That is why the market was mainly treading water on Wednesday morning shortly before the medium-term budget proposals later in the day, after a sharp recovery on Tuesday.
By midday on Wednesday the All-share index was only 0.24% lower at 48 413, while the Top 40 index traded 0.32% weaker at 42 248.
Resources indices were again the weakest performers, with the Resources 10 index 0.91% down and Gold losing 0.85%. The Financial index gained 0.20% and the industrial index was only 0.16% softer.
Finance Minister Nhlanhla Nene delivers his maiden Medium Term Budget Policy Statement on Wednesday afternoon, amid a perfect storm of low gross domestic product growth, widening deficits and looming credit rating downgrades of state-owned enterprises.
It is understandable that investors are waiting to see how the minister will balance the need between spending and keeping the state’s debt in check, because if the statement is perceived negatively it can do serious damage to investor confidence and do further damage to South Africa’s credit ratings.
But despite the caution on Wednesday morning, the mood on the markets is much better than a week ago.
Imara SP Reid said in its daily Market Snapshot on Wednesday morning that investors' attention has shifted from concern about global economic prospects to the results of US companies, which have surprised on the upside so far, particularly US corporations in the technology space.
The advances on Wall Street the last four days were largely in line with technical evidence which argued for an improvement from an exceptionally oversold market, but the upside momentum has materialised in a more robust fashion than available evidence suggested.
The improvement in tone across a number of markets and geographical regions is likely to follow through to the JSE. An appraisal of the market suggests that brisk upside momentum is likely and that additional advances are on the cards, but not always at Tuesday's brisk tempo.
It is important for the Top 40 index to breach the important support level of 43 600, and stay there. At one stage on Tuesday it looked as if the index was well on its way to this target, but it lost some momentum on Wednesday morning. If the index breaches 43 600, it will again trade above its 200-day moving average, an important technical indicator.
The mood in the resources sector is probably still influenced by news that the Chinese economy improved by only 7.3% in the third quarter, the slowest growth rate since 2008.
Important resources shares are therefore still trading at 52-week lows, including Harmony [JSE:HAR] and Impala Platinum [JSE:IMP].
Harmony lost another 2.58% to only R21.53, below the previous 52-week low of R21.71 which was set on Monday. Another heavyweight in the gold sector, AngloGold Ashanti [JSE:ANG], traded 1.63% weaker at R110.17, not far off from Monday’s 52-week low of R109.35.
Impala was 1.46% lower at R82.19 which is also below the previous low of R82.41, set on Monday.
One of the star performers on Wednesday morning was Sun International [JSE:SUI] which was 0.49% higher at a new 52-week high of R124.13, beating the previous day’s record of R123.52. This share is now 20.5% higher than a year ago.
- Fin24
* Visit Fin24's Mini
Budget Special for all the news.