TRADERS WATCH 13

The composite index of the Nigerian Stock Exchange again had a mixed performance to close the week higher in the midst of negative economic indicators. They include a declining Purchasing Managers' Index (PMI), soaring inflation, rising unemployment and the falling Naira value, amidst a galloping interest rate.

All of these have triggered high cost of funds in a low liquidity environment where the Central Bank of Nigeria (CBN) continues to suck the little liquidity in the system, thereby staving the private sector of funds.

Moreso, results from the just  concluded earnings season were below market forecast to reflect the gloomy economic situation, while the mixed sentiments resulted to dwindling investor and consumer confidence in the system. Add this to the fact that government policies seem not to have given the nation any economic direction.  

The recent readmission of nine suspended banks to the foreign exchange market is yet another policy somersault and over regulation of the sector by the apex bank. This is also slowing economic growth as can be gauged by the high interest rate. 

In stimulating economic recovery, the first factor is to cut interest rate. Generally, lower interest rates is positive for economic expansion while higher interest rates have negative impact on business profit and consumer spending, leading to economic contraction where Nigeria has found ourselves today. 

The NSE All-Share Index gained 305.76 points to close last week at 27,756.67 points, from an opening figure of 27,450.91 points, representing a 1.11% growth on a relatively low volume of trades that signifies an underplay of smart money in the market to markup prices. Buying volume of total transactions for the week was 38%, while selling position was 62% to reverse the previous week's down rally. 

NSEASI WEEKLY TIME FRAME 

NSEASI on a weekly time frame has formed a double bottom with index touching the lower line of the bullish channel at a strong support level  that seem to support the week's reversal after a short sideways pattern. The index is slightly above its 20 and 50-Day moving averages, the break out of descending triangle chart pattern indicates a continuation of the ongoing trend. Traders should watch out for first resistance level at 28,016.6and second resistance at 28,622.4 any move down with first support level at 27,675.9 and second support at 26,729.30. 

Looking at technical indicators, the NSEASI closed below the upper band by 48.1%, while MACD is bearish. RSI is reading 51.30, which is relatively strong. Money flow index has reversed down, indicating that funds are exiting the market. MACD and CCI are signaling EXIT position while SOand RSI are saying enter.

FCMB

FCMB moved 6.48% higher over the past week on a positive sentiment of its reinstated to FX market and strong financials. Traders should watch for a break out of the descending triangle chart pattern to continue an uptrend to a first resistance level of N1.21 and second resistance of N1.38or reverse down to touch first support level at N1.08 and N1.02 respectively.  The stock is trading below its 20-Day moving average at N1.15 per share.

Looking at the technical indicators, FCMB closed above the lower band by 27.4%. MACD is bearish and RSI is reading 42.28, which signifies neutral. All momentum indicators are signaling sell, except RSI. MFI has turned up, indicating that funds are entering the stock. The weekly buy volume of the total transactions was 93%, while sell position was 7%. 

WEMA BANK

Wema Bank moved 17.198% higher over the past week on low price sentiment that reversed the down trend. Traders should watch for a break out of the trend line to first resistance level of N0.78 and second resistance level of N0.84 or reverse down to touch first support level at N0.70 and the second support level will be at N0.62 per share. The stock is trading below its 20-Day moving average at N0.75 per share.

Looking at the technical indicators, Wema Bank closed above the lower band by 46.7%. MACD is still bearish, RSI is reading 47.18which is neutral. All the momentum indicators are signaling buy, except for MACD. MFI is indicating that funds were entering the stock as of Friday, Buying to selling volume indicator reveal 100% buy volume of the bank.

ACCESS BANK

Access Bank moved 0.54% higher over the past week and at the same time forming a symmetrical chart pattern on its price action that indicates continuation of the trend. Traders should watch the uptrend to first resistance level of N6.00 or a move down to support level of N5.14 per share. The stock is currently trading above the 20 and 50-Day moving average on a daily chart, with weekly buy volume of 69% and sell volume of 31%. 

Looking at technical indicators, Access Bank closed below the upper band by 37.9% and Bollinger Bands is 11.42% wider than normal.  MACD is currently bullish since it is trading above its signal line. RSI is reading 58.18 and appears strong, some momentum indicators like CCI. MACD and RSI are signaling sell, while SO is signaling buy. MFI is looking down on a weekly time frame showing that funds are exiting the stock.

SEPLAT

Seplat's share price rose 15.76 % over the past week to reverse the decline on positive sentiment earning more foreign currency as it export crude.   Traders should watch the uptrend to first resistance level of N350 or a move down to support level of N298. 

                                         

Looking at technical indicators,Seplat closed above the lower band by 48.5%. Bollinger Bands are 6.93% wider than normal. The current width of the bands does not suggest anything conclusive about the future volatility or movement of its price. MACD is bearish at oversold range. Price has retraced up to move higher for some time. RSI is reading 53.90 and appears to be neutral, while other momentum indicators like SO, CCI and RSI have signaled buy. With MACD signaling sell. MFI is looking down, to indicate that funds are exiting the stock with buying volume position of 100% for the week.

UBA

UBA moved 2.25% lower over the past week on a mixed sentiment that the bank was among those suspended from the forex market and later cleared and re-admitted by the CBN, coupled with the release of its interim financials.

Traders should watch for a break out of the descending triangle chart pattern to continue an uptrend to a strong resistance level of N4.84 or reverse down to touch first support level at N4.04 each. UBA is trading above its 20-Day moving average at N4.34 per share.

Looking at the technical indicators, UBA closed below the upper band by 49.7%. MACD is bearish, but just crossed below its signal line last Friday.  RSI is reading 53.22 which signifies strength. CCI is indicating buy, just as MFI is indicating that funds are exiting the stock as of Friday,with the 84% sell volume.

PRESCO

Presco moved up 11.88% over the past week, as it continues to side range and spike up to form a bullish channel. Traders should watch OUT as the stock has formed a double top at a strong resistance level of N46 or a move down to support level of N42 each. 

Looking at technical indicators, Presco closed above the upper band by 36.6%. This, combined with the steep uptrend, suggests that the upward trend in prices has a good chance of continuing.  However, a short-term pull-back inside the bands is likely. Bollinger Bands are  7.06% narrower than normal. MACD is in a bullish range. Price has retraced up to move higher for some time. RSI is reading 80.04 and appears to be over bought, while other momentum indicators like CCI, SO and RSI have signaled sell. With MACD signaling buy. MFI is looking up, to indicate that funds are entering  the stock with buying volume position of 100% for the week. 

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Ambrose Omordion
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