Monday, January 08, 2018 06:03PM /Quantitative
Financial Analytics Ltd
Though UBA plc price fell from N11.24 to N11 during the last
trading day, this week’s Qfac pick is United Bank for Africa, (UBA) Plc and our
analysis is pointing to a buy signal.
United Bank for Africa Plc a financial institution in Nigeria
engaged in corporate, commercial and retail banking as well as trade services,
cash management, treasury and custodial services with branches African
countries. Our buy signal derives from the following:
Moving
Average Analysis:
The latest price of N11.00 beats its 5-Day,5 5-Day,
50-Day, and 100-Day moving average prices. Most technical analysts use the
moving average rule that recommends a buy when a market close crosses above x
day moving average, while a sell is signaled when a market close crosses below
x day moving average (where x could be any number of days)
Source:
QFAc
Commodity
Channel Index:
Though most chartists use the CCI as an
overbought/oversold oscillator, it could be used to signal buys or sells. CCI
compares current price with average price over a period of time CCI readings of
above 100 indicate a buy while those below -100 indicate a sell. Our CCI index
for UBA based on a 14- week period is 200.45
Source:
QFAc
Relative
Strength Index (RSI):
According to Welles Wilder who introduced RSI
in1978, market tops are often completed when the RSI rises above 70 while
bottoms are formed during periods when the RSI falls below 30. Most analysts
prepare to buy as prices dip below 30 using a rise back to 30 as a buy signal
and prepare to sell when the RSI moves above 70.This is premised on the notion
that RSI of 70 and above indicate that a stock is becoming overbought or
overvalued and could be getting ready for a reversal while an RSI value of 30
and below indicate an oversell or an upcoming reversal Our chart shows
that UBA has an RSI of 66.143 which is below the overbought mark, we call it a
buy especially for the day traders but could be a hold for longer tern traders.
Source:
QFAc
Moving
Average Convergence Divergence (MACD): The MACD uses two
lines to signal a buy or a sell, the faster line (MACD) and the slower line
(signal). The actual buy or sell signals are given when the two lines
cross, such that a crossing by the faster MACD line above the slower signal
line indicates a buy while a crossing of the MACD line below the signal line
indicates a sell. For UBA, the MACD line just crossed the signal line
indicating a buy
Source: QFAc
Stochastic Oscillator: The Stochastic indicator also
uses two lines to signal buys or sells, the %K and %D lines. Buy signals are
indicated when the fast %K line rises above 30 accompanied by a cross above the
fast %D line while sell signals are indicated when the fast %K stochastic line
falls below 80 and accompanied by a cross below the fast %D stochastic line.
Source:
QFAc
As indicated above, the fast %K rose above 30 and crossed above
the fast %D on December 27th indicating a buy.
Summary: Based
on the above technical charts, we believe that the technical analysis is
pointing to a buy signal for UBA.
For complete
list of picks or for analysis of any stock of interest, contact Analytics@mutualfundsnigeria.com
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