Sentiment Analysis Report W/E May 25, 2012

Category: Cap Mkt Sentiments

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Sunday, May 27, 2012/ Proshare Research

The Diagnosis

Analysis of the market activity in the week ended May 25^th 2012 technically reveals a sustained decline in market optimism and waning profit-taking tendency in the investors’ trading pattern as against significant increase in profit-taking tendency amid decline market optimism observed in the previous week’s performance.

In the week just ended, sustained weak bargain tendency was observed across the major sectors as investors remained pessimistic, mainly towards big and medium CAP stocks due to their overbought postures . However, improved accumulation pattern was observed amid waning profit-taking tendency in major and active sectors while sustained moderate sell tendency extends to more unattractive sectors.

Nevertheless, the sustained moderate sell tendency continued to outweigh the weak buy side as most active and liquid stocks traded within overbought range while the short termist remained in control of market direction - a major reason for the continued profit-taking propensity and pessimistic activities in the market.

To date, the indecisive posture of the market remains high, alongside a declined activity level as sideline attendants appeared to take positions subtly, yet remain a significant feature.

Prescription and the likely expectation in the coming periods: The short term market correction is likely to end in the coming sessions as profit taking prospensity appeared very weak. Another round of rally is not in doubt as the key benchmark indices has moved out of overbought range.

Meanwhile the chances of a moderate bargain tendency in the coming week has increased as accumulation pattern gained support during the week - a pointer to market price consolidating into trading range and less volatile state.

Technically, market sentiments during the week favoured liquid and active stocks of Medium and Large CAP categories in Construction/Real Estate, Conglomerates and Services sector(s) in that order which further revealed the sectors investors patronised in the week.

On the other hand, it was observed that market sentiments moved against the Industrial Goods, Oil & Gas, Financial Services, Consumer Goods, Agriculture and Healthcare sector(s)as sell sentiment was stronger in the sector(s).

Stock Trend & Direction

We conducted a review of stocks that have sharpened market direction and performance in the week - using technical tools like RSI, MACD, VOLUME, MFI, CANDLESTICK, MOVING AVERAGES, BOLLIGER BANDS and ACCUMULATION & DISTRIBUTION to reveal investors’ sentiments towards the market movers.

THE BIG VOLUME

UBA Plc experienced continued weak bargain activities and mixed sentiments in the week amid increased price volatility to record a flat position as against a modest gain of 5.0% recorded in the previous week - a sustained weak bargain tendency observed towards stock.

The bearish posture of MACD confirms the weak bargain posture, though the general bearish trend in the market had much negative impact on this posture as profiteering dominated the week while UBA still traded in overbought range.

Nevertheless, the stock maintained its bullish posture in both short and long term period as revealed by price moving average while the stock successfully built new support at N4.00 in the week. This indicates further that investors are willing to pay higher as the price movement suggests, though the money flow index closed southward.

Technical conclusion on sentiments: The emerging sentiments appeared positive as the stock seems to have successfully established new support at N4.00, moving into less volatile range as revealed by Bollinger band. The waning sell tendency observed in the last trading session buttressed this further as revealed by volume trend. The chart below shows MACD, candlestick, RSI and volume analysis.

GT Bank Plc experienced sustained mild sell tendency and negative sentiments in the week to record -1.3% loss in the week as against -2.2% loss recorded in the previous week – a continued price correction pattern was observed towards the Guaranty Trust Bank as the stock remains on the slope since three weeks back, after hitting a 13months high at N17.25 (recorded on 3rd May 2012).

The stock closed in a neutral position for short term trend while it remained bullish in long term period as revealed by price moving average, indicating the stock is still within bearish range. This further suggests that investors are willing to pay less for the stock at the moment as revealed by price movement.

The bearish position of MACD confirmed the continued price correction, buttressed by bearish volume while the sustained falling momentum buttressed it further as revealed by RSI. Also, the unstable trend in the Money flow Index and Accumulation/distribution trend buttressed the mild sell tendency noted above.

Technical conclusion on sentiments: The emerging sentiments appeared positive with moderate reliability as the sell pressure is losing momentum while the stock has high possibility to maintain its short term support at N15.60, barring unforeseen market volatility. The chart below shows MACD, candlestick, RSI and volume analysis.

THE GAINERS

Goldinsure Plc experienced active bargain tendency and improved positive sentiments to record a 10.9% gain for the week as against the flat position recorded last week - strong price retracement coupled with active buying tendency was observed in the price trend, after hitting its year low (6months support level) as sentiments turned positive.

The stock closed neutral in both short and mid-long term period as revealed by price moving average, indicating the stock is yet to attain bullish mode i.e. still within the ambit of the bears.

This indicates further that the stock has more chances to extend the price uptrend, considering the price position above upper Bollinger band by 2.1% which suggests strong buying drive as buttressed by MACD.

The significant volume surge witnessed during the week confirms active bargain as noted above while the continued northward trend in money flow index and the uptrend momentum as revealed by RSI buttressed this further.

Technical conclusion on sentiments: There is no weakness in bargain position yet as the stock is moving out of depressed posture. Nevertheless, the stock has a moderate chance to extend price uptrend in the coming sessions as the uptrend momentum increased in the last session as revealed by RSI and money flow index. However, the short term pull-back is not in doubt as the stock remains volatile. The chart below shows MACD, candlestick, RSI and volume analysis.

Transcorp Plc experienced continued bargain trend and sustained positive sentiments to record 23.3% gain against 23.7% gain recorded in the previous session - an impressive bullish trend coupled with sustained bargain posture was observed as the stock maintained uptrend, recording 76% gain within four weeks while the stock broke its 9mths resistance of N0.82kobo recorded on 19th Sept 2011. The outlook is in line with our position (as envisaged) in previous sentiments analysis on the stock.

The stock remained bullish in both short and mid-long term period as revealed by price moving average while the strong bullish position of MACD buttressed this further.

However, the stock appeared to be in overbought range and it is long overdue for price correction as revealed by RSI and MACD. To buttress this further, the Bollinger bands are significantly wider than normal, indicating possibility of price consolidating into less volatile trading range.

Also, the last session's candlestick pattern signifies reversal as presence of the bears was observed, indicating possibility of short term pull-back, buttressed by slight weakness observed in accumulation and money flow index.

Technical conclusion on sentiments: The emerging sentiments appeared negative as we have observed weakness in price momentum while the stock is in overbought range while remained overdue for short term retracement. The chart below shows MACD, candlestick, RSI and volume analysis.

THE LOSERS

NASCON Plc experienced strong sell tendency and negative sentiments in the week to record -22.4% loss as against 5.0% gain recorded in the previous week - a short term price correction was observed as the stock appreciated by 59% within the last 6weeks.

The stock closed neutral in short term but remained bullish in mid-long term as revealed by price moving average, which indicates the stock is yet to completely slide into short term bearish mode. The bearish position of MACD buttressed strong sell tendency with the price falling momentum as revealed by RSI.

However, renewed bargain tendency was observed in the last session as sell pressure waned with significant bullish volume growth as revealed by volume trend, buttressed by the candlestick pattern (white marubuzo candle), indicating bulls are in control of the session.

Technical conclusion on sentiments: The emerging sentiments appeared positive while renewed bargain drive was witnessed with corresponding bullish volume in the last session amid moderate accumulation.The chart below shows MACD, candlestick, RSI and volume analysis.

MAYBAKER experienced growing sell tendency and sustained bearish sentiments in the week to record -14.6% loss as against -3.4% loss recorded in the previous week - sustained sell tendency and prolonged bearish sentiments was observed while the stock appeared depressed, recording -46% loss within 8weeks to hit 7yrs low.

The stock closed bearish in short and mid-long term period as revealed by price moving average, buttressed by MACD while the stock remained depressed in an oversold region as revealed by RSI. This buttressed the prolonged sell and bearish sentiments noted here - May & Baker Plc dives below 7yrs low as investors sell-off.

There was a lacklustre and low trading pattern towards the stock throughout the week as revealed by volume trend while money flow index maintained southward posture amid continued distribution.

Technical conclusion on sentiments: the stock is in bearish mode and appeared depressed due to prolonged sell tendency and bearish sentiments towards the stock. However, the oversold posture of the stock as revealed by RSI may incite possible reversal as the stock appeared bottomed-out. The chart below shows MACD, candlestick, RSI and volume analysis.

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.