South Africa 40 Cash Index: large cash adjustment Monday not Tuesday
The shortened trading week sees the adjustment on Monday rather than Tuesday. The dividend in the underlying is currently expected to be 232 points.
The South Africa 40 Cash Index has now broken above the 70700-resistance level before retracing back below.
The long-term trend for the index remains up as the price continues to trade firmly above the 200-day simple moving average (200MA) (blue line), although the index has also now moved into overbought territory in the near term.
Our view is that the trend takes precedence over the overbought signal, and we continue to favour long positions on the index rather than short positions.
Traders who are long might consider maintaining a close below the 69835 level as a stop loss indication for the trade.
Traders who are not yet long might prefer to see a strong close today for a new entry signal.
The recent high at 71670 provides the initial upside resistance target favoured, a close above this level would suggest 72840 as a further target from the move.
Should we instead see a price pullback from overbought territory, we would look for a bullish price reversal at one of our lower levels for long entry, provided that the 200MA is not broken with a close below.
IG client sentiment
As of 13h30 on Monday the 3rd of April 2023, the majority (63%) of IG clients with open positions on the South Africa 40 Cash Index expect the price to fall, while 37% of clients with open positions expect the price to rise.
Cash adjustment
Traders of the South Africa 40 Cash Index can expect an adjustment in line with the dividend in the underlying index at equity market close on Monday the 3rd of April 2023. The shortened trading week sees the adjustment on Monday rather than Tuesday. The dividend in the underlying is currently expected to be 232 points.
Key data to watch
The week ahead sees a relatively light domestic calendar in terms of scheduled high impact data, although there are several international events which could provide short term volatility. The most significant data point is likely to be Friday’s US Non-Farm Payroll and Unemployment Claims. While the underlying market for the South Africa 40 Cash Index will be close, after-hours pricing would still apply.
A calendar of scheduled economic data points for the week is as follows:
| Date | Time | Region | Event | Previous |
|---|---|---|---|---|
4 April 2023 |
4:00pm |
USD |
JOLTS Job Openings |
10.82M |
5 April 2023 |
2:15pm |
USD |
ADP Non-Farm Employment Change |
242K |
5 April 2023 |
4:00pm |
USD |
ISM Services PMI |
55.1 |
6 April 2023 |
2:30pm |
USD |
Unemployment Claims |
198K |
7 April 2023 |
2:30pm |
USD |
Average Hourly Earnings m/m |
0.20% |
7 April 2023 |
2:30pm |
USD |
Non-Farm Employment Change |
311K |
7 April 2023 |
2:30pm |
USD |
Unemployment Rate |
3.60% |
This information has been prepared by IG, a trading name of IG Markets Ltd 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. See full non-independent research disclaimer and quarterly summary.
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