TRADERS WATCH 20

The benchmark indicators of the Nigerian Stock market closed negatively at the end of trading week, despite the ongoing earnings season.  The relative low volume of trade in the period is a reflection of corporate earnings that were released so far and low liquidity in the system as a result of weak macro-economic fundamental that has been a serious concern for foreign and local investors. 

The Composite index NSEASI shed 264.21 points to close last week at 27,596.82 points, from an opening figure of 27,861.03 points, representing a 0.95% decline on a low volume of trades that signal caution trading and investing on the part of the investing community. The buying volume of total transactions for the week was 33%, while selling position was 67% to continue the previous week’s mixed sentiments.   

      NSEASI WEEKLY TIME FRAME

NSEASI on a weekly time frame has broken down the symmetrical triangle with index closing 0.95 percent lower for the period to support the reversal or continuation of the chart pattern. In this chart we plot the momentum and trending ability of the market.  When looking at this weekly chart you can clearly see that index is trading above the 50-DMA and that the ADX (trending ability) continues to trade above 20 and rise.  

This is an indication that there is still room for the market to run in this new week. The index is slightly below its 20 Day moving averages and outside the symmetrical triangle supporting bear transition.  Traders should watch out for first and second support level at 27,246.88 and 27,090.25 respectively, any move up with 27,835.22 and 28,241.13 respectively. 

Looking at technical indicators, the NSEASI closed above the lower band by 34.0%, while MACD is just bearish as it cross below it signal line a day ago. RSI is reading 49.15, which is relatively neutral. Money flow index has reversed up, indicating that funds are entering the market. MACD and CCI are signaling sell position while SO and RSI are still indicating buy. 

    Guaranty Trust Bank

GTBank moved 3.32% higher over the past week on a mixed sentiment of 41% buy position and 59% sell volume. The price action has formed double bottom chart pattern that support the upward reversal of trend. The stock is currently trading above its 20 and 50-day moving average. Traders should watch for a break out of the first and second resistant at N25.56 and N26.24 respectively or reverse down to first support level at N23.10 and second support level at N21.78.

Looking at the technical indicators,GTBank closed below the upper band by 45.9%. MACD is bearish, but just crossed below its signal line two trading sessions ago.  RSI is reading 55.57 which signifies strength. RSI is indicating buy, just as MFI turned down to signal that funds are exiting the stock. Last Friday candlestick formation indicates reversal is imminent.

    Wema Bank

Wema Bank moved 3.17% higher over the past week on a mixed sentiment forming a descending triangle chart pattern after downward trend making lower lows for almost ten months, despite several attempts to rebound.

Traders should watch for a breakout of the triangle chart pattern to continue a down or up trend to a first resistant level of N0.70 and second resistant level of N0.72 or reverse down to first support level at N0.63 and second support point at N0.60 respectively.  The stock is trading below its 20 and 50-Day moving average at N0.65 per share. 

Looking at the technical indicators, Wema Bank closed above the lower band by 26.9%. MACD is bearish and RSI is reading 43.37, which indicate neutral. All momentum indicators are signaling buy, except MACD. MFI is looking up, signifying that funds are entering the stock. The weekly buy volume of the total transactions was 80%, while sell position was 20%.  But Friday's position was 100% for buy and 0% sell. The current trend is weak as ADX is below 20. 

   CAVERTON

Caverton Offshore moved 13.16% higher over the past week on a positive sentiment owing to its low price attraction to traders. But in recent years, the stock has continued its one and half-year down trend which was as a result of poor financials and the nature of its services.  Traders should watch for first resistance level of N0.95 and second resistance level of N1.05 or reverse down to touch first support level at N0.70 and the second support level will be at N0.64 per share. The stock is trading below its 20-Day moving average at N0.75 per share.  The current trend is weak. 

Looking at the technical indicators, CAVERTON closed above the lower band by 13.3%.  Although prices have reversed up after broken the lower band, the most likely scenario is for the current trading range that CAVERTON is to continue.  MACD is still bearish, RSI is reading 27.94 which is oversold. All the momentum indicators are signaling oversold, MACD had 2 day bullish divergent already, MFI is indicating that funds are entering the stock. SO and CCI are saying buy.  The Buy to sell volume indicator reveal 100% buy volume of the company.

   CADBURY

Cadbury moved 16.21% lower over the past week on bearish sentiment to continue its two years and some months down trend as the company recent release a negative numbers to the market.   Traders should watch for a continued down trend to first support level of N12.46 and second support level of N11.00 or reverse up to touch first resistant level at N15.56 and the second resistant level will be at N16.64 per share. The stock is trading below its 20-Day moving average.   

The current trend is strong as ADX is above 20.

Looking at the technical indicators, Cadbury closed above the lower band by 13.4%. MACD is still bearish, RSI is reading 36.38 which is oversold. SO and CCI indicators are signaling SELL, while MACD and RSI are saying BUY. MFI is indicating that funds are exiting the stock. The Buy to sell volume indicator reveal 100% sell volume of the company share. 

    Lafarge Africa

Lafarge Africa moved 3.15% lower over the past week on a strong bearish sentiment as it continues to trend downward making lower lows to touch its five years low on a strong support level of 42.50, despite several attempts to rebound. 

Traders should watch for a breakdown of the descending triangle chart pattern to continue a down trend to a first support level of N38.50 and second support of N35.40 or reverse up to first resistant level at N49.50 and second resistance RS at N56.40 respectively.  The stock is trading below its 20 and 50-Day moving average at N42.50 per share. 

Looking at the technical indicators, Lafarge Africa closed above the lower band by 10.1%. MACD is bearish and RSI is reading 24.93, which signifies oversold. RSI and CCI indicators are signaling buy, except MACD and SO. MFI is UP, indicating funds are entering the stock. The weekly buy volume of the total transactions was 100%, while sell position was 0%. The current trend is strong as ADX is above 20. 

Note; Earnings season comes with disappointments and surprises, let this guide you as more numbers are expected in the market this week.

 

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