Market Update

7 June 2021 By PDSNET

The S&P500 has virtually completed its seventh “mini-correction” on Friday the 4th of June 2021, since the V-bottom of the pandemic in March 2020. It exceeded its previous all-time high closing level of 4232.6, reaching an intra-day high of 4233.45. That it would probably go to a new record high was indicated by its record intra-day high of 4234.12 made on 1st June 2021, immediately after the Memorial Day holiday. Further new record high closes are evidently imminent as international investment sentiment surges back towards “risk-on”. Consider the chart:

S&P500 Index: February 2020 - 4th June 2021. Chart by ShareFriend Pro.


The strong upward move has gained new momentum from Joe Biden’s proposed $6trillion budget proposal and is boosted by good quarterly results from the S&P500 companies. Interest rates remain low and investment optimism is rife.

The shift towards “risk-on” is impacting on the currencies of emerging markets as more and more overseas investors, faced with zero or negative real interest rates at home, join the search for real returns on their money. The rand, which, in our opinion, has been under-valued for some years, is strengthening rapidly.

On Friday evening (4th June 2021) the rand was pushed to new highs at R13.4311 to the US dollar. Consider the chart:

South African rand/US dollar: June 2018 -  4th June 2021. Chart by ShareFriend Pro.


In our view the rand is now, perhaps, a little over-bought in the short-term and some sort of correction seems probable. Nonetheless, its strength means that the rising oil price has been largely offset for South African motorists.

The price of North Sea Brent oil has broken up through resistance at $69 and is now trading at $71.89. This reflects the fact that demand for motor vehicles continues to rise worldwide as the international economic recovery gains momentum. The growing take-up of electric vehicles is not yet sufficient to dampen oil demand significantly. Consider the chart:

North Sea Brent Oil: November 2019 - 4th June 2021. Chart by ShareFriend Pro.


It is now apparent that the world economy is in a strong economic boom which is reflected in rising share and commodity prices. South African economic recoveries have always been “export-led” and this recovery will be no different. Despite our various efforts at beneficiation, we remain primarily an exporter of commodities and we are enjoying a commodity bonanza as everything from coal and iron to gold and platinum rise to new highs.

The affluence which this has created is working its way through the JSE, impacting commodity shares first, of course, but spreading to other sectors, most of which are recovering quickly. This is a time to be fully invested, but to keep a wary eye out for that correction which we predicted in last month’s Confidential Report.


All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

Share this article:


Fundamental Context

The assessment of shares is divided into fundamental analysis and technical analysis. The fundamentalist is trying to answer this question, “How good will this company be as a payer of dividends in the future ?” This requires an in-depth study of everything about the company starting with its most recent financials.

Market Action

In general, we encourage investors to take a medium to long-term view of the market and not to get involved in “trading” or intra-day buying and selling, especially in highly geared derivative instruments.

However, watching the intra-day progress of the S&P500 index and other indicators

The Confidential Report - June 2021


In the previous Confidential Report on 5th May 2021, when the S&P500 index was at 4167, we suggested that it was probably due for a correction. Over the last month we have watched as a correction unfolded in that index. However, it turned out to be only a mini-correction of just 4% - and as we pointed out in our article, 


Almost nine months ago we suggested that you take an interest in two shares – Massmart and Blue Label. We suggested that they would benefit from any sort of recovery in the South African economy. At the time, investors were running scared because of the fall-out from the pandemic and the resulting lockdowns. We quoted that famous saying by Warren Buffett –


Since the V-bottom of COVID-19 in March last year, the S&P500 index has risen an amazing 86,6% without any major correction. There have been 7 “mini-corrections” of varying sizes, including the current one (which is not yet over), but in each case the market has quickly bounced back and resumed its inexorable upward trend. Consider the chart:

Rand Hedges

One of the complicating factors for a South African investor is the volatility of the rand. Many of our leading shares derive a large percentage, or even all, their income from their interests overseas – which means that their earnings are directly impacted by the strength or weakness of the rand. So, it becomes essential that you formulate a view on the

The Confidential Report - May 2021

The US economy grew at an annualized rate of 6,4% in the first quarter of 2021 – which was much faster than expected. Gross Domestic Product (GDP) was $19,1 trillion – which can be compared to the $19,3 trillion of the December quarter of 2019 - before the pandemic took hold. This shows that the economy is now virtually back to pre-COVID-19 levels. The

Top of the Market Signs

In last week’s article, 12-Year Bull Trend, we pointed out that the bull trend was rising exponentially and ultimately that could only end with an exponential collapse. We said that the exact timing of that collapse was very difficult to assess.

You may also recall our article of 23rd January

12 Year Bull Trend

On 6th March 2009, just over 12 years ago, the S&P500 index made an intra-day cycle low at 666.79. It was the end of a 17-month bear trend which had seen the S&P fall by 57,4%. The world was in the teeth of the sub-prime crisis and negativity abounded. Investors were terrified.  The response to the crisis was massive and world-wide.