JSE stocks likely to fall further

Investors are in for a bumpy ride because Johannesburg Stock Exchange (JSE) stocks are likely to fall even more according to Andrew Kinsey head of risk at online trading platform GT247.com. His comments follow the dramatic fall that mining shares experienced yesterday. Kinsey said companies like BHP Billiton and AngloGold Ashanti tumbled on disappointing earnings coupled with a drop in metal prices.


But it’s not all doom and gloom. Kinsey, who expects the market correction to last between two and three weeks, added that despite the index’s likely downward trend, there are still opportunities for investors to protect gains made since June 2012 as the market corrects.


“The market has shown good gains in the calendar year, which have been reversed in the past few days. However, previous gains may be protected by either reducing or closing positions. Alternatively, investors can take advantage of option strategies that should be relatively inexpensive due to low levels of volatility,” he says.   


The downward trend could be followed by a bounce back added Kinsey. “The Alsi has broken through key levels of 35 900 and 35 300. If we are just retracing the move from the November lows then it’s possible we could go about a 1 000 points lower to 34 150. However, we would then anticipate a bounce thereafter to resolve oversold conditions – although the timing of this will remain a challenge.”