NSE RESIST FURTHER DECLINE AHEAD OF RATE CRASH AND INAUGURATION OF FEDERAL CABINET

 

The Nigerian equity market closed the first trading week of November on a flat note, as it struggles to resist further downward trend, as traders cash on low price of fundamentally sound companies to rebalance their portfolio ahead of rate crash in the money market and assigning of portfolio to the confirmed ministers that would pilot the government affairs to bring the all awaited change in the economy and governance.  

The market for straight four trading sessions were recording marginal decline to witness a reversal on Friday that recover all the losses on a huge volume indicating accumulation process by smart money.   The Composite NSE ASI traded above its 29,000 resistance zone within the period forming a double bottom at the new support level that is likely to usher in bull transition in a bear market.  

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 that is reflecting on the equity price of these countries that are struggling with their currency evolution. 

 

The market closed positively last Friday as the Composite NSEASI slide marginally 0.01 per cent to close at 29,175.35 from an opening figure of 29,177.72 basis points, a difference of 2.37points.  The year-to-date negative return stood at 15.82 per cent. 

Meanwhile, market capitalisation also closed last week at N10.029 trillion from an opening value of N10.028 trillion recorded in the previous week. In the same vain, all the major indices for the period closed lower except the NSE Premium, NSE 30, NSE INS and NSE Oil/Gas that were up. On the big board, the decliners outpaced advancers by 43 to 24. Despite the up market on Friday, the market breadth remained negative and weak waiting for trigger.

The recent disappointing earnings that damper the interest and the moral of many traders and investors were a reflection of the static economy that is calling for serious government attention. 

NSE ASI WEEKLY CHART

The double bottom formation pattern on the weekly chart of the NSEASI with a hammer candle stick indicates upside reversal on a big volume with marginal loss to support the very short bull-run, especially as money market rate is dropping seriously. Also, the index closed below its 50-day moving average which is the red lineand a sign of bearish market but on the move to trigger another recovering market. 

  Meanwhile, the cabinet ministers that have been confirmed andare waiting for portfolio in order to articulate economic policy that would  give direction to the economy and enable investors look the way of Nigeria is under way.

ZENITH BANK

On 11/6/2015, ZENITHBANK closed below the upper band by 39.8%. Bollinger Bands are 11.10% 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 7 white candles and 2 black candles for a net of 5 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 6 period(s) ago.  Since the MACD crossed its moving average, ZENITHBANK's price has decreased 2.21%, 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 48.97 and 71.41 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 11/6/2015, WEMA BANK closed below the upper band by 28.0%. Bollinger Bands are 38.58% 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 2 black candles for a net of 3 white candles. During the past 50 bars, there have been 20 white candles and 19 black candles for a net of 1 white candle. 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, WEMA BANK's price has increased 2.06%, 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 strength is returning to Wema bank.

DIAMOND BANK

On 11/6/2015, DIAMONDBNK closed above the lower band by 8.6%. Bollinger Bands are 0.92% 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 6 black candles for a net of 3 black candles.  During the past 50 bars, there have been 16 white candles and 32 black candles for a net of 16 black candles. Currently the MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 14 period(s) ago.  Since the MACD crossed its moving average, DIAMONDBNK's price has decreased 31.05%, and has ranged from a high of N3.99 to a low of N2.43. The current value of the RSI is 28.68.

Analyst Opinion:

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

GTBANK

On 11/6/2015, GUARANTY closed above the lower band by 34.0%. Bollinger Bands are 11.83% 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 1 period(s) ago.  Since the MACD crossed its moving average, GUARANTY's price has increased 0.48% , and has ranged from a high of N24.43  to a low of N23.00. The current value of RSI and Stochastic Oscillator are 44.84 and 53.21 respectively.

Analyst Opinion:

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

AFRICA PRUDENTIAL

On 11/6/2015, AFRIPRUD closed above the lower band by 7.8%. Bollinger Bands are 60.69% 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 25 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 7 black candles for a net of 4 black candles.  During the past 50 bars, there have been 20 white candles and 21 black candles for a net of 1 black candle. 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.

Oando

 

On 11/6/2015, 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 34.33.

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.

ACCESS BANK

On 11/6/2015, 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 position for all investment objective.

LIVESTOCK FEED

On 11/6/2015, LIVESTOCK closed above the lower band by 2.5%. Bollinger Bands are 37.37% 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 4 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 17 period(s) ago.  Since the MACD crossed its moving average, LIVESTOCK's price has decreased 30.54%, and has ranged from a high of  N2.30 to a low of  N1.400. The current value of the RSI is 31.63.

Analyst Opinion:

This stock is trading at its oversold region, traders should confirm up trend before buying into the company share.

FIDSON HERATHCARE 

On 11/6/2015, FIDSON closed below the lower band by 24.1%.  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 26.16% narrower than normal.  The current width of the bands (alone) 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 19 white candles and 25 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 16 period(s) ago.  Since the MACD crossed its moving average, FIDSON's price has decreased 15.11%, and has ranged from a high of N3.48 to a low of N 2.80. The current value of the RSI is 39.11.

Analyst Opinion:

Traders should wait to confirm reversal and position while investors should buy at market price.

CAVERTON

On 11/6/2015, CAVERTON closed below the lower band by 10.6%.  Although prices have broken the lower band and a downside breakout is possible, the most likely scenario is for the current trading range that CAVERTON is in to continue.  During the past 10 bars, there have been 0 white candles and 3 black candles for a net of 3 black candles.  During the past 50 bars, there have been 8 white candles and 13 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 7 period(s) ago.  Since the MACD crossed its moving average, CAVERTON's price has decreased 9.51%, and has ranged from a high of N3.05 to a low of N2.76. The current value of the RSI is 21.89

Analyst Opinion:

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

Conclusion

The market  has shown resilience as mixed sentiments dominated last week trading as traders and  value seeking investors  take advantage of prevailing price levels to reposition portfolio. We expect the bearish trend to moderate further as funds flow out of money market as a result of crashing rates into the stock market to take medium to  long term position.