TECHNICAL POSITION OF NIGERIA STOCK EXCHANGE SECTORIAL INDEXES

Nigeria’s stock market after six weeks of correction broke-out the downtrend line with strong technicals that supports another rally, at a time investors positive sentiments continue to wax strong with buying pressure on the increase ahead of earnings season that had commenced as numbers have started trickling in already.

 The Q3 numbers released so far are mixed in performance and yet to give a clear direction as to what investors should expect from the sectors wherefrom these numbers emanated, in addition to expected   economic data like the September inflation and Q3 GDP figures.
The weekly technical chart appears stronger to support recovery with the increase in volume and price movers in the week under review, as volume index in the period at 2.14 and buying position of 96%, and 4% selling volume for the week’s transaction continue previous week’s up market.
Activities last week showed that some sectors had rebounded  while others are still struggling, just as volume breakout are becoming stronger, with some sectors trading  above their 20 and 50-day moving average. 

From a technical perspective, the market’s short term rally is underway with earnings reporting season having kicked off already and speculators are trading the expected numbers while positioning ahead of the earnings reports. While trading earnings, market players should understand how to use resistant and support levels to boost their returns and manage risk.

NSEASI WEEKLY TIME FRAME

The index weekly time frame has sustained its up-trending on a positive sentiments despite profit booking. The increasing momentum from traders and investors as repositioning for quarterly earnings reports and end of the year seasonality changes.
The recent rebound remains strong as trending ability on weekly and daily time frame are still strong with ADX above 20 for the period at 38.24 and 26.14 respectively. 
Traders should watch out for a breakout of resistant level of 37,088.45 as more speculators have return to trade Q3 earnings reporting season, while trading with caution ahead of economic data from the National Bureau of Statistics (NBS). Any move down to 35,488.81 if the numbers are below expectations. 

Looking at technical indicators, the NSEASI closed below the upper band by 25.8%, while MACD has been bearish in the four trading sessions, just as the RSI is reading 67.11 relatively on overbought region. Money flow index on a weekly time frame is turning up, while daily, it is looking up to indicate that funds are entering the market. The momentum indicators like RSI, CCI and MACD are signaling SELL while SO indicates BUY.  The index is trading above it 20 and 50 day moving average

NSE Banking Index

The banking index is trading above its 20 and 50-day moving average with strong positive sentiments ahead of the sector’s Q3 financials, which has increased the demand for banking stocks as volume index stand at 1.04 with buying position of 100%, and 0% selling volume for the week’s transaction to continue its four weeks rally despite profit taking.  The sector’s trending ability on a weekly and daily time frame are strong since ADX is above 20 at 50.21 and 24.42 respectively.

Traders should position on a breakout of the double top that is currently being formed, as it is a reversal chart pattern that supports pullbacks, despite the expected return of speculators to trade the Q3 earnings season that had kicked off.  The first resistance level is at 463.35 and the second at 471.28 point, any move down to 444.27 and 435.17 respectively.

Looking at technical indicators, the NSE BNK index closed below the upper band by 18.8%; MACD is bearish; RSI is reading 71.54, on overbought region; Money flow index on a weekly time frame is turning up, while daily, it is looking up to indicate that funds are entering the sector. The momentum indicators like RSI, CCI and MACD are signaling SELL, while SO is saying buy.

NSE Consumer Goods Index

NSE Consumer Goods index has formed a FLAG chart pattern that supports continuation of trend, after it had experienced a divergence when OBV was trending up and the index action moving down. A breakout of the flag will confirm a major rally in the short term if the numbers from the industry beat market estimate.  The index still remain relatively strong as it is trading above the 20 to 50 day moving average as at last week Friday.  The sector’s volume index of 0.78 with buying position of 68%, and 32% selling volume for the week’s transaction to continue a two-week uptrend despite profit taking from the industry. The sustainability of earnings in Q3 will further drive prices of stocks in the sector. As the year changing personality in terms of companies that had turn from a bearish situation at the beginning of the year but now bullish to lead the market are in this industry.
Traders should watch out for breakout levels of equities in this sector on this rebound.  The first resistance level is at 966.27 and the second at 974.18 point, any move down to 921.28 and 935.82 respectively.

The NSE’s Consumer Goods index trending ability on weekly and daily time frame is strong since ADX trading above 20 at 43.12 and 22.46 respectively. Looking at technical indicators, the NSECONSGOODS closed below the upper band by 31.3%. MACD is bullish, while RSI is reading 65.25 almost at overbought region. The momentum indicators like RSI, SO, MACD and CCO are signaling sell.

NSE Industrial Goods Index
 

NSE Insurance index had rebounded to breakout the downtrend line. The weekly chart reveals the sector index is trading above 20 and 50-day moving average as at last Friday.  In the last two weeks strength has returned as reflected on the improving volume and with the prices of some stocks in the sector rallying high.  The sector’s volume index stood at 0.48, buying position of 86%, and 14% selling volume for the week’s transaction to continue the previous week’s bull transition.
Traders should take position with the breakout of yellow line on improving volume, confirm strength of rallying which more impetus will be added when numbers surpasses estimates.  The first resistance level is at 2176.28 and the second at 2225.18 point, any move down to 1964.87 and 1,926.14 respectively.

The sector’s index trending ability on a weekly and daily time frame are strong since ADX is trading above 20 at 26.15 and 21.48 respectively. Looking at technical indicators, NSE INDUSTRIAL closed below the upper band at 36.7%. MACD is bearish, while RSI is reading 59.85 relatively strong. Momentum indicators like RSI, MACD and CCO are signaling sell, while SO signaled buy.