Monday, April 27, 2015 11:05 AM /Invest Data Consulting
The equity market selling pressure continued as profit taking dominated trades in the banking and consumer good sub-sector of the market to keep the composite index NSEASI and the market capitalization on the negative direction. The mixed performance of first quarter earnings released did not influence the market in any way for the week. The NSEASI and market capitalization dropped by 1.48 percent to close lower at 34,485.72 points and N11.75 trillion respectively.
TRADES FOR THE WEEK
FIDELITY BANK PLC (FIDELITYBK)
This bank is among the top ten Nigerian banks with business branches in the major cities and commercial centres of Nigeria. The bank is focus on commercial, corporate and consumer banking, also leveraging on its investment banking as former merchant bank. Its strong retail and investment banking products have attracted traders and SME to the bank. Regardless of all the factors militating against the banking sector, its earnings and assets are robust to support its share price. The upside potential of its share value is high as the market expects Q1 result after it had rewarded investors with 18 kobo dividend for 2014 financial year. The bank share price suffered moderate loss during the general market downturn.
Looking at the above, it revealed that the stock had been trending down for a period of one year, from high of N2.87 to low of N1.13 BEFORE it reversed and had a pullback that trigger the rally. The cup and handle chart pattern is a very strong pattern in TA that call for attention. The recent pull back of the stock was due to profit taking and price adjustment for dividend. As price move to new support level at N1.87, reversal in trend is imminent as signalled by stochastic oscillator. As the stock retraced toward the first RED resistance line, which would give a return of 6.53 per cent. The second target is the YELLOW resistance level, which would give a return of 14.74 per cent, and the third target which is a breakout of the top resistance line at N2.34 with expected return of 23.16 per cent.
Any further break out below the ORANGE support level at N1.87 and a stop loss of 10k which is anything not below N1.80 so that your capital can be protected from any further LOSSES. The upside potential of this stock is high if the bank expected Q1 financials beats market expectation.
DANGOTE SUGAR REFINERY (DANGSUGAR)
This is one of the largest sugar refinery in the world with capacity of 1.44 million metric tonne per annum with strong backward integration of sugar cane farms in more than six states. The company has repackaged its products for local and international consumption which sustained its profit and supported increased dividend payout in recent years.
Looking at chart above it shows that the stock trended down for more than nine months before it started trending up and down that form triple bottoms that ushered an uptrend that form a bullish channel. The current pull back is an opportunity to position as the market expects its Q1 financials in the market.
Reversal is imminent before it touches the first support level at N7 as Stochastic and CCI signals buy. As we expect the stock to retrace to the first resistance line at N7.74, which would give a return of 7.05 per cent.
The second target is the GREEN resistance level at N8.10, which would give a return of 12 per cent, and the third target which is the last YELLOW resistance line with expected return of 24.48 percent.
Any further break out below the support level at N6.77 and a stop loss of 46k so that your capital can be preserved. The upside potential of this stock is high but the market forces will determine.
ACCESS BANK PLC (ACCESS)
This is a one shop financial institution that is into commercial banking, investment banking and securities trading with strong corporate, retail and investment banking products that are driving the impressive numbers being posted. Regardless of all the factors militating against the banking sector, its earnings are robust to support its share price for upside potential and with expected dividend payment if announced. The bank share price had suffered a loss of 58 percent in five months.
The chart above revealed that the stock had been trending down for a period of nine months before reversing in January and recently forming symmetrical triangle with a double tops pattern at the orange resistance line. The stock is currently trending down at N6.31 below the first support level at N6.50. Reversal signal is imminent as MACD is buy and RSI is below 50 currently at 46.47 level. As we expect the stock to retrace at this point to the first orange resistance line, which would give a return of 9.19%. The 2nd target is the red resistance level, which would give a return of 13.78%, and the 3rd target which is the last yellow resistance line with expected return of 32.81%. Any further break out below the last support level at N5.98 and a stop loss of 35 kobo which is anything not below N5.94 so that your capital can be protected from further loss. The upside potential of this stock is huge. The number of days it takes the stock to drop, may also be the same time to recover.
CEMENT COMPANY OF NORTHEN NIGERIAN (CCNN)
This is growing cement producing company in the country today, that is determined to expand its capacity to boost its metric tons output. Its sustainable performance had led to strong numbers that supported the recent year’s dividend payment. The company full year earnings performance was impressive which is likely to continue as Nigeria bridges its infrastructure gap to drive economic diversification by the new government.
Looking at the chart you can see that the stock was up for six month and came down when the major market correction started after the strong earnings and expectation has influenced price positively. But it has in recent year form a reversal bullish channel with strong support level at N11.14. As we expect the stock retracement from it side- trending to the first resistance line at N12.60, which would give a return of 8.71per cent. The second target is the resistance level, which is the black line, would give a return of 18.90 per cent and the third target is the SKY BLUE resistance line with expected return of 25.02 per cent. The last yellow resistance line would give a return of 29.59 percent. Any further break out below the support level at N10.70 and a stop loss of N1.00 which is anything not below N10.59 so that your capital can be protected from further loss. The upside potential of this stock. If the stock Q1 earnings beat market expectation.
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