“Manage your risks or they will destroy you “- W. B. Busin
Sentiments in capital market is a powerful determinant of stock prices. And price is technically regarded as the summation of sentiments of all marekt participants.
This report is basically to guide you appropriately by revealing market sentiments as regards to trend and direction of individual stock, so you won’t be treading against market sentiments.
To this regard, we have employed technical analysis indicators which are strictly mathematical equations without human influence to analyse stock trends. The objective is not to (de)market any stock/company but to technically show you, our esteemed subscribers, the direction which market is trending and the sectors/stocks that are (un)favoured by current market sentiments.
In the subsequent paragraphs, we shall be relating to you how market fared in the previous week .i.e. the technical review and interpretation of general market sentiment. Meanwhile the market movers i.e. volume drivers and gainers for the week will be technically reviewed to reveal most possible emerging trend/direction. Also, we include due deligence table which contains basic financial ratios for you justify your reasoning.
Please note that the analysis is based on volume and price reaction during sessions and it does not suggest any recommendation to buy or sell as Proshare Nigeria limited would not be responsible for any investment decision you take.
Diagnosis (for the week ended 16th March 2012)
Analysis of the market activity in the week ended March 16th 2012 technically revealead low optimistim and high speculative propensity in the investors’ trading pattern as against growing optimism and steady bargain trend observed in the previous weekly performances.
In the week, bargain momentum declined significantly while market sentiment appeared mixed, though the bears dominated the terrain as reflected in the negative breadth while pessimism level gained more points.
Also, the indecisive posture of the market remained too high. This further shows that large number of market participants are on sideline and appeared wary which could not be isolated from the unstable trend in the market.
Nevertheless, the waning of profit taking tendency and speculative buying witnessed at the close of the week suggests better prospect in the new week.
Also, it was revealed that market sentiments during the week moved againt the large CAP and blue chips in the Consumer Goods, Services, Industrial Goods, Conglomerates, Financial Serives, Agriculture, Oil & Gas and Healthcare sectors in that order which further revealed the sectors which investors were patronising in the week.
On the other hand, it was observed that market sentiments favoured the following sectors Construction/Real Estate and ICT in that order as bargain sentiments was strong in the sectors.
Stock Trend & Direction
Here, we shall review stocks that have shapened market direction and performance in the week, using technical tools like RSI, MACD, VOLUME, MFI, CANDLESTICK, MOVING AVERAGES, BOLLIGER BANDS and ACCUMULATION & DISTRIBUTIONto reveal investors’ sentiments towards the market movers.
THE BIG VOLUME
UBA closed positive for the week by +1.5% gain- a better performance to -11.4% loss recorded in the previous week. Though, still struggling to establish a support level at N2.56 but the bearish pressure witnessed in the midweek weakened the support level as stock experienced low of N2.47 in the week.
Subsequently, the stock maintained the support level as the stock closed higher at N2.68- this indicates emerging positive sentiments towards the stock after mid-week sell pressure witnessed in the market generally as suggested by candlestick pattern
The Moving Averages closed neutral and bearish in short and long term respectively while MACD closed bearish below signal line.
The volume movement at the close of the week revealed that more of accumulation was done in the week while the volatility appeared waned.
Technical Conclusion on sentiments: There is tendency for sustainable positive trend as the stock maintained support levels at N2.56 while the sentiments likely to remain positive, considering accumulation posture.
Though, the moving averages and MACD suggest mixed outlook in short term while the slight reduction of Bollinger band reveals waning of volatility in the near term. The chart below shows MACD, candlestick, RSI and volume.
STERLING BANKclosed with 13.8% gain in the week as against 9.0% gain recorded last week- a better and improved bargain sentiment as the stock experienced a bullish trading pattern in the week.
This candlestick pattern reveals a strong buying drive and positive sentiments towards the stock. The moving averages revealed bullish trend in short term but stayed neutral in long term. Also MACD closed bullish.
However, the continuity of the bullish trend is in question, as the stock is currently at overbought region; the price hits the upper Bollinger band. This means the stock is technically at its top as buttressed by RSI which further means the trend can reverse any moment for now, though the bargain drive likely to defy this, looking at the candlestick pattern and volume trend.
Also, the money flow index closed northward and similar trend observed in volume trend as most transactions were accumulation while this also confirms the strong positive sentiments.
Technical conclusion on the sentiments: The sentiment towards the stock is positive and bullish in short term. The candlestick pattern revealed strong buying sentiments in the week.
On the other hand, the stock is at its top as revealed by momentum indicator (RSI) and its price position at the tip of upper Bollinger band confirms the overbought region. But the stock likely to maintain uptrend in next few sessions as buying momentum closed stronger and firmed. The chart below shows MACD, candlestick, RSI and volume.
JBERGERexperienced a bullish week to close with 27.3% gain against 15.7% gain recorded last trading week. The bargain drive remained strong as stock maintained maximum opening position and closed with same position throughout the week- This indicates strong positive sentiments and strong bullish run. This buttressed by MACD.
However, the RSI revealed the stock to be in overbought region buttressed by price above the upper Bollinger band. Meanwhile, the moving averages closed bearish in both short and long term as the price closed below its short and long term moving averages- this means price movement momentum is technically weak.
The volume trend revealed that more of accumulation was done in the week, though the volume trade was significantly low- this shows that majority of investors maintained hold position.
Technical conclusion on sentiments: There is strong positive sentiment towards the stock and this is likely to be sustained as most investors maintained hold positions on the stock.
The uptrend is not in doubt. Though, the stock appeared due for correction and it might retrace anytime soon, considering the overbought region as revealed by RSI and Bollinger band while the uptrend movement appeared technically weak as suggested by moving averages which closed bearish in short and long term. The chart below shows MACD, candlestick, RSI and volume.
DANGFLOUR experienced positive sentiments and impressive rally in the week to close with 11.4% against 6.0% gain recorded in the previous week. However, the stock retraced as the stock failed to break its 6weeks resistance at N4.90. Though, the MACD still closed bullish buttressed by volume movement trend which closed positive and above its 15days moving average as more of accumulation was done in the week
However, the sentiments appeared mixed as the stock hit the upper Bollinger band while the moving average revealed a bearish trend in long term.
Technical conclusion on sentiments: the emerging sentiments appeared bearish as the stock failed to break its 6weeks resistance at N4.90 and retraced accordingly after hitting above upper Bollinger band. The chart below shows MACD, candlestick, RSI and volume.
UBNexperienced continued bearish sentiment to close with -22.2% loss as against -9.6% loss recorded in the previous week. The stock records new lows throughout the week. The RSI revealed that the stock is depressed buttressed by continued distribution witnessed in the week while money continued to flow out of the stock
The technical conclusion on sentiments: there is a strong bearish sentiment towards the stock while majority of sentiments indicators revealed a depressed posture of the stock. The chart below shows MACD, candlestick, RSI and volume.
MAYBAKERappeared depressed as revealed by RSI while MACD and the moving averages suggest bearish trend in both short and long term.
Also, the stock records new lows throughout the week, recording maximum loss for each session to close the week with -16.8% loss as against -9.1% loss recorded in the previous week.
The stock experienced consistent distribution and continued cash outflow through the week. The trend likely to continue for a while, all things being equal.
Technical conclusion on sentiments: The sentiment towards the stock is bearish and likely to continue. The chart below shows MACD, candlestick, RSI and volume.
Disclaimer: The information provided herein is our opinion only. Under no circumstances do any statements here represent a recommendation to buy or sell your stocks or make any kind of an investment. You are responsible for your own due diligence. To summarize, we do not provide recommendations nor do we make any claims or promises that any information here will lead to a profit, loss or any other result. They are for your guidance purpose only.