In our research note "Crash Peak Recovery" on 1st June, we identified a set of diversified shares we felt were still "good to go" for the Rebound Strategy, despite a hectic market rise. We recommended waiting for some weakness and pullback to capitalise on the formation of such a portfolio. The market has come off 8.5% since then and this set of shares followed accordingly, dropping some 15%
There is a good chance that 6 Jul 2009 is a localised trough, the base from which another series of rises will take place on the ALSH. On 6th July we reported in the Weekly JSE Pulse "Special Conditions" section that declines outnumbered advances by 7-to-1, a highly rare occurance indicating that the last of the sellers in the consolidation had been flushed from the system. This is based on our research of Advance/Decline ratios dubbed "How to profit from Advance/Decline Ratios".
We think its a good time to incept a model portfolio for this set of diversified shares which we will dub V-DIV (V for rebound, DIV for diversified). This set of shares is highly sensitive to market rises and the theory goes that a rise in the ALSH will result in a healthy rise in this set of shares, the same as achieved with VT-100 and V-COMBO.