Analysis of market activity in the week ended June 01, 2012 technically revealed the sustained weak market optimism and continued sell tendency in the investors’ trading pattern as against the moderate profit-taking tendency amid falling market optimism observed in the previous week’s performance.
Further analysis would indicate that the market has slipped into a reversal mode technically as the market consecutively recorded losses over a 4-week period, plunging below its 22,000 pyschological line on the back of an unrellenting sell tendency amid increased volatility.
In the week just ended, sustained weak bargaintendency was observed across the major sectors as price correction gained tempo, mainly towards big and medium CAP stocks due to their recent overbought postures. However, fresh and renewed bargain drivewas observed towards bottomed-out stocksin few active sectors while their depressed postures remained attractive.
Nevertheless, the sustained sell tendency continued to outweigh the weak buy side as most active and liquid stocks are still experiencing price correction while the short termist remained in control of market direction - a major reason for the continued pessimistic activities in the market.
To date, the indecisive posture of the market remains high, alongside growingactivity level as sideline attendants appeared to take positions subtly, yet remain a significant feature.
Prescription and the likely expectation in the coming periods: The depressed and oversold postures of value and liquid stocks accross the board remain the most likely game changers for the market in the coming period(s); due in the main, to their attractiveness while the market RSI appears deppressed as well.
The point must be made that while the cycle of negativity has declined, the absence of positifve news in and to the market to drive impressive bargains would continue to give support to speculative and pessimistic activities in the coming periods - a pointer to further market price volatility in the coming period.
Technically, market sentiments during the week favoured liquid and active stocks of Medium and Large CAP categories in Healthcare, Industrial Goods and Oil & Gas sector(s) in that order – reflecting the sectors investors patronised in the week.
On the other hand, it was observed that market sentiments moved against the Conglomerates, Services, ICT, Financial Services, Construction/Real Estate and Agriculture 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
TRANSCORPexperienced continued bargain tendency and sustained positive sentiments in the week to record +7.8% gain as against +23.3% gain recorded in the previous week - the stock appears to be losing uptrend momentum amid weak performance even as the stock recorded 73.21% gain in the last five weeks.
The stock remained in bullish trend, trading above both its short and long term postures as revealed by price moving average while the bullish posture of MACD confirms same.
However, the candlestick pattern (Black Marubuso) revealed a strong sell tendency in the last session as bargain drive appeared weak due to the overbought posture of the stock. To buttress this further, the sharp fall in price uptrend momentum as revealed by RSI confirms this; just as a similar trend was observed in money flow index (MFI) as distribution dominated the trading pattern, buttressed by the huge bearish volume recorded.
Technical Conclusion on Sentiments: The stock may extend the downtrend further as short-termist (profit-takers) would appear to be in control of the stock. The chance for a short term price correction has increased due to the prolonged overbought posture of the stock.The chart below shows MACD, candlestick, RSI and volume analysis.
GUARANTY experienced continued mild sell tendency and low bearish sentiments as the stock maintained gradual downtrend in the week to record -3.2% loss as against -1.3% loss recorded in the previous week – a sustained weak bargain drive was observed as the stock booked -10.86% loss in the last four weeks while the outlook revealed some price correction after the stock recorded a 13-month high of N17.25kobo on May 3rd 2012.
Nevertheless, the stock remained bullish in long term while maintaining a neutral posture in short term period, indicating that the stock is yet to attain full bearish mode as revealed by its price moving average - further indicating that the stock is likely to maintain its old support level (N15.40).
However, the last candlestick pattern (inverted hammer) gives a reversal signal, revealing the presence of bulls as the trend sets to retrace for possible short term rally. The sharp upturn in RSI buttresses this further as this suggests an increase in uptrend momentum while a similar trend was observed in both accumulation and money flow index (MFI).
Technical Conclusion on Sentiments: There is a high possibility that the stock will extend its uptrend in coming period as the emerging sentiments appear positive while we expect the bulls to hold their positions as stock is likely to maintain its old support level at N15.40.The chart below shows MACD, candlestick, RSI and volume analysis.
MAYBAKER experienced active bargain tendency and positive sentiments in the week to record +14.60% gain against -14.60% loss recorded in the previous week - price retracement was observed as the stock regained the loss recorded in the previous week after hitting an all time low at N1.29kobo (recorded on 24 May 2012).
The neutral posture of the stock in short term as revealed by its price moving average indicates the stock is yet to attain bullish mode as the stock still appears depressed in an oversold region as revealed by RSI, indicating moderate possibility to extend the uptrend.
In addition, the bullish position of MACD reveals the active bargain tendency of the investors, further buttressing the moderate possibility of extending the uptrend as noted above while the Bollinger bands appeared narrower, suggesting possible sharp price movement in the near term.
Also, accumulation was witnessed in the week with growing volume, buttressing active bargain as noted above while money flow index (MFI) closed northward.
Technical Conclusion on Sentiments: There is a moderate possibility for the uptrend to continue as the stock remains depressed in an oversold region. Meanwhile, the price retracement is not in doubt as short-termist (profit-takers) retain control of market. The chart below shows MACD, candlestick, RSI and volume analysis.
FIDSONexperienced an improved bargain drive and positive sentiments in the week to record the +10.0% gain as against -5.9% loss recorded in the previous week - an improved bargain posture was equally observed as the stock experienced retracement, after establishing support at N0.80kobo.
Be that as it may, the stock closed neutral in both short and mid-long term as revealed by its price moving average, indicating the stock is yet to attain bullish mode due to the weak bargain posture observed.
Also, the bearish posture of MACD further affirms the weak bargain position noted above while the low volume trend buttressed this further amid sustained distribution and southward trend in the money flow index (MFI).
Technical Conclusion on Sentiments: The likelihood of the stock extending the uptrend remains low due to the sustained weak bargain drive amid the southward posture of its money flow index. The chart below shows MACD, candlestick, RSI and volume analysis.
FCMBexperienced sustained sell tendency and growing bearish sentiments in the week to record -15.3% loss as against -6.0% loss recorded in the previous week – a strong reversal trend was observed as the stock continued to plunge amid weak bargain drive to record -35.48% loss in the last 4weeks, after hitting an 8-month high at N5.58kobo.
The bearish position of MACD further reveals the weak bargain position while the stock remained bearish in short term period as revealed by its price moving average. Also, the stock appears depressed to close below oversold line with a growing ‘falling momentum’ as revealed by RSI - the low volume trend suggests lacklustre trading as investors continued to sell their positions. The prolonged negative trend in the money flow index buttressed this further.
However, we observed a possible trend reversal in the last session with moderate reliability as suggested by the candlestick pattern (graveyard doji).
Technical Conclusion on Sentiments: The falling trend is likely to reverse as the reversal signals indicated above suggests. Yet, this requires a bullish opening confirmation in the next session and we expect the bulls to hold their positions. However, if the reversal attempt fails, the stock may record new low for the year. The chart below shows MACD, candlestick, RSI and volume analysis.
NASCONexperienced continued sell tendency and sustained bearish sentiments in the week to record -14.1% loss as against -22.4% loss recorded in the previous week – the price correction continued to dominate trading pattern in the week as strong sell tendency was observed towards the stock. The stock has booked -33.33% loss in the last two weeks, after recording an 11-month high of N6.30kobo on 18th May 2012.
The stock appeared depressed to close below oversold region as revealed by RSI while the position of the MACD at oversold region buttressed this further. Meanwhile, the stock closed neutral in short term period and remained bullish in mid-long term period, indicating the stock is yet to attain a full bearish mode - an indication that the price correction trend may continue.
Also, the bearish volume recorded throughout the week reflected the unrelenting sell tendency as noted above while a cash outflow persists, as revealed in the money flow index (MFI).
Technical Conclusion on Sentiments: The stock has a moderate possibility of extending the price correction in the coming periods as investors’ sentiments toward the stock remained bearish. However, a price pull-back is not in doubt as the depressed posture of the stock at the oversold region could incite possible bargain. The chart below shows MACD, candlestick, RSI and volume analysis.
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