How StockTalk signals are calculated
The StockTalk signals tool analyses each JSE-listed stock against eight technical factors and combines them into a single verdict: BUY ZONE, WATCH, HOLD, or AVOID. This page documents exactly what each factor measures, how they are scored, and what the final verdict means. If you are using a signal to inform a trade decision, this is the page to read first.
1. Support proximity
The model finds the nearest price support level (a price where the stock has historically bounced). The closer the current price is to that support, the higher the score. Trading very close to support is the single strongest buy-zone signal.
2. RSI 14 (momentum)
The 14-day Relative Strength Index measures how fast the price has been moving. An RSI below 30 is considered oversold (potentially cheap), while above 70 is overbought (potentially stretched). Buy-zone signals favour RSI between 30 and 55.
3. vs SMA 50 (short-term trend)
The 50-day simple moving average reflects the short-term price trend. Stocks trading near or slightly below their SMA 50 (without breaking down) score positively. Stocks far above their SMA 50 are considered stretched.
4. vs SMA 200 (long-term trend)
The 200-day SMA shows the long-term health of the stock. Ideally, buy-zone candidates are above their SMA 200 or close to it. Stocks well below their SMA 200 are in a structural downtrend and require stronger supporting signals to score well.
5. Volume vs 30-day average
Volume confirms price moves. When a stock approaches support on lower-than-usual volume, it suggests less selling pressure, which is positive. Unusual volume spikes near support can indicate accumulation by larger investors.
6. Catalyst presence
Upcoming earnings announcements or significant corporate actions (such as director dealings) can increase a stock's short-term volatility and interest. The model applies a small positive boost when a catalyst is detected within the near-term window.
7. Stop-loss risk
Stop-loss risk measures how far the nearest support level is from the current price, expressed as a percentage. A tight gap means a stop-loss order can be placed close to the entry price, limiting potential losses. A wide gap indicates higher risk if the support level fails.
- Low risk: support is within 3% of current price
- Moderate risk: support is 3%–8% away
- Elevated risk: support is more than 8% away
8. Final verdict
Each factor is scored and combined into a single score from 0 to 100:
- BUY ZONE: score 65+, near support, RSI not overbought
- WATCH: score 45–64, approaching a buy zone but not there yet
- HOLD: score 30–44, in trend but no clear entry signal
- AVOID: score below 30, unfavourable conditions
This is a purely technical model. It does not consider company fundamentals, news sentiment, or macroeconomic factors. Always combine these signals with your own research.
Questions about the methodology, or a specific stock where the signal looks wrong? Email support@stocktalk.co.za and we will investigate. We treat anomaly reports as bugs first, opinion second.