VOLATILITY MAY LINGER, AS TRADERS POSITION IN WINNING TRADE, AMIDST PORTFOLIO BALANCING

The stock market on Wednesday had a turn-around to the upside, halting two sessions of down markets on strong volatile mood as smart money and fund managers position for end of the quarter and year to meet set targets and earn their portfolio management and advisory services fees. The recent market correction resulting from profit taking in preparation for the festive season has also created a buying opportunity for discerning investors and traders alike, ahead of the 2017 full-year and 2018 first quarter earnings reporting seasons, as end of wave 4 comes close to usher in a 5-wave extension at the end of Wednesday’s trading session. The mixed technicals at the end of mid-week trading are yet to give clear direction until Thursday’s market open to confirm direction.

The Nigerian Stock Exchange (NSE) composite All-Share Index (ASI) opened lower and slipped downward between the mid-morning and midday, retracing up by the afternoon to hit intraday highs of 37,933.86 from a low of 37,661.17 on a low volume traded, but positive market breadth to close near the highs for the day.

The selling pressure in the two previous days turned to a buying position of 100% on Wednesday as volume index stood at 0.43 of the day’s total transactions to reverse the two-day bear transition.
Trading closed with the benchmark Index gaining 150.10 basis points at 37,933.86 from the opening 37,783.76 points, representing a 0.4% growth, just as market capitalisation went up by N53.39bn to close at N13.5tr from an opening value of N13.45tr, representing also 0.40% value gain in investors’ position.

Mid-week’s upturn was as a result of price appreciation recorded by low, medium and high cap stocks like Dangote Cement, Zenith Bank, GTBank, UBA, Stanbic IBTC, Unilever, Seplat and FBNH. This impacted positively on the NSE’s year-to-date return, lifting it to 41.15%, just as YTD growth in market capitalisation stood at N4.21tr, representing a growth of 45.95% above the year’s opening value.
Market breadth for the day was positive as the number of advancers slightly outweighed decliners in the ratio of 23:22 on a below-average traded volume that was lower than previous day’s level.

Activities in terms of volume and value were down by 68% and 37.58% respectively to 207.89m shares worth N3.39bn from previous day’s 649.63m units, valued at N5.43bn. Transactions were driven by activities in Sterling Bank, Guaranty Trust Bank, Diamond Bank, UBA and Fidelity Bank topped the volume chart.

The best performing stocks at the end of the day were Champion Breweries, Linkage Assurance and Seplat that topped the advancer’s table, gaining 5% apiece to close at N2.10, N0.63 and N567.05 each on market forces. On the other hand, Flour Mills and PZ shed 4.99% and 4.98% to close at N28.36 and N21.38 respectively on market forces and profit booking.

TODAY’S OUTLOOK

The ongoing volatility is expected to continue as traders take advantage of pullback to position and accumulate more in wining trades amidst profit taking in expectation of year-end rally as fund manager balance trade and account for the year in order to meet target and earn their management fee. Add this to the declining interest rate in the money market which is likely to trigger circular flow of fund again into the equity market. The positive outlook for emerging markets in 2018 as a result of high commodity prices is a major attraction as currencies of these developing markets remain relatively stable.

All of these factors begin to make much more sense to investors when you add the undervalued nature of assets on these exchanges.
Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.

It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.
Get your home study pack on INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable. You can also still access stocks analysed in the home study pack of the INVEST 2018 traders & investors summit, which is out already.

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Ambrose Omordion
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