The Nigerian Stock Market sustained
the upside rally for the fifth consecutive week to close on Friday 11th August, 2017 above key resistance
level of 37,023.5. Investor’s behavior during the past trading week was bullish as bargaining
interest was seen in the consumer goods and industrial goods sectors which
further boost the upside rally in the index. The financial services sectors saw
investors taking profit as the Oil/Gas sector shed some points.
Key resistance stands at 43,108.2
while intermediate support is seen at 34,388.9
Volume analysis shows a second
consecutive decline in traded units. This shows a weakness as there is a
negative divergence between index and volume.
Technically, the index remains bullish
as it continue to trade above the 100 and 200 SMA. Momentum indicator (RSI 14
week period) has trickled back to the overbought territory (81) after a brief
correction with an impending negative divergence.
The relationship between price and
volume is diverging giving an early signal is a possible reversal.
Daily
trend analysis
On the daily timeframe, the index is
trading at the upper Bollinger band with MACD signaling a negative divergence
as the MACD histogram currently weakening signaling that the buying pressure is
thinning out.
Volume analysis also continues to show
a negative divergence which shows that buying interesting is fading out.
Our
Expectations:
Investors are to be cautious in the coming into the new
trading week as there is a weakness in the rally. The impending negative divergence
depicts that buying interest is fading out for a possible downward correction
in trend.
The Banking sector which is a
leading sector has thus signaled this with a negative close. We expect further investor’s
appetite to favor the industrial and consumer goods sectors.
Posts
