullback is very likely. There is also a chance it remains overbought for an extended period, like we saw in Dec/Jan.

Strategy Details: Buy some now to get a line in. And buy more if it pulls back to 10 600 (spot price) (current level is 10 815).

Target: Minimum upside target is 11 060 i.e. the height of the inverse head and shoulders projected up. Take half profits there and continue with a breaking of the prior one-day low as your trailing stop (to allow for capturing further upside).  Pullbacks will remain buyable thereafter. The index can go to 11 500, before we get a far larger correction.

Stop-loss: Place initial stop as a close below line 2 i.e. 10 500. Once the price gets above 11 00, use a breaking of its prior 3-day low as the trailing stop and take profits as advised above.

iii JSE ALL SHARE INDEX – A temporary pullback

Broad Recommendation: TRADERS BUY PULLBACKS. INVESTORS HOLD. Trend: Up on all main timeframes, but short-term overbought. Strategy: Buy a reversal day up from the 28 200-27 900 zone, or on a breaking of its prior day's high.

Chart 3. (Daily) 100 OVERBOUGHT Stochastic Oscillator NEG DIVERGENCE 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 OVERSOLD 10

296 JSE-OVER 296 295 295 294 294 293 293 292 292 291 291 290 290 289 289 288 288 287 287 286 286 285 285 284 284 283 283 282 282 281 281 280 280 279 279 278 278 277 277 276 276 275 275 274 274 273 1 273 272 272 271 271 270 270 269 269 268 268 267 267 266 266 265 265 264 264 263 263 262 262 261 261 260 20-DAY MOVING AVE 260 259 259 258 258 257 257 256 256 255 255 2 9 16 23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 23 29 5 November December 2010 February March April Chart Setup: After making a new high for the recovery rally, the index has pulled back over the past two sessions. Look for a bit more pullback before it heads up again.  The short-term Stochastic (on top) is still overbought, and giving a negative divergence (see Glossary) which has been warning of a pullback to come. Strategy Details: Traders look to buy again on a reversal day/candle (see Glossary) from the 28 200- 27 900 zone. But ideally as close to line 1 support as possible. (Line 1 is at 27 780 on Weds 24th, and rising at an angle of 70 pts per day thereafter). However, if it takes out (i.e. breaks) its previous day's high before pulling back that far, then buy (more aggressive). Do whichever happens first.  Investors keep holding stocks, as there's still good upside in this bull market (although at some point this year I'm expecting another big selloff, probably bigger than the one we had in Jan/Feb. Nevertheless, we'll come right back thereafter to make new highs again). Target: Look for the index to make its way to 29 600 in the short-term. (That will most likely happen before we get a large correction). Larger upside to 31 400 eventually.

Stop-loss: When buying again on the current pullback, place your initial stop as close below line 1 (see level above). If buying on a break of its prior day's high, place the stop below the breakout days low. Once we get above 29 000, use a breaking of its prior three-day low as your trailing stop. Then take half profits at/near 29 600 and continue with a breaking of its prior one-day low on the remainder.

iv USD/ZAR – Bounces off important support

Broad Recommendation: TRADE THE BOUNDARIES/LONG RAND BIAS. Trend: Short-term rand strength, although rand overbought. Med-term sideways. Long-term rand strength. Strategy: Go long the rand on a bounce to 7.48, or on a breakout below line 3 – first to happen.

Chart 4. (Daily) Stochastic Oscillator (4.54543) OVERBOUGHT

200-DAY MOVING AVE 0 OVERSOLD 0 C-$ZAR-AM (732.200, 733.100, 732.200, 733.000, -1.00000) 840 840 835 835 830 830 825 20-DAY MOVING AVE 825

820 820 815 815

810 810

805 805 2 800 800 795 4 795 790 790

785 785

780 780

775 775

770 770

765 765

760 760

755 755

750 750

745 745

740 740

735 735

730 730 725 1 3 725 720 720

715 715 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24 31 7 14 21 28 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 22 29 5 June July August September October November December 2010 February March April

Chart Setup: The dollar/rand is trading in a med-term channel between lines 3 and 4. It has recently tested line 3 at 7.2850 (spot price). That is an important support (resistance) level for the rand.  The daily Stochastic (on top) is oversold for the dollar (overbought for the rand), so expect a bounce fairly soon. The weekly oscillators are not yet oversold.

Strategy Details: Trade the boundaries between lines 3 and 4 i.e. shorting the rand on a reversal day up off line 3 (7.28/7.29 level). Take at least half profits at 7.47 and more at line 2 (7.53) if reached. Go long the rand (buy) on a reversal day down from 7.47 or a bit higher (e.g. 7.53). (I don’t think we'll reach line 4, 7.88, for some time).  Note, if we break down below line 3, i.e. close below 7.28 (spot price) for two consecutive days then go long the rand again.

Target: A bounce to 7.47. Then back down to line 3 at 7.29 level to take profits. If we breakdown below line 3 (7.28) it will setup an eventual move to 6.75.

Stop-loss: If shorting the rand off line 3, the stop is a close below 7.28 (spot). If going long again on a reversal down from 7.47, the stop is a close above 7.55.

v ARM (ARI) – Lining up for a breakout

Broad Recommendation: TRADERS PREPARE TO BUY Trend: Up, despite current pullback. Strategy: Buy on either a close above line 3 or a pullback to line 2 (R185.50) – first to happen.

Chart 5. (Daily)

100 Stochastic Oscillator (11.9500) OVERBOUGHT 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 OVERSOLD 10 0 0 ARM (193.180, 199.110, 192.000, 194.500, +2.50000) 210 210

205 205 3 200 200

195 195

190 190 2 185 185

180 180

175 175

170 170

165 1 165

160 160

155 50-DAY MA 155

150 150

23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 23 29 5 December 2010 February March April

Chart Setup: ARM, one of the market leaders, has been consolidating over the past two weeks in a bull flag. It can breakout above line 3 at any time.  The daily Stochastic (on top) is oversold, a bullish sign.

Strategy Details: Buy it on either a close above line 3, or a pullback to (and reversal day off) line 2 at R185.50. Do whichever happens first. (Line 3 is at R200.05 on Weds 24th, and declining at an angle of 50c per day thereafter).

Target: R210-R213 for traders.

Stop-loss: If buying on a pullback to R185.50 (line 2), place your stop as a close below R180 or below the reversal day up's low (whichever is closer). If buying on a close above line 3, the stop is an intraday breaking of the lowest point of the current short-term pullback.

vi SANLAM (SLM) – Temporary consolidation

Broad Recommendation: TRADERS BUY. INVESTORS HOLD. Trend: Up, despite current consolidation. Strategy: Traders buy on either a close above line 2 or at line 1 – whichever happens first.

Chart 6. (Daily) Stochastic Oscillator (29.3548) 90 OVERBOUGHT 90 80 80 70 70 60 60 50 50 40 40 30 OVERSOLD 30

SANLAM (24.7500, 25.0000, 24.6400, 24.7500, +0.07000)

26.5 BREAKOUT TARGET 26.5

26.0 26.0

2 25.5 25.5

25.0 25.0

24.5 1 24.5

24.0 24.0

23.5 23.5

23.0 23.0

22.5 22.5

22.0 22.0

50-DAY MA 21.5 21.5 23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 23 29 5 December 2010 February March April

Chart Setup: Leading financial stock Sanlam, has been consolidating sideways to down over the past two weeks. This is after it recently broke out to a new all time high. Tip: Buying a pullback after a share makes a new high, is a high probability trade.  The short-term Stochastic (on top) is becoming oversold, which points to the rallying to resume at any time.

Strategy Details: Traders buy on either a close above line 2 or at/near line 1. Do whichever happens first. (Lin 2 is at R25.41 on Weds 24th, and declining at an angle of 3c per day thereafter. Line 1 is at the R24.35 level).  Investors keep holding.

Target: A close above line 2 will setup a minimum target to R26.40. Take half trading profits there and continue with a breaking of its prior one-day low as the stop on the remainder of your position.

Stop-loss: For buying off line 1, the stop will be a close below R23.45. Once the price closes above line 2, move your stop up to a breaking of the lowest point of the current pullback. The latter will also be the stop if buying on an close above line 2.

vii ASPEN (APN) – Temporary pullback to buy

Broad Recommendation: TRADERS BUY. INVESTORS HOLD. Trend: Up, on all main timeframes. Strategy: Buy at line 2 and line 1.

Chart 7. (Daily)

Stochastic Oscillator (54.6881) OVERBOUGHT

OVERSOLD

88 ASPEN (78.2500, 80.9800, 78.2500, 79.7100, -0.18000) 88 87 87 86 86 85 85 3 84 84 83 83 82 82

78 78 2 77 77

75 1 75

73 TO OCT '09 73

64 50-DAY MOVING AVE 64

16 23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 23 29 5 December 2010 February March April

Chart Setup: Aspen is one of the leading stocks on the market, and recently reported a good set of results. It is pulling back to line 2 and potentially line 1 at R75.60. Last week it reached its short-term target from the 'Notes & Updates' section before pulling back.  The short-term Stochastic (on top) is neutral.

Strategy Details: Traders buy at/near line 2. (Line 2 is at R76.60 on Weds 24th and rising at an angle of 10c per day thereafter). If the price drops to line 1 support (R75.60) then buy more.

Target: R85-R88 for traders. Longer-term potential to over R100 for investors. Pullbacks will be buyable for traders all the way up.

Stop-loss: Initial stop is a close below R74.90. If stopped out (unlikely) look to buy again from the R71 level. Once the price gets to R83.50, tighten your stop to a breaking of its prior 2-day low. Then take profits in the R85-R88 zone for traders.

viii SMALL-CAP. CHART

ZEDER (ZED) – Edging ever higher

Broad Recommendation: BUY Trend: Up on all main timeframes. Strategy: Buy as close to R1.85 as possible.

Chart 8. (Daily) 100 Stochastic Oscillator (11.7647) OVERBOUGHT 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 OVERSOLD 0 2.95 ZEDER (1.90000, 1.94000, 1.90000, 1.92000, +0.02000) 2.95 2.90 2.90 2.85 2.85 2.80 2.80 2.75 2.75 2.70 2.70 2.65 2.65 2.60 2.60 2.55 2.55 2.50 2.50 2.45 2.45 2.40 3 2.40 2.35 MINIMUM TARGET 2.35 2.30 2.30 2.25 2.25 2.20 2.20 2.15 2.15 2.10 2.10 2.05 2.05 2.00 2.00 1.95 1.95 1.90 1.90 1.85 1.85 1.80 2 1.80 1.75 1.75 1.70 1.70 1.65 1.65 1.60 1.60 1.55 1.55 1.50 80-DAY MA 1.50 1.45 1.45

1.40 1.40

1.35 1.35 1 1.30 1.30

1.25 1.25 March April May June July August September November 2009 February March April May June July August September November 2010 February March April Sector: Other Financial. Current Price: R1.92 Chart Setup: Zeder has been recovering steadily but surely from its bear market low a year ago. Lines 1 and 2 form a channel, which points to a higher target to come. Also, the 80-day moving ave is providing good support on pullbacks in this recovery.  The short-term Stochastic (on top) is entering its oversold level, but can still go a bit lower. The price itself has recently pulled back from a new recovery high. Strategy Details: Buy it as close to R1.85 as possible (but in the R1.85-R1.90 zone should be ok). Target: Minimum target is R2.30 i.e. the height of channel 1-2 projected up. Take half profits there. Further potential is to line 3 at R2.37 (this is the 61.8% Fibonacci retracement, see Glossary, of the bear market drop). Stop-loss: Initial stop is a close below R1.74. Once the price closes above R2.07 move the stop up to below R1.85. Other small-caps of interest (alphabetically): (shares to consider on a pullback) - Long: Bell, Dcentrix, Howden, Rainbow, Value.

ix 3. RELATIVE STRENGTH

 These are the strongest index stocks on a 3-month basis relative to the JSE All Share Index.  Typically the leading stocks keep leading. Therefore, traders can buy these stocks on pullbacks, although always look at the chart first before making a decision. Medium and longer-term players should look to buy them when they first appear on this list.

Strongest seven Top 40 stocks: Exxaro, Abil, Shoprit, InvPlc, Richemont, ARM, Kumba-IO.

Strongest five Resi 20 stocks: Petmin, Exxaro, Merafe, ARM, Kumba-IO.

Resi 20 vs. Findi 30 over 3-months: Findi 30 stronger.

4. NOTES & UPDATES: - Concerning last newsletter’s index stock charts:

- Old Mutual: is giving the expected pullback to allow for buying. Look to buy on a reversal day up from 13.50-13.35 or lower. It's unlikely to fall further than 13.10. Med-term target to 15.70. - BHPBilliton: it hasn’t triggered the buy signal yet. Buy on either a reversal off 242 or 239 (whereever it happens first). Or, wait for a close above 249 to buy (more conservative). In this case I'd favour the former strategy. Refer to last week for targets. - SABMiller: hold. Buy more at 209.50 or lower. First target is 222, refer to last week's report for details.

Other recommendations and index stocks of interest (alphabetical order):

Important Notice: When buying after a pullback or selling short after a bounce, always look for a sign of a reversal e.g. reversal day or reversal candle before entering (otherwise one is simply picking a top/bottom, which does not work). A reversal day/candle at the top is typically when the price rallies that day but then sells off to close near the bottom of the day’s range. Conversely, a reversal day/candle at the bottom is when the price initially drops that day, but then rallies back to close near the top of the day’s range. Waiting for the reversal day will put the odds back in your favour. (I usually like to see the high/low of the reversal day taken out the next day before finally entering). - Regarding taking profits, I suggest locking in profits in thirds as the price moves in your favour i.e. 1/3 of your position, then another third then the final third.

High probability trades (or charts) I particularly like (long or short) at the moment (in no particular order):

 Foschini, Steinhof, Merafe, Lib-Hold, Sasol, Didata, Kumba, MrPrice, MTN .

- Abil: take short-term profits and re-enter long on pullback to 33-33.50. Upside target is 39.50. Stop is a close below 32.20. - Absa: got to the upside target for a nice trading profit. It's pulling back now. Look to go long again from the 139 level on a reversal day up. Stop is a close below 137. Start taking trading profits above 144. Investors hold. Larger target now is 155. - Altech: Hold as a med-term play to 84. Short-term stop only, is a close below 75. We will comment on it again if anything changes. - Altron: hold. Target is 32.30. Stop a close below 25.80.

x - Anggold: is not getting going with the gold price remaining weak. Raise your stop to a close below 278.80. To the upside it needs to close above 285.90 to get going to 298. Main support is 268.70. - Anglo: is pulling back from being overbought, as expected. Look for it to get to the 290.50 level. Look to buy it there. Further support is 285. Place stop as a close below 285. Target then it 312 and 329. - Angloplat: hold. Buy on a pullback to 703. Stop is a close below 690. Target to 772. - ArcMittal: aggressive traders buying at support here will have been stopped out. It was a risky trade as mentioned. If it closed above 89 then try buying again. In the meantime it can still fall to 76. - ARM: see Chart 5. - Aspen: see Chart 7. - Astral: reached the 116.30 target. Buy again on a pullback to 106. Bigger picture there is a target of 135. Stop a close below 103.50. - Aveng: the stop was triggered for a small loss as it dropped sharply on bad results. It's oversold. Support is 33.70. No trade here at the moment, unless we bounce to 38.40 then short it for a drop to 35.10. Stop a close above 38.75. - Barworld: while short-term profits can be taken, look to buy/re-enter on a pullback to 44. Look for it to make its way up to 49.50. And potentially above 56 med-term. Stop is a close below 43 for traders. - Basread: buy again at current levels or better e.g. as close to 12.15 as possible. Take trading profits at 13.90. Potential to 15.50 med-term. Stop a close below 11.75. - BATS: has formed a small triangle and can break out in either direction. If it (traders) exit until we get a breakout. I.e. buy on a close above 251.70/sell short on a close below 247.35. Minimum target for upside break will be 257. For a breakdown it will be 242.50. Stop will be a close beyond the opposite breakout level mentioned above. - BHPBilliton: see update above. - Bidvest: stopped less than R1 short of the upside target. If it gets that close, and forms a reversal candle like it did last Thursday, then take your profits (for traders). Look to re-enter long on a reversal day up from 133.75 or lower. Target is 147-150. Stop is a close below 130. If it gets to 130 more can be bought (using the same stop). - Datatec: Target is 34, its edging ever closer. Hold. Stop is a close below 30.85. - Didata: stopped just short of the 11.10 target before falling. If still in, hold. Look to buy again for, 9.90. Stop a close below 9.80. Target to 11. - Discovery: hold, its edging up gradually. Minimum target is 35.20. It's not far from there now. Short-term stop is a close below 33.90. Traders buy with caution near 33.90 with the same stop. If the stop does trigger look to buy at the 32.50 level. Med-term hold regardless. Longer-term target is 40.50. - DRDGold: has continued down with no reversal day up to buy. Target is 3.25 on the downside to retest the Nov low. We'll look at buying from there. In the interim, a bounce to 4.20 and reversal day down can be shorted. - Exxaro: reached the 126 upside target for a nice profit. Look for a pullback to 119.80 to buy again. Target up to 130 then. Stop blew a reversal days low from 119.90 level or lower. Investors hold. Target to 150 eventually. - Firstrand: traders look to buy on a pullback to 19.80/70. Target to 22. Investors keep holding. - Foschini: shot straight up and is now pulling back. Look to buy at 64. Stop a close below 63. Target to 72. Larger target is 79. - Gfields: its holding up relatively well given the recent weakness in the gold price. This is a good sign. Stop is a close below 88.40. If it drops to that level buy again if it gives a reversal day up off that level (use the same stop). Target to 94.80. It needs to close above 95 to get going. To the downside, a close below 88.20 will be bearish and a short signal for a drop to 81. xi - Grindrod: hold current short trade. Stop is a close above 15.12. Target to 14.35. - Group-5: is moving up again. Hold. Target to 15.50. Stop below 14.15. - Harmony: didn’t trigger the upside break. If in hold. There is good support at 68.50. Stop is a close below that level. If it reverses up from there then buy more (with caution). Target to 75. - Imperial: trailing stop triggered to protect profits. Buy on this pullback to 96.30 or lower (further support will be 92.50). Target to 110. Larger target is 121.50. - Implats: is pulling back from a short-term overbought level. Hold. First target is 214.50 for taking short-term profits. Med-term back to 228.70. Look to buy if not in at 197.50. Stop is a close below 191. - InvPlc: reached and exceeded the 61 short-term targets for a nice profit. I gave a reversal candle down yesterday. Traders look to buy again in the 59.20-58.20 zone. Target then to 63 short-term. Med-term hold to a target of 78. - Kumba-IO: is still pulling back in to short-term. Buy a reversal day up from 335.60 (stop below reversal days low) or a close above 350.80 (today, an angle declining by R2 per day). Do whichever happens first. Target then 380-400 to take profits in that zone. - Lib-Hold: had a good run up to 79 before pulling back. If in hold. If not, buy in the 71.50-69.75 zone. Stop is a close below 69.70. Short-term target to 81.50. Larger target is 92. - Lib-Int: if you bought as per last week's advice (traders), exit for a small profit. Its building up for another drop to 53.25. Otherwise no clear trade here at the moment. - Lonmin: hold. Buy on either a pullback to 214.50 if not in, or a close above 227.50 – first to happen. Stop is wide as a close below 205.70. Once it closes above 227.50 it will setup a target to 250. - M&R-Hld: try short it as close to 40.50 as possible. Stop a close above 41.00. Target down to 35 for shorts. A close below 37.90 will also be a shorting signal for the same target. It may well drift all the way down to test its '09 low of 33.60. That is a very important support level, and there's a good chance it will start rallying again from there. - Massmart: has had another rally, but I'd still like to buy it closer to 97. The R100-97 zone will be a good place to buy. Upside targets are 112.80 and eventually to 140 longer-term. I like it particularly for the med-term. - Merafe: pulled back to the buying level and had a good rally yesterday (Tues). I like the look of its chart on a med-term view. Short-term target is 1.74. Med-term target is 1.90. Short-term stop is a close below 1.50. If stopped out, look to buy again from 1.44. - MondiPlc: reached its med-term target, which was given here almost a year ago. Look to buy again at the 48 level. Target up to 55, stop a close below 46.90. - MrPrice: stopped 30c short of the target, which is close enough to be taking at least half profits for traders. Short-term support is 40. It can be bought there, and if it breaks below that level then buy more at 37.50. Stop is a close below 37.30. A close above 43.30 will take it to 46.30. - MTN-Group: there is some resistance at 125. Trading profits can be taken there, but re-enter on a close above 125.30. It can also be bought on weakness in the 119-118 zone. Stop is a close below 115.40 for traders. Upside target is 132. - Naspers-N: exceeded the 317 target. It is very overbought in the short-term. Med-term and investors hols. Traders look to buy again on a pullback to 312 or lower. Stop will be a close below 306.50. Larger target to 350. - Nedbank: stopped just a few cents short of our 136.50 trading target so far for some short-term profit taking. Take trading profits at 136.20. A pullback to 130 can be bought again. Med-term target is 148. Investors keep holding. - Netcare: is gradually moving up. Its making higher lows all the time which is a good sign. Hold. Target is 14.10. Stop is a close below 13.15. - Newgold: triggered the stop as it fell through support on both a strong rand and weaker gold price. It is pointing to a target of 75, but I'd treat that target wit ha bit of scepticism for now. If it bounces xii to 81.80 and gives a reversal candle down from there then short it. Stop above reversal candles high. Target to 75. It's too oversold to short at current levels. - Northam: triggered a reversal day up yesterday although not a classic one. If you bought, hold. Stop is a close below 44.50. Take profits at 48.30. It needs to close above 48.70 to get going and give another buy signal. Its currently lagging the big 3 platinum stocks. - Old Mutual: see update above. - PicknPay: is on its way to a minimum target of 45.50 (got close last week). Look to buy/buy more on a pullback to 43.30 or lower. Stop is a close below 42. Med-term look for a move to 48. - PPC: us stuck in a 32-33.50 range at the moment. Either buy near 32, or on a close above 33.50 – first to happen. Target to 35. Stop a close below 31. - Reinet: hold/buy at 11.50 if it gets near there again. Hold. Stop is a close below 11.35. It still needs to close above 11.95 to give a bullish breakout, to get going. Upside target is 12.50 but I'd like to see that breakout above 11.95 to be more confident of it getting there. Note, all sideways patterns are followed by large breakout. This one is getting to be a large sideways pattern so far. The odds favour an upside breakout, but patience is required. - Remgro: has exceeded the short-term targets on rumours of an acquisition. Traders buy again in the 98.30-96.30 zone. Stop is a close below 93. Target to 110. Investors keep holding. - Reunert: hold. Target is 59.50 short-term. Stop is a close below 55.50. It can be bought again at 55.70 if it drops there before reaching the target. Bigger targets are 60.50, then 65. - Richemont: went straight up to over 29. Look to buy again on a pullback to 27.75 for traders. Target to 29.50. Investors hold. - RMBH: buy on a pullback to 32 or lower. Short-term target to 33.70. Larger target to 38. Investors hold. - SABMiller: see update above. - Sanlam: see Chart 6. - Santam: got back to 109 to take profits as advised. It can still go to 114.50 but look to get back in on a pullback to 105 first. - Sappi: hold. I still like its chart. The minimum upside target is 35.35. Stop for traders is a close below 31.75. - Sasol: has formed a potential head and shoulders short-term. A close below 281.50 will be a short signal for a drop to 270.80. Stop will be a close above 287.50. No large positions here to be taken. - Shoprit: reached the mentioned short-term target before pulling back. Traders can buy again at 77.30 or lower. Target is 84.50. Investors keep holding. - Spar: reached the mentioned target before pulling back for another good profit. Traders re-enter in the 76-75 range. Stop is a close below 74.50. Trading target to 80. Is a med and long-term hold. - Stanbank: reached the 118 profit target before pulling back. Traders re-enter at 115.30 or better for another run to 119-120 for profit taking. Stop is a close below 113.90. Investors hold. Larger target is 130. - Steinhof: reached and exceeded the trading target for half profit taking. The reminder of profits locked in on the trailing stop. Investors keep holding. Traders look to buy again ideally at the 20.40 level. Stop is a close below 20. Target is 22.20-22.50. Investors hold. Telkom: take trading profits at 34.90. Pullbacks to 33 can be bought. Stop a close below 32.50. - Tigbrands: reached the first target of 189 for half profit taking. Next target is 193. Stop is a close below 180. Any pullback to the can be bought again. Investors hold. - Truwths: stopped 4c short of the 56.60 target which is close enough to be taking profits. Larger target is 63 for med-term players and investors. Traders buy at 52.90 or lower. Stop is a close below 50.50. Investors keep holding. - Vodacom: finally triggered the upside breakout. Target is 58.40. Start locking in partial profits at 58. Any pullback to 55.60 can be bought still if we get one.

xiii - Woolies: the first target of 23 reached for some profit taking as advised. Next target is 25.10. It did pullback sharply in recent days, which is good (as it allows one to buy again). Current stop for traders is a close below 22.30 if you're still in on part of your position. If it pulls back to 21.50 then buy again.

GOLD UPDATE: The JSE gold index hasn’t given the mentioned breakout yet, although it got close last week. It needs to close above 2240 to break out now. If it can hold above 2166 that will be a positive sign for the short-term. An upside breakout will set up a move to 2465. What's encouraging is that the main gold shares are holding up well given the gold prices recent weakness. Typically gold shares lead the gold price. Dollar gold price: it's broken short-term support and is not getting going. After having formed an inverse head and shoulders as shown recently, it's now moved sideways to form a head and shoulders in the opposite direction. Bottom line is that is moving sideways in the med-term. A close above 1131 will be bullish, but a close below 1092 will be short-term bearish. Best short-term strategy is to stand aside for now until it develops a clear trend again. Big picture definitely still positive. Rand gold price: It broke to the downside (refer to the chart in last week's report). It was a fairly risky trade but had a tight stop so was worth taking. It's technically pointing to a target of 7800 in to short- term. It is oversold though with a positive divergence on its chart so it might not reach that target. No trade here at the moment and shorting at current levels is risky.

5. “SHORTABLE” STOCKS AND INDICES

Please note:  We list the stocks and indices (local and overseas) that are in short-term (at least) downtrends, and that can be sold short (see Glossary for definition) on rallies to resistance.  Selling short can be done via single stock futures, CFDs, spread trading, and/or put warrants.  One way of trading these stocks/indices is to sell short rallies to the falling 20-day moving average (in stronger downtrends) or the falling 40-day moving average (in more gradual downtrends). These moving averages tend to act as resistance. Wait for a downward reversal at the moving averages before selling short.  NOTE 1: ALWAYS USE PROTECTIVE STOPS ON ALL POSITIONS. Selling short is for short- term traders only, and all positions must be monitored closely.  NOTE 2: The instruments on this list are not automatic shorts, but it is a starting point for looking. Always look at the chart first before making a final decision.

Shortable Stocks: (as of 24 March ‘10) Price (R) 20-Day MA: 40-Day MA:

ARCMITTAL 84.0000 97.1485 102.1428 HULAMIN 11.0000 11.7320 12.0708 LIB-INT 54.2500 55.4245 55.4743 M&R-HLD 38.6000 38.6345 40.0583 SIMMERS 1.1800 1.2965 1.4180 SUNINT 88.6500 89.8830 90.6295 URONE 18.8800 20.8465 22.0543

Shortable Indices/Currencies/Commodities: Price 20-Day MA: 40-Day MA:

C-$ZAR-AM 732.7000 747.4790 755.7820 C-EUR-$ 135.3000 136.1850 136.9175 C-EUR-ZAR 989.5400 1021.0350 1035.9160 xiv C-GBP-$ 150.2000 151.3000 154.6125 C-GBP-YEN 135.7900 136.0660 139.1797 C-GBP-ZAR 1103.7800 1133.0205 1169.2998

SUMMARY

The JSE's main indices and main index stocks are still looking very bullish, with higher targets across the board. As a result, minor pullbacks like we're currently seeing, present good buying opportunities.

A few more days pulling back will be the ideal scenario, but in such a strong trend be aware that pullbacks may be shallow. The focus is very much on looking to buy these dips, for traders. Investors to keep holding stocks as the bull market is far from over, although there will still be one more big correction on to way up. It's hard to say when, but not anytime soon. A large correction (at some stage, probably later this year) will be another chance to buy for a bigger run-up.

Sincerely,

Colin Abrams TheMarket.co.za

PS: Remember: Protective stops on all positions!

NEXT WEEK'S NEWSLETTER:

Please note next weeks newsletter will be out on Thursday (1 April), not Wednesday, due to the Passover holi/holy day.

UPCOMING COURSES - JOHANNESBURG:

Course 2: Advanced Technical Analysis (Level II) and Money Management - 11th April '10 (Sunday).

Course 3: Developing Trader Discipline (Trading Psychology) - 9th April '10 (Friday).

Please let us know if you'd like to attend ([email protected]). Seating is limited.

COPYRIGHT:

THIS NEWSLETTER IS TO BE READ ONLY BY THE PERSON WHO HAS PAID AND SUBSCRIBED TO IT (I.E. THE SUBSCRIBER). UNDER NO CIRCUMSTANCES IS IT TO BE SHOWN (OR GIVEN) IN PHYSICAL OR ELECTRONIC FORM TO ANY OTHER PERSON, WITHOUT THE PRIOR CONSENT OF THEMARKET.CO.ZA. NOTE FURTHER, ANY PERSON FOUND TO BE DISTRIBUTING THIS DOCUMENT TO A NON-SUBSCRIBER (WITHOUT OUR PERMISSION) WILL HAVE HIS/HER SUBSCRIPTION CANCELLED WITH IMMEDIATE EFFECT. (A HUGE AMOUNT OF WORK GOES INTO EACH ISSUE OF THE NEWSLETTER AND TO SHOW IT TO A NON SUBSCRIBER IS NOT ONLY MORALLY INCORRECT, IT IS ALSO ILLEGAL). FURTHERMORE, ELECTRONIC TRANSMISSION (EMAIL), REPRODUCING, AND/OR DISSEMINATING THIS DOCUMENT (OR PART THEREOF) IN ANY OTHER MANNER WITHOUT THE WRITTEN CONSENT OF THEMARKET.CO.ZA IS A VIOLATION OF THE COPYRIGHT LAW - AND IS ILLEGAL. LEGAL ACTION WILL BE TAKEN AGAINST PERPETRATORS

xv DISCLAIMER: Information for stock and index observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the stock/index/commodity/or currency observations, and opinions are entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. The information provided here is for interest and educational purposes only, and does not constitute advice. The editor and publisher will not be held responsible for losses incurred as a result the opinions expressed herein. All information herein is based on opinion; markets follow their own course. You must assess the risk of any trade and make your own independent decisions regarding any securities mentioned herein (or options thereon). We will from time to time have a position in the securities described herein. One should always use protective stops on all trading and investment positions. There is a risk of monetary loss in trading and/or investing on the financial markets.

Charts created in Metastock