TRADERS WATCH 35

TRADERS, INVESTORS LOOK TO MARKET FORCES FOR DIRECTION

The benchmark indicators of the Nigerian Stock market closed in the red for the third consecutive week so far in the month of February, as investor confidence continues to weaken due to the deepening negative macro-economic indicators and the governance style as well as economic policies which are evident in the prevailing living condition. The NSE indicators have also not reacted positively as expected to the ongoing earnings season with light reports being released.  

However, it must be noted that the reduced rate of decline momentum recorded last week was due to the positive earnings report from United Capital Plc and the recommendation of the first dividend to shareholders that seem to rekindle investor interest in the market, resulting in improved volume of trade.

The Composite index NSE All-Share Index shed 175.11 points to close last week at 25,164.91 points, from an opening figure of 25,340.02 points, representing a 0.69% decline on a high volume of trades that signal gradual return of investors and traders to the market.  The buying volume of total transactions for the week was 40%, while selling position was 60% to continue the previous week’s mixed sentiments.   

NSEASI WEEKLY TIME FRAME

The NSEASI on a weekly time frame has broken down the symmetrical triangle with the index closing 0.69%lower for the period which supports reversal or continuation of the trend. But with the touch of the yellow line and at the time forming a double bottom that equally supports reversal if more positive financials hit the market in weeks ahead.  The trending  momentum and ability of the market is weak on a weekly and strong on daily time frame as ADX is 15.80 and 29.76 respectively, as the index is trading below the short moving average. This is an indication that there is still possibility of the market continuing in this direction or reversing this new week, depending however on market forces.Traders should watch out for first and second support level at 24,920.23 and 24,766.19 respectively, as well as any move up with 25,350.22 and 25,560.46 respectively. 

Looking at technical indicators, the NSEASI closed above the lower band by 12.0%, while MACD is bearish in the last 19 trading sessions.  RSI is reading 36.51, which is relatively oversold region. Money flow index is looking up, indicating that funds are entering the market. MACD and SO are signaling sell position while CCI and RSI are still indicating entering position.

PZ

PZ moved 21.29% higher over the past week on bullish sentiment to reverse after several attempts to reverse have failed in the last three years of down trend on low volume and price attraction.

Traders should watch for continuation of uptrend to first resistant level at N14.25 and second resistance level of N15.20 or reverse down to touch first support level at N11.04 and the second support level at N9.98 per share. Also, the stock is trading below its 20-Day moving average at N13.39 per share.  The current trend is strong above ADX 20 at 35.38.

Looking at the technical indicators, PZ closed above the lower band by 24.6%. MACD is bearish, RSI is reading 38.59which is oversold. All the momentum indicators are signaling buy except for MACD.MFI is looking up, indicating that funds are entering the stock. The buy-to-sell volume indicator reveals 100% buy volume of the stock.

Analyst Opinion

New position should wait as profit taking is imminent to pull back the price for traders.

Sterling Bank

Sterling Bank moved 5.71% higher over the past week on a positive sentiments owing to its low price attraction to traders, reversing the  almost one and half-year down trend which  have remained unchanged despite various attempts,as a result of the mixed financials and the market direction. 

Traders should watch for first resistance level of N0.80 and second resistance level of N0.85 or reverse down to touch first support level at N0.72 and the second support level will be at N0.69 per share. The stock is trading above its 20-Day moving average at N0.74 per share. The current trend is strong on weekly time frame as ADX is above 20 at 43.40 but weak on a daily trend. 

Looking at the technical indicators, STERLING BANK closed above the lower band by 36.7%. MACD is still bullish, RSI is reading 38.18 which is oversold. All the momentum indicators are signaling BUY. MFI is indicating that funds are entering the stock. The buy to sell volume indicator reveal 100% buy volume of the stock for the week and daily.

Analyst Opinion

Investors should HOLD, while new position should be taken for short-term with eyes on the trend

Eterna

Eterna moved 6.70% lower over the past week on a bearish sentiment as market players exit positions to take profit from the recent rally. This is despite the improving financials in a tight business environment to form a bullish channel, but pulling back to the lower line of the channel which at the same time creates a buy opportunity. The current trend momentum and direction on a weekly and daily time frame are above ADX 20. 

Traders should watch as downtrend breaks the first support level at N3.10 and second support price of N2.98, or for any move up to the first resistance level of N3.41 and second resistance level (R2) at N3.60 per share.The stock is trading above its 20 and 50-day moving average.

Looking at technical indicators, ETERNA closed below the upper band by 31.4%. MACD is bullish for six trading sessions and relatively at overbought range. RSI is reading 58.07. All the momentum indicators like SO, RSI and CCI are signaling sell, while MACD signaled buy. MFI is looking down on daily and weekly time frame. The buying-to-sell volume index reveals a weekly buy position of 59% and sell of 41%.

Analyst Opinion

Wait to confirm reversal in trend before taking position for short and long-term. Keep your gaze on the trend and price action 

UnitedCap

UCap moved 7.61% higher over the past week on a bullish sentiment as market players position and react positively to its impressive financials in a tight business environment to form a rising channel that support the current breakout of the channel, as 3.73 becoming the new support level. 

The current trend momentum and direction on a weekly and daily time frame are above ADX 20 at 50.29 and 54.33 respectively. 

Traders should watch as pullback is imminent within the bullish channel to the current strong support level at N3.73 and second support price of N3.50. Watch for any move to breakout the first resistance level of N3.90 and a new high of N4.06. The stock is trading above its 100 and 200-Day moving average.

Looking at technical indicators, UCAP closed above the upper band by 3.4%. 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.MACD is bullish, while RSI is reading 82.18 on overbought region. All the momentum indicators like SO, RSI and CCO are in their overbought range and signaling sell, while MACD signaled buy, MFI is looking up on weekly and daily time frame. The buy to sell volume index revealed a weekly ‘buy’ position of 59% and sell position of 41%, while on daily time frame is 67% sell volume with 33% buy position as at Friday. 

Analyst Opinion

Prices may continue to move higher for some time.  Wait for prices to move lower before considering any short positions, while long-term investor may position for dividend.