NGX Sustains Santa Claus Rally Amid Profit Booking, Year-End Portfolio Rebalancing

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Nigeria’s stock market has witnessed a Santa Claus rally in recent days and weeks, in the midst of seasonality and trend, repeating itself as the year 2023 winds down to usher in 2024 that is setting up with challenges and opportunities for discerning investors and smart traders. The NGX remain among the best performing stock markets across the global so far in 2023, thereby extending the positive sentiment and strong momentum for nine straight weeks, and in the process breaking out various resistance levels and psychological lines on buying interest, end of the year portfolio rebalancing, sector rotation and intermittent profit taking to sustain an uptrend ahead of Christmas holidays and end year window dressing.

The NGX hit new all-time high of 74,430.47 basis points, trading above the 74,000 mark and T-line on the daily, weekly and monthly time frame at 74,023.27 on above average traded volume and positive advancers and decliners line. As demand and accumulation in financial service stocks, blue-chip companies and highly priced equities supported the rally as market players positioning for dividend paying stocks and capital gains to play defensive against a downturn, and also hedge against the rising inflation as the mixed outlook in fixed income market yields/rate and increasing economic headwinds remain a major concern for investors and traders in Nigerian financial market. We note, however, tht the expected reset in the global and domestic financial market is likely to come with new opportunities and pitfalls.

But in all of these if you get a big move in your direction, you need to do something. What I mean by this is not always obvious. If you get a big directional move that favours your position, you need to do one of two things or both in my opinion.
The first is to take some profit off the table. The second is to move your hard or mental stops up to either lock in some gains or remove risk by bringing the stop up to break even, while removing emotions. Usually when I get a big move or a bigger move than I expected, I do both: take some profit and move my stop loss. So, as a technical traders let this guide your decisions at all time in any market cycle or direction.

As the year 2023 has just three trading sessions before the onset of yet another earnings reporting and dividend season which is the peak of full-year numbers in Q1 2024, let the charts and price actions below guide your trading decisions by looking at the chart patterns among others.

NGXASI Weekly Chart (Opening chart)

NGX Banking Weekly Chart