Investors Wait To Test Medium-Term Market Mood, After NGSE Index Swings Positive

It was an interesting trading session on the Nigerian Stock Exchange (NSE) at the midweek, as the benchmark All-Share index closed green, halting five consecutive days of losses after some back and forth action.

Wednesday’s proved once again that equities market behavior remain difficult to diagnose as short term trends remain dicey and unstable to predict in the face of various factors at play, following which traders are unable to take advantage of these low prices. As observed in our previous analysis, the month of March may fool traders, both ways, looking at the low probability trading market with prices not responding to the earnings reports pouring in. It is therefore safe to warn against raising hopes high at this point, just as one would not suggest that a crash is ahead.

The long term diagnosis shows that stocks have registered an important cycle low and that the next major high is due and underway. One of the best index action tools to use at this time is the “key reversal,” which occurred Wednesday, when the NSE index rebounded from red toward the end of session to closes above previous close on a high traded volume that clearly meant midweek’s was more bullish than the previous one.

In one single day (or one bar), price showed it was more bearish than Tuesday, but then it rebounded to swing positive, and when mood swings like that happens, something big is underway. We can then take advantage of that price movement by going long at the open of the next bar. (The reverse is true for short trades but wait to confirm market forces tomorrow).

Trading began with the All share index opening lower in the morning, getting worse by the mid-morning to early afternoon on massive selloffs, before a sharp rebound, which made up for some lost points in the previous day’s session. This was after the index surpassed its opening point to intraday highs of 31.360.28 basis points from lows of 31,057.66bps, with the session closing positive.
Midweek’s market technicals were positive and mixed, as volume traded was higher than previous day, in the midst of negative breadth and high buying sentiment, as revealed by Investdata’s Daily Sentiment Report, showing a buy position of 100% and sell volume of 0% on a total daily transaction volume index at 1.07.

Forces behind the day’s market performance was down sharply, despite the seeming reversal as shown by the money flow index at 21.43points, from previous day’s 28.04bps, indicating that funds are still leaving the market regardless of the buying interest in banking and consumer goods.

Index and Market Cap

At the end of midweek’s trading the All Share index gained 46.92bps to close at 31,360.28bps from 31,313.36bps, representing a 0.15% growth; while market capitalization recovered N17.5bn, closing at N11.69tr, from an opening value of N11.68tr, also representing a 0.15% value gain.
Attention: Join Investdata buy and sell signal setup to get all our in-depths analysis on the picture and to get access to our carefully created watch list. To become a member, send ‘YES’ or ‘STOCKS’ to the phone numbers below. The number of stocks on our watchlist has increased due to the prolonged market correction. Take advantage of this service to buy right and sell right during this earnings season and beyond.

The upturn was driven by last minutes buying interest in stocks like: Nestle, Guaranty Trust Bank, CAP, Eterna, FBNH, Okomu Oil and Diamond Bank, among others, which reduced Year-to-Date loss to 0.22%, while market capitalization stood N443.89billion from the year’s opening level of N11.72tr, representing a 0.22% decline in value.

Mixed Sector Indices
The sectoral performance indexes were largely bullish, except for the NSE Industrial good and insurance that closed lower, on profit taking in Dangote Cement, Lafarge Africa, NEM, Regency Assurance and Prestige Assurance. Market breadth however remained negative as decliners outnumbered advancers in the ratio of 18:13.

Market activities were mixed as volume was up by 83.16% to 377.49m shares, as against the previous day‘s 219.37m units, while value took a 16.35% plunge from N2.93bn to N2.26bn. Volume was driven by financial services and ICT stocks like: Diamond Bank, Chams, FBNH, Zenith Bank and Ucap.

Chemical & Allied Products and Sterling Bank were the best performing stocks, gaining 10% and 9.77% respectively to close at N37.40 and N2.36 per share, purely on earnings expectations. On the flipside, Regency Assurance and Africa Prudential 7.69%% and 7.52% respectively to close at N0.24 and N4.55 each, on market forces and profit taking ahead of price adjustment for 50 kobo dividend.

Market Outlook
With the expectation of more 2018 financials, the selloff is likely to subside, but need positive economic statement and policy to give direction while volatility may continue, as market players adopt the wait-and-see attitude in the face of repositioning for the ongoing 2019 dividend declaration season and relative post-general elections peace to shape market performance in the interim. We advise cautious trading and investing while positioning in fundamentally sound equities.

Volatility will also continue as investors and fund managers reposition their portfolios, with eyes fixed on earnings reports, but investors should review their positions in line with their investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.

However, we would like to reiterate our advice that investors should go for equities with intrinsic value,
We advise also that investors should allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals

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Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467

https://investdata.com.ng/2019/03/investors-wait-to-test-medium-term-market-mood-after-ngse-index-swings-positive/