MARKET UPDATE 35

At the end of October trading the Nigerian Stock Exchange (NSE) had mixed performance with the bears dominating to short live the recovery mood triggered in September. The Composite NSEASI traded above its 31,000 resistance zone within the period before breaking down to form a descending triangle on huge volume, against the situation in September which signals continuation of down trend with traders and investors yet to respond to the mixed earnings reports released to the market recently.

The weekly formation of head and shoulder is also a bearish signal that support down market as revealed by the chart pattern.

The dwindling earnings power of many international companies are putting pressure on the global equities market, with investors expressing concerns about the slow growth rate in the major economies of the world, as China, the U.S and European countries are struggling with their production and purchasing capacity.

This was revealed in the ongoing earnings season as numbers were below market and analysts’ expectations.

The market closed negative last Friday as the Composite NSEASI shed 6.5 per cent to close at 29,190.54 from an opening figure of 31,217.77 basis points, a difference of 2027.23 points.   Market Capitalization also closed the month at N10.03 trillion.  On the big board, the decliners outpaced advancers for the period, despite the mixed performance recorded in the period, market breadth remained weak and negative. 

NSEASI WEEKLY CHART

The symmetrical triangle on the weekly chart of the NSEASI waiting for a break out or down as a continuation pattern. The possibility of break down is high as volume trade were increasing on the down trend. On the week’s last trading day to continue downside trend on strong volume with high lost to support bearish market, especially as the market enter the peak of its earnings season with weak numbers from majority of the listed companies. Also, the index remained under 50-day moving average which is the red line is a sign of bearish mood and a weak market.

Meanwhile, themarket did not react to President Muhammadu Buhari's submission of ministerial nominees, who were subsequently screenedand  confirmed as members of the federal cabinet. It isexpected that the new cabinet would provide the required economic reforms blueprint that would rejuvenate the economy and compliment the CBN’s monetary policy of stimulation. 

NSEASI MONTHLY CHART

The descending triangle on the monthly chart of the NSEASI is also a continuation or reversal pattern waiting for a break out or down. The possibility of break down is high as volume trade was high against September. The month’s last trading day closed down on strong volume suggesting that the earnings season did not support the market as traders and investors are standing on the side line.

OANDO

On 10/30/2015, OANDO closed below the lower band by 10.2%.  This combined with the steep downtrend suggests that the downward trend in prices has a good chance of continuing.  However, a short-term pull-back inside the bands is likely. Bollinger Bands are 6.99% narrower than normal.  The current width of the bands does not suggest anything conclusive about the future volatility or movement of prices.During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles.  During the past 50 bars, there have been 15 white candles and 34 black candles for a net of 19 black candles. 

Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 17 period(s) ago.  Since the MACD crossed its moving average, OANDO's price has decreased 61.72%, and has ranged from a high of N16.19 to a low of N6.01. The current value of the RSI and Stochastic Oscillator are 25.78 and 9.34 respectively.

Analyst Opinion:

New entrants should wait to confirm support level before jumping into the stock. While those in the stock who are yet to sell should extend their waiting.

FBNH

On 10/30/2015, FBNH closed above the lower band by 5.0%. Bollinger Bands are 19.96% narrower than normal.  The current width of the bands does not suggest anything conclusive about the future volatility or movement of prices. During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles.  During the past 50 bars, there have been 15 white candles and 35 black candles for a net of 20 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 0 period(s) ago.  Since the MACD crossed its moving average, FBNH's price has been unchanged, and has ranged from a high of N5.80 to a low of N4.95. The current value of the RSI is 28.67

Analyst Opinion:

Reversal is imminent. Traders and investors should take position, as the stock is trading at  its oversold region

ACCESS BANK

On 10/30/2015, ACCESS closed above the lower band by 22.1%. Bollinger Bands are 46.48% narrower than normal.  The narrow width of the bands suggests low volatility as compared to ACCESS' normal range.  Therefore, the probability of volatility increasing with a sharp price move has increased for the near-term.  The bands have been in this narrow range for 1 period(s).  The probability of a significant price move increases the longer the bands remain in this narrow range. During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles.  During the past 50 bars, there have been 17 white candles and 32 black candles for a net of 15 black candles. Currently the MACD is bullish since it is trading above its signal line. The MACD crossed above its signal line 6 period(s) ago.  Since the MACD crossed its moving average, ACCESS's price has decreased 11.20%, and has ranged from a high of N5.40 to a low of N4.57. The current value of the RSI is 39.26. 

Analyst Opinion:

Traders and investors should watch out for reversal in trend and position for all investment purpose.

NB

On 10/30/2015, NB closed below the upper band by 40.3%. Bollinger Bands are 0.87% wider than normal.  The current width of the bands does not suggest anything conclusive about the future volatility or movement of prices. During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 18 white candles and 32 black candles for a net of 14 black candles. Currently the MACD is bullish since it is trading above its signal line. The MACD crossed above its signal line 5 period(s) ago.  Since the MACD crossed its moving average, NB's price has decreased 2.30%, and has ranged from a high of N149.00 to a low of N130.50. The current value of the RSI is 49.19.

Analyst Opinion:

Traders should wait to confirm reversal before jumping into the stock while should hold

ZENITH BANK

On 10/30/2015, ZENITH BANK closed below the upper band by 44.2%. Bollinger Bands are 4.31% narrower than normal.  The current width of the bands does not suggest anything conclusive about the future volatility or movement of prices. During the past 10 bars, there have been 6 white candles and 3 black candles for a net of 3 white candles.  During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles. Currently the MACD is bullish since it is trading above its signal line. The MACD crossed above its signal line 5 period(s) ago. Since the MACD crossed its moving average, ZENITH BANK's price has decreased 2.82%, and has ranged from a high of N18.85 to a low of N15.97. The current value of the RSI and Stochastic Oscillator are 48.44 and 61.40 respectively.

Analyst Opinion:

Take the very short profit and reposition at a lower price.

UBA

On 10/30/2015, UBA closed above the lower band by 19.7%. Bollinger Bands are 23.39% narrower than normal.  The current width of the bands does not suggest anything conclusive about the future volatility or movement of prices. During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candle.  During the past 50 bars, there have been 19 white candles and 30 black candles for a net of 11 black candles. Currently the MACD is bullish since it is trading above its signal line. The MACD crossed above its signal line 4 period(s) ago.  Since the MACD crossed its moving average, UBA's price has decreased 17.45%, and has ranged from a high of N4.50 to a low of N3.42. The current value of the RSI is 38.53

Analyst Opinion:

Traders should wait to confirm reversal and jump in, while investors should take advantage of low price to accumulate more

NESTLE

On 10/30/2015, NESTLE closed below the lower band by 22.8%.  Although prices have broken the lower band and a downside breakout is possible, the most likely scenario is for the current trading range that NESTLE is in to continue.  The narrow width of the bands suggests low volatility as compared to NESTLE's normal range.  Therefore, the probability of volatility increasing with a sharp price move has increased for the near-term.  The bands have been in this narrow range for 23 period(s).  The probability of a significant price move increases the longer the bands remain in this narrow range.During the past 10 bars, there have been 2 white candles and 2 black candles.  During the past 50 bars, there have been 10 white candles and 15 black candles for a net of 5 black candles. Currently the MACD is bullish since it is trading above its signal line. The MACD crossed above its signal line 24 period(s) ago.  Since the MACD crossed its moving average, NESTLE's price has increased 0.61%, and has ranged from a high of N869.99 to a low of N820.00. The current value of the RSI is 42.13

Analyst Opinion:

Investors should hold while traders should confirm trend before taken position.

NAHCO

On 10/30/2015, NAHCO closed above the lower band by 4.0%. Bollinger Bands are 40.88% narrower than normal.  The narrow width of the bands suggests low volatility as compared to NAHCO's normal range.  Therefore, the probability of volatility increasing with a sharp price move has increased for the near-term.  The bands have been in this narrow range for 1 period(s).  The probability of a significant price move increases the longer the bands remain in this narrow range. During the past 10 bars, there have been 2 white candles and 7 black candles for a net of 5 black candles.  During the past 50 bars, there have been 18 white candles and 29 black candles for a net of 11 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 20 period(s) ago.  Since the MACD crossed its moving average, NAHCO's price has decreased 23.43%, and has ranged from a high of N5.81 to a low of N3.99. The current value of the RSI is 38.72.

Analyst Opinion:

Investors already in the stock should hold while traders should confirm uptrend and position.

DANGOTE CEMENT

On 10/30/2015, DANGCEM closed above the lower band by 18.1%. Bollinger Bands are 48.55% narrower than normal.  The narrow width of the bands suggests low volatility as compared to DANGCEM's normal range.  Therefore, the probability of volatility increasing with a sharp price move has increased for the near-term.  The bands have been in this narrow range for 11 period(s).  The probability of a significant price move increases the longer the bands remain in this narrow range.  During the past 10 bars, there have been 5 white candles and 5 black candles.  During the past 50 bars, there have been 18 white candles and 28 black candles for a net of 10 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 8 period(s) ago.  Since the MACD crossed its moving average, DANGCEM's price has decreased 0.59%, and has ranged from a high of N179.99 to a low of N155.60. The current value of the RSI is 42.15

Analyst Opinion:

Traders should wait to confirm uptrend before jumping in, while investors investors in the stock should hold.