The Nigerian Stock Exchange Trend Analysis Review and Outlook on 13th January, 2018.

Conclusion:

Based on technical analysis, index is to likely begin a corrective movement to the downside driven by the expectation that investors would embark on more profit taking activities (which technically started on Friday 12^th January, 2018) to test immediate support of 39,588.9

Our expectation is informed by the inability for the index to rally or close above the key resistance level of 43,255 while also all momentum indicators on the monthly, weekly and daily timeframe are either at the overbought territory or showing signs of impending negative divergence.

Summary:

Most stocks that have availed investors with capital gains over the past weeks are more likely to retrace or correct as such drive the index down to retest support level 39,588 on the other hand a monthly close above key resistance 43,255 would signal more steep rally in most valuable stocks listed on the exchange.

For summary of my technical analysis view on individual equities, contact me on a.adetunji@trendonomicsng.com

Happy Trading Week

Chart of the Day - Fidelity Bank Plc (listed on the Nigerian Stock Exchange)

From a technical perspective, for two consecutive days there is in indecision in the direction of the share price; this is reflected in the Doji candle formations on 5^th and 8^th of January, 2018. 

Critically looking at the chart below, we can see a negative divergence between Price and MACD history also between Price movement and Volume traded (as price rally upward, volume declines).

Needful to note is that the decisive candle patterns occurs at the upper Bollinger band.

Source: Amibroker – Fidelity Daily Chart

Expectations:

Technically, the share price is beginning to show signs of impending corrections. As such we expect a decline in the market price of the share to support level

Nigerian Stock Exchange WoW Trend Analysis - 8th January 2018

OVERVIEW:
The Nigerian Stock Market stated the year on a bright note as the All Share Index and market capitalization both gained 1.78% to close at 38,903.60 and N13.851 trillion respectively in the first trading week in 2018.

The rally in the index in the first trading week in 2018 was largely driven by appreciations all sectorial indices as the banking sector which had 6.32% rally followed by Insurance by 4.66%, Industrial goods by 3.49%, Consumer goods by 1.47% and Oil/Gas by 0.95%

Trading activities witnessed in the week showed that a total turnover of 2.417 billion shares worth N18.813 billion in 20,874 deals were traded by investors on the floor of the exchange in contrast to 1.310 billion shares worth N12.635 billion in 9,016 deals that exchanges hand in the previous week. 

This represents changes of 84.50% in shares traded, 48.89% in worth of turnover and 132% in deals.

Market breath analyses for the week under review indicates a positive sentiment as 55 equities advanced with 12 stocks declined while 105 equities were unchanged in the trading week as compared to last week’s 32 advance, 25 declines and 115 stocks unchanged respectively, the breath indicators shows relatively positive behaviors 4.58x.

Looking at top 5 Advance and decline equities, leading the gainers pack was Sterling Bank Plc, FCMB, Diamond Bank, Skye Bank and Eterna Oil that advanced by 30.56%, 28.38%, 26.00%, 22.00% and 21.18% respectively while on the top 5 decline end, Mobil Plc led the losers pack with -12.64% followed suit by NEM, Neimeth, Transexperess and Nestle by -7.83%, -4.00%, -3.85% and -3.60% respectively. 

Trend Analysis of the ASI

The ASI in the week gained for 3 trading days (Tuesday, Thursday and Friday) while declined on Wednesday during the week. The index currently trades above the long term average with key major resistance at 43,224.17, intermediate resistance at 39,573.3 and Support at 34,606.10

Volume on the weekly timeframe showed an advance compared to previous week’s trading volume.

Momentum indicators on the weekly timeframe showed that RSI 14 week period trades at 76 while stochastic line trades at 77 with a negative divergence being seen between the index and the oscillators 

Daily trend analysis

On the shorter time frame (Daily chart), the bargaining interest by the investing community continues to drive the index towards the upper Bollinger band with volume declining in the last trading day while MACD remain flat 

 

Our Expectations:

In the medium term, the All Share Index may possibly rally toward 42,215 as the positive sentiment from investors could see prices of stocks rally higher breaking above intermediate resistance levels as more buying pressure could be seen. On the other hand, a refusal to breach the intermediate resistance may see profit taking that would drive the index down towards 37,121 the next support level.

Sectors such as the banking, industrial and Consumer goods would remain viable for investors