As the Nigerian Exchange’s market remains strong and positive, some equity companies have shown signs of recovery. In this article, we’ll discuss these stocks and project potential profit-taking zones for investors who bought into value during the corrective phase.
Technical Analysis Tools
In this report, we shall use the following tools and analysis methods:
Elliott’s wave theory to understand the overall market sentiment
Fibonacci tools to determine support and resistance levels
The Relative Strength Index and volume to evaluate the market’s strength
The Money Flow Index to determine the market liquidity
Moving average and MACD to understand the nature of the trend
Top-down analysis to know the best investment position
Stocks to Watch
1. Regal Alliance Insurance Plc
On October 15, Regal’s technical analysis suggested that traders should watch ₦0.60 and ₦0.70 as potential support zones as price lingered around ₦0.82. In line with this sentiment, the stock retraced to ₦0.60 and formed a doji candlestick pattern. This performance launched its recovery phase as Regal’s liquidity and relative strength improved. Notably, MACD sustained its divergence signal, preparing for a trend reversal. Thus, market participants should watch ₦0.85, ₦1.30, and ₦2 as potential profit taking zones
2. Computer Warehouse Group Plc
CWG retraced to the 0.5 Fibonacci level of Wave 3 and commenced its recovery phase. In line with this performance, the stock’s liquidity and relative strength improved. Also, CWG’s volume remained solid as MACD sustained its divergence signal. Investors should watch for support between ₦17 and ₦ 15, with prices projected at ₦24, ₦30, and ₦36.
3. Abbey Bank Plc
On October 29, Abbey’s technical analysis suggested that investors should watch ₦5 and ₦6 for support within the 1.0 Fibonacci level. In line with this sentiment, the stock met support at ₦5.70 and initiated its recovery phase. Thus, this current pullback should offer investment opportunities. The stock’s liquidity and relative strength remained solid while MACD sustained its divergence signal. The price projections for Abbey include ₦10, ₦12, and ₦15.
4. Guinea Insurance Plc
On September 21, Guinea’s technical analysis suggested that traders should watch ₦0.65 and ₦0.60 as strong support levels. In line with this sentiment, the stock gained 30% and pulled back due to profit-taking. Currently, Guinea is offering another buy-in opportunity for traders at ₦0.75 and ₦0.80. Given this performance, the stock’s volume, liquidity, and relative strength improved as MACD sustained its divergence signal. Thus, the price projections for this stock include 1₦, ₦1.6, and ₦2.
5. NPF Microfinance Bank Plc
On September 29, NPF’s technical analysis suggested that investors watch ₦4 and ₦3.50 as potential support levels. In line with this sentiment, the stock has been testing ₦4 while consolidating sideways. Given this performance, the stock’s liquidity, relative strength, and momentum have remained solid. The price projections for NPF are ₦7 and ₦9.
Other stocks to watch
Other stocks investors should watch this week include Consolidation Hallmark, AXA Mansard, and UPDC. These stocks sustained their positive performance after analysis their technical position last week.
