MARKET UPDATE 37

Global& Local EconomicTransition weigh down Emerging Markets

The Nigerian equity market continued to trend downward as it remained in the bearish territory, despite the mixed performance recorded for the week when it closed trading on Friday positive.  The market in this mood failed to respond to last week's inauguration of the maiden federal executive council to pilot the affairs of the nation and revitalise the declining economy and influence the market, going forward. It is immediately clear whether this is the market's way of saying the wait was too long, coming almost six months after the May 29 inauguration of the Muhammadu Buhari administration.

The bears retained controlof market tempo,as more equities shed weight, despite the two bull sessions witnessed in the course of the week.

 The Composite NSE ASI traded below its 29,000 resistance zone to 28,841.67 within the period, while still forming a double bottom at the new support level that is likely to reverse, depending on market fundamental and forces. 

The pressure on the global equities market continued as economic and other relevant data released so far points toward a weakening economy, at a time when GDP growth rate in the major economies of the world like China, U.S and in Europe are declining. This has been responsible for the oscillation of global market indicators, coupled with the increasing likelihood of Federal Reserve moving interest rate up in the December or early 2016.   

The Nigerian market closed negative last Friday, as the Composite NSEASI shed 1.14 per cent to close at 28,841.67 from an opening figure of 29,175.35 basis points, a difference of 333.68points, pushing the year-to-datedecline to 16.93 per cent.

Meanwhile, market capitalisation also closed last week at N9.92 trillion from an opening value of N10.03 trillion recorded in the previous week. In the same vein, all the major indices for the period closed lower, except the NSE INS and NSE LOTUS that were up with 0.93 percent and 0.17 percent respectively.  On the big board, the decliners outpaced advancers, just as despite the up market on Tuesday and Friday, the market breadth remained negative and weak waiting for trigger. 

With the declining economic situation dampening the interest and the morale of international and domestic investors, there is an urgent need for a comprehensive economic reform blueprint that would usher in a progressive economy and enhance the living standard of Nigerians. 

NSE ASI WEEKLY CHART

The double bottom formation pattern is still intact  on the weekly chart of the NSEASI with a hammer candle stick indicates upside reversal but low volume with 1.14 percent loss did not support the very short bull-run, except there is improvement in market fundamental especially now that  money market rate is crashing. Also, the index remains below its 50-day moving average which is the red line and a sign of bearish market.

AFRICA PRUDENTIAL

On 11/13/2015, AFRIPRUD closed above the lower band by 35.5%. Bollinger Bands are 60.52% narrower than normal.  The narrow width of the bands suggests low volatility as compared to AFRIPRUD'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 30 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 3 white candles and 6 black candles for a net of 3 black candles.  During the past 50 bars, there have been 19 white candles and 21 black candles for a net of 2 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 1 period(s) ago.  Since the MACD crossed its moving average, AFRIPRUD's price has decreased 0.39%, and has ranged from a high of N2.68 to a low of N2.57.  The current value of the RSI is 43.52.

Analyst Opinion;

Break out or down is imminent, traders and investors should jump into this stock now.

Oando

On 11/13/2015, OANDO closed above the lower band by 11.3%. Bollinger Bands are 8.85% 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 4 white candles and 6 black candles for a net of 2 black candles.  During the past 50 bars, there have been 16 white candles and 33 black candles for a net of 17 black candles.

Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 18 period(s) ago.  Since the MACD crossed its moving average, OANDO's price has decreased 50.83%, and has ranged from a high of N16.19 to a low of N5.43. The current value of the RSI is 34.30.

Analyst Opinion:

Traders positioning in this stock should take the very short trading position, while Investors already in Oando should buy at the market price to reduce losses as revealed by RSI.

ACCESS BANK

On 11/13/2015, ACCESS closed above the lower band by 12.9%. Bollinger Bands are 55.20% narrower than normal.  The narrow width of the bands suggests low volatility as compared to ACCESS'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 2 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 7 period(s) ago.  Since the MACD crossed its moving average, ACCESS's price has decreased 13.71%, and has ranged from a high of N5.40 to a low of N4.46. The current value of the RSI is 37.78

Analyst Opinion:

New entrance to the stock should buy for all investment objective as signaled by Bolling Band indicator

LIVESTOCK FEED

On 11/13/2015, LIVESTOCK closed above the lower band by 6.5%. Bollinger Bands are 36.45% 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 5 black candles for a net of 2 black candles.  During the past 50 bars, there have been 17 white candles and 30 black candles for a net of 13 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 18 period(s) ago.  Since the MACD crossed its moving average, LIVESTOCK's price has decreased 31.03%, and has ranged from a high of N2.30 to a low of N1.40. The current value of the RSI is 31.39.

Analyst Opinion:

This stock is trading at its oversold region, traders should confirm up trend before buying into the company, while investors should accumulate at this market price

FIDSON HERATHCARE 

On 11/13/2015, FIDSON closed below the lower band by 13.5%.  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 21.62% 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 4 black candles for a net of 2 white candles.  During the past 50 bars, there have been 20 white candles and 25 black candles for a net of 5 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, FIDSON's price has decreased 9.39%, and has ranged from a high of N3.48 to a low of N 2.80. The current value of the RSI is 44.72.

Analyst Opinion:

 Reversal is confirmed traders should take position while investors accumulate at current market price.

CAVERTON

On 11/13/2015, CAVERTON closed above the lower band by 4.1%. Bollinger Bands are 69.24% wider than normal.   The large width of the bands suggest high volatility as compared to CAVERTON's normal range.  Therefore, the probability of volatility decreasing and prices entering a trading range has increased for the near-term.  The bands have been in this wide range for 3 period(s).  

The probability of prices consolidating into a less volatile trading range increases the longer the bands remain in this wide range. During the past 10 bars, there have been 0 white candles and 4 black candles for a net of 4 black candles.  During the past 50 bars, there have been 5 white candles and 14 black candles for a net of 9 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 11 period(s) ago.  Since the MACD crossed its moving average, CAVERTON's price has decreased 18.03%, and has ranged from a high of N3.05 to a low of N2.76. The current value of the RSI is 16.33

Analyst Opinion:

Currently trading at its oversold region, traders should confirm reversal before jumping into the stock.

ZENITH BANK

On 11/13/2015, ZENITHBANK closed below the upper band by 48.1%. Bollinger Bands are 17.85% narrower than normal.  The current width of the bands does not suggest anything conclusive about the future volatility or movement of price. 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 7 period(s) ago.  Since the MACD crossed its moving average, ZENITHBANK's price has decreased 6.13%, 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 45.71 and 67.42 respectively.

Analyst Opinion:

On a weekly chart reading, Zenith has formed a continuation pattern, suggesting that traders should confirm break out before positioning, while investors should accumulate in stages.

WEMA BANK

On 11/13/2015, WEMA BANK closed below the upper band by 33.9%. Bollinger Bands are 37.82% 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 4 white candles and 3 black candles for a net of 1 white candle.  During the past 50 bars, there have been 19 white candles and 20 black candles for a net of 1 black candle. Currently the MACD is bullish since it is trading above its signal line. The MACD crossed above its signal line 8 period(s) ago. Since the MACD crossed its moving average, WEMA BANK's price has increased 1.03%, and has ranged from a high of N1.04 to a low of N0.87. The current value of the RSI is 53.81.

Analyst Opinion:

Traders and Investors should wait to confirm uptrend before jumping into the stock as indicators of strong rebound.

DIAMOND BANK

On 11/13/2015, DIAMONDBNK closed above the lower band by 11.8%. Bollinger Bands are 0.13% wider than normal.  The current width of the bands does not suggest anything conclusive about the future volatility or movement of prices.  The recent price action around the bands compared to the action of the Relative Strength Index (RSI) suggests that a possible buying opportunity may exist.  Prices have recently troughed below the lower band.  This action was followed by a rally and then another trough inside the bands.  The RSI has diverged from this price action with successive higher troughs, suggesting strength ahead.  A protective sell stop should be placed at or slightly below N2.43.  For confirmation of this buying opportunity, you should look at a volume based indicator such as the On Balance Volume or Money Flow Index for confirmation. 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 15 white candles and 33 black candles for a net of 18 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 15 period(s) ago.  Since the MACD crossed its moving average, DIAMONDBNK's price has decreased 31.58%, and has ranged from a high of N3.99 to a low of N2.43. The current value of the RSI is 28.42.

Analyst Opinion:

Traders should confirm reversal in trend before considering any positions, while investors should position in stages.

GTBANK

On 11/13/2015, GUARANTY closed above the lower band by 39.1%. Bollinger Bands are 21.11% 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 5 black candles.  During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 2 period(s) ago.  Since the MACD crossed its moving average, GUARANTY's price has increased 1.26% , and has ranged from a high of N24.43  to a low of N23.00. The current value of RSI and Stochastic Oscillator are 45.65 and 41.55 respectively.

Analyst Opinion:

Traders should wait for a lower price before positioning in the stock as momentum declining  while investors should accumulate in stages.

Conclusion

Traders should trade cautiously, especially as immediate factors to drive the market are neither here nor there, but think medium and long investing in fundamentally sound stocks with strong potential of upside in the nearest future.