TRADERS WATCH 34

As Earnings Season Peaks, Time For Discernment

The market indices were mixed to closed last week significantly lower with the composite NSE All-Share Index shedding 462.51 basis points to close at 25,340.02, from an opening figure of 25,802.54 points, representing 1.79% decline.

This was based on above average volume traded for the period as the course continued its bearish trend, while buying volume of total transactions for the week was 22% and selling position, 78%.  Despite the volatility in the market, the  peak of 2016 full year earnings reporting  draws closer for discerning investors and traders to know where to pitch their tent.  

NSEASI WEEKLY TIME FRAME

The NSE’s ASI on a weekly time frame has just broken down the triangle to push the bearish trend and at the same time forming a double bottom that signals an imminent reversal. This however depends on market forces in the new week, considering the intermittent profit taking and indecision among traders and investors that had propelled the mixed performance of up-today and down-tomorrow.

The index has broken down the trend line of its recent support level at 25,333.59 to confirm the pullback.  The reversal of the index around this point of Fibonacci retracement equally reflected on the downward trend, as the index closed 1.79% lower for the period. The momentum and trending ability of the market on weekly frame is weak, as ADX is below 20 for the period at 15.14.

Traders should watch out as retracement is imminent. The first support level is at 25,164.08 and the second support at 24,885.23 point, any move up to 25,468.12 and 25,614.56 respectively.

Looking at technical indicators, the NSEASI closed above the lower band by 14.9%, while MACD has been bearish in the last 18 trading days. RSI is reading 37.73 at oversold region. Money flow index on a weekly basis is looking down, indicating that funds are leaving the market. The momentum indicators are mixed as RSI and CCI are signaling buy, while SO and MACD are saying sell.

Caverton

Caverton moved 12.5% higher over the past week on a positive sentiment after trending down for almost two years with various attempts to rebound, but breakout of the down trend line four months ago and pullback to form a double bottom that confirmed this recent up trend that had equally formed a double top that support reversal of trend. The rally is strong on a weekly and daily time frame as ADX is above 20. Traders should watch for a break out of the first resistance level at N1.00 and second resistance level at N1.10 or reverse down to touch first support level at N0.80 and the second support level will be at N0.73 per share. The stock is trading above its 20-Day moving average at N0.90 per share.  

Looking at the technical indicators, FCMB closed below the upper band by 42.5%.  MACD is bullish, while RSI is reading 43.31.  MACD, SO and CC1 indicators just signaled BUY on Friday while RSI have moved out of oversold region.  MFI is looking down on weekly time frame while is up on daily frame to indicate that funds are entering the stock. The Buy-To-Sell volume indicator reveals 100% buy volume on the week and sell position 0%.

Analyst Opinion

Pullback is imminent at this level, depending on market forces. As the market opens Monday morning new positioning should wait.

FBN Holding

FBN Holding moved 10.57% lower over the past week on a negative sentiment, despite its low price attraction, after it had remained on the down trend for almost three years as a result of weak financials and effects of the general market direction. But with the double bottom formation of its price action, reversal is likely.

Traders should watch for first support level of N3.05 and second support level of N2.90 or reverse up to touch first resistance level at N3.30 and the second resistance level will be at N3.85 per share. The stock is trading below its 20-Day moving average at N3.13 per share. The current trend is weak on weekly and daily time frame as ADX is below 20.

Looking at technical indicators, FBNH closed above the lower band by 35%. MACD is bullish, RSI is reading 42.13 which is at accumulation stage.  The momentum indicators are mixed as SO and CCI are signaling sell, while MACD and RSI are indicating buy. MFI is looking down on weekly and daily time frame to indicate that funds are exiting the stock. The buy to sell volume indicator reveal 5% buy volume and 95% sell position for the week and 100% sell volume as at  Friday trading.

Analyst Opinion

Wait for confirmation of retracement before jumping into the stock for traders, while investors with medium and long-term investment goal can accumulate. 

Nestle

Nestle Nigeria’s share price fell by 8.18% over the past week on a mixed sentiment as outlook for dividend payment in 2017 remains slim on the back of its weak financials. Its price action is at the point of breaking its strong support level at N620 to a low of N419.85 or reversal as double bottom is formed within the falling channel.  The current trend and direction is strong as ADX on weekly and daily time frame is above 20.

Traders should watch out for reversal or continuation of trend move to first support level at N600 and any move up to the first resistance level at N652. The stock is trading below its shortest moving average at N624.

Looking at technical indicators, NESTLE closed below the lower band by 31.5%. 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.  MACD is bearish since 19 trading days.  RSI is reading 18.45, while other momentum indicators like CCI, RSI and SO are signaling buy while MACD is indicating SELL. MFI is looking down on weekly and daily to indicate that funds are exiting the stock, just as buying volume position of 14% and sell position of 86% for the week.

Analyst Opinion

Wait for retracement before looking the way of the stock for now.