Technical Analysis: NSE Sector Outlook

Banking Sector

The banking sector witnessed a marginal drop in value in the past trading week as it depreciated by 0.20% to close at 273.70 basis points. Year to date currently stands at negative 0.23%.

From a technical analysis perspective, the banking sector within the mid-point and lower Bollinger band and finds support at the lower Bollinger band at 267.5 basis point with RSI 14 day period picked up from 36 levels to currently trade at 46.9 levels

Key levels resistance 285 while intermediate support at 267.20 basis points.

Volume on the other hand continues to decline week compared to previous week by 42%

Recommendations:

The bullish optimism in the banking sector could be regarded as a suspect as the indices rise in value does not correspond with volume. Speculative activities could be the order of the day in the coming trading week as equity such as Guarantee Trust Bank Plc, Access Bank, Zenith Bank, UBA and Fidelity Bank should be of keen interest. 

Oil and Gas Sector

The upside rally in the Oil and Gas sector, saw the sector appreciated in the past trading week by 4.27% to close at 304.90 basis points. The Year to date figure showed a decline percentage by 2.49%.

From a technical analysis perspective, the sector continues to find resistance at 304.90 basis point also a confluence of the upper Bollinger band. RSI 14 day period on the other currently shows a negative divergence

Key levels resistance 304.90 while intermediate support at 280 basis points.

Volume indicators shows a decline

Recommendations:

Investor’s earlier accumulative stands may see a profit taking period in the coming trading session. Stocks such as Mobil, Oando and Eterna may could a corrective move while Total could resume a potential upside rally

Industrial Sector

The industrial sector witnessed appreciated in value by 5.15% in the past trading week to close at 1,678.80 basis points. Year to date currently stands at positive 5.23%. 

From a technical analysis perspective, Equities in the industrial sector had a steep rally as depicted by the daily chart of the indices. The index current find resistance at the upper Bollinger band at 1,689.90 with RSI 14 day period reaching the overbought level at 75

Volume on the other hand continues to decline week for three consecutive trading days despite the upside rally in the sector

Recommendations:

The bullish trend in the sector may encounter a temporary halt as profit taking by investors would likely see correction in the coming week. Investors should consider re-positioning at 1,537 basis points.

Consumer Goods Sector

The Consumer Goods sector witnessed a marginal appreciation by 0.80% in the past trading week to close at 632.83 basis points. Year to date currently stands at negative 11.20%

From a technical analysis perspective, the sector is currently trading a range of resistance 637.2 and support 619.6 basis points

Recommendations:

Investor’s toast in this sector remains neutral as equities trades in a zigzag manner. 

Insurance Sector

The Insurance sector witnessed an appreciation of 1.97% in the past trading week to close at 126.26 basis points. Year to date currently stands at negative 0.02%

From a technical analysis perspective, the rally in the sector was largely due to rally in few equities in the sector. Continental reinsurance and Mansard is the major driver in the sector.

Trend indicator showed room for upside rally with resistance 126.80 basis point a significant level for the sector.

Volume indicators stay relatively flat with RSI 14 day period trending towards the overbought level.

Recommendations:

Profit taking could drive the sector down in the coming week.

Weekly Technical Equity Outlook - 10th April, 2017

OVERVIEW:
The NSE All-Share Index and Market Capitalization appreciated by 0.92% to close the week at 25,746.52 and N8.909 trillion respectively. 

Similarly, all other Indices finished higher during the week with the exception of the NSE Banking index that depreciated by 0.20% while the ASeM Index closed flat.

Market breath analyses review a positive sentiment as 36 equities gained with 22 stocks declined while 119 equities were unchanged in the trading week as compared to last week’s 36 gains, 24 declines and 117 stocks unchanged respectively, the breath indicators shows positive sentiment.

 

Trend Analysis

Investor’s sentiment was mildly bullish during the past trading week, with relatively low accumulative stands from market players. The Nigerian Stock Exchange All Share Index in the weekly chart below showed that investors remain optimistic on the equities traded on the floor of the exchange.  

Technical levels indicates support at 24,521.80 while intermediate resistance at 26,243bps and key resistant zone at 27,161.20 – 26,874.30 bps

Trend indicator, Bollinger band system on the weekly timeframe showed that the index still trends within the bearish territory and eyeing EMA 20 (mid Bollinger band) at 25.807 bps.

Volume analysis was strongly weak compared to the previous week’s volume with more than 500m volume though it remain on the bid side.  

Daily trend analysis

• Looking at the lower timeframe:   
• The index trading broke above the downward trendline
• Index formed a doji at the upper Bollinger band  
• RSI 14 day period trading at 59
• Volume momentum remain relatively low

 

Overall Sentiment:

Short term: Bullish
Medium term:Bearish
Long term: Bearish

Our Expectations:

Last week’s bullish movement in the ASI index may be regarded as weak as volume did not correspond to the strong rally seen in the index. We can  refer to this as the activities of speculators taking advantage of dividend driven stocks as such we expect a profit taking activities in the coming session as the daily chart reflects a possible impending correction. We expect a correct to occur in blue chip stocks such as Mobil, Nestle, 7Up Bottling Company and some banking stocks giving room for possible accumulation at a relatively lower price. 

Dollar Surged and Yield Rebounded after a Dramatic Week of Negative News, More Upside ahead

Source: ACTIONFOREX.COM

"The market is always right". That's by no means saying that the market is efficient, that's a topic for the academics. But, the market always move with certain underlying forces. We may or may not always understand why stocks, yields, currencies commodities move that way. It doesn't matter. And indeed, the voice of the market is usually the loudest when it does something that doesn't make sense. It's up to us to hear it or ignore it. And, reading news is not about reading the news but the reactions to the news. It's our choice to see the reactions, or just to criticize the reactions.

So coming back to "reality", we've got a very dramatic week, especially towards the end. And news were indeed rather negative to Dollar. US launched military strike in Syria and relationship with Russia tensed up after that. Russia even condemned that US is just "one step away" from war. The highly anticipated summit between US President Donald Trump and Chinese President Xi Jinping ended with "very frank, very candid" discussions. But then? Nothing more. Non-farm payroll grew a mere 98k in March even though unemployment rate dropped to 10 year low.

How did the markets respond? DJIA closed down -0.03% on Friday at -20656.10, and down -7.12 pts only for the week. S&P 500 closed down -0.08% on Friday to 2355.54, down the week by -7.18 pts for the week. 10 year yield dived to as low as 2.271 on Friday but closed the day up 0.030 at 2.373, down -0.023 for the week. Dollar index gained 0.46 on Friday to close at 101.13, up from prior week's 100.56. The resiliences in stocks, rebound in yields and the surge in Dollar were impressive. And these developments argue that, maybe those news were not bad news at all.

One of the explanations could be found in the jump in oil price on geopolitical risks. Energy stocks' rally somewhat offset losses in financial stocks. And technically, WTI crude oil maintained a higher high, higher low pattern and is back above 55 day EMA. It should now be heading back to 55.24 resistance and above to extend the larger up trend. And with that, upside pressure on headline inflation could be revived that would eventually pass through to underlying inflation. ...Read full report

Gold Finds Resistance at $1263 per ounce, Poise for more downtrend

Gold during the Asian session on Friday 7th April, 2017 spiked to the upside as a result of the airstrike by US on Syria. The spike saw the price of the precious metal reached a session high of $1270.66 per ounce.

Gold could not continue in the upside momentum as it ended the trading day at $1253.98 to close below key resistance level of $1263. 

The day ended with an inverted hammer and a negative divergence between price and MACD. 

The precious metal in the coming sessions may be eyeing a key support level at $1240. A break below this level would see a steep downtrend towards $1200 while on the other hand, a movement above $1263 with a daily close would see the metal eye key resistance at  $1306 per ounce.