Equities

Technical Position Of Selected NSE Stocks

At any given time, the general market direction accounts for as much as 50% of equity price movements.

You want to be able to invest in stocks during a recovery or bull market when the market composite index is in a confirmed uptrend. This confirmation usually occurs when a major index follows through on day 4 or later after its rally attempt. The first two or three days of the rally are normally disregarded, as the rally has not yet proven it will succeed and follow through with power and conviction. Therefore, a follow through day occurs when at least one of the major indexes makes a big percentage gain witha higher volume. The gain should generally be in the area of 2% or more. All days of the rally do not need to be up.  Market tops always coincide with signs of weakness in the major indices, this weakness is defined by days of heavy selling. When the market index closes lower and the volume for that index or stock increases over the previous day, the market or stock is said to be under distribution.  Let the above tips technical guide you as the Santa clues rally continue, but profit taking in the xmas week is underway.

The market indexes for the week were significantly higher following positive sentiment for low price attraction and end of the year seasonal trading patterns, despite the negative consumer price index that were released during the period under review as inflation rate for the month of November 2016  increased by 18.48%  year on year. This is 0.15% higher than the rate recorded in October (18.34%).  Also the recent hike of interest rate in the US which has put pressure on emerging market and others as outflow of funds have increased making the stock markets around the world mixed close lower.

The Composite index NSEASI shed 889.41 points to close last week at 26,707.10 points, from an opening figure of 25,817.69 points, representing 3.44 percent growth on improved volume of trades to continue three weeks bull transition. Buying position of 98 percent of total volume traded for the week and 2 percent selling volume.

Market breadth analysis shows a bullish sentiment as 40 equities gained while 19 stocks lost value for the week.

NSEASI WEEKLY TIME FRAME

NSEASI on a weekly time frame has bottom out to continue its three week recovery rallyon a heavy volume and at the same time price action has formed a symmetrical triangle which is a continuation chart pattern.

Since the index has already brokenout the back line which was strong resistance level at 26,000 and almost forming a double tops at the range of 26,722.20 to 26,981.10 meaning that pullback is imminent.  Market index has moved above the 61% Fibonacci retracement which suggests strong recovery that supports uptrend as the index close 3.44% higher for the period.  The momentum and trending ability of the market on weekly and daily time frame supports bull trend as ADX is above 20 in the respective period.

Traders should watch out for a break out of symmetrical triangle to the first resistance level at 26,982.09 and the second resistant point at 27,098.20, any move down with 25,982.23 and 25,645.67 respectively.

Looking at technical indicators, the NSEASI closed above the upper band by 10.0%.  Although prices have broken the upper band and an upside breakout is possible, the most likely scenario is for the current trading range that NSEASI is in to continue,   while MACD is bullish in the last 10 trading days.  RSI is reading 69.41and overbought. Money flow index is looking up, indicating that funds are still entering the market. All the momentum indicators are signaling buy including MACD, CCI, SO and RSI.

 

 

 

 

 

HONEY WELL FLOURMILL

Honeywell moved 24.53 % higher over the past week on a positive sentiment owing to its low price attraction to traders to reverse the one and half-year down trend which was as a result of mixed financials and the nature of its products.  Traders should watch for first resistance level of N1.41 and second resistance level of N1.50 or reverse down to touch first support level at N1.11 and the second support level will be at N1.06 per share. The stock is trading above its 50-Day moving average at N1.32 per share.  The current trend is strong on daily time frame as ADX is above 20 at 71.69.  But profit taking is imminent.

Looking at the technical indicators, HONYFLOUR closed above the upper band by 18.0%.  Although prices have broken the upper band and an upside breakout is possible, the most likely scenario is for the current trading range that HONYFLOUR is in to continue. MACD is still bullish, RSI is reading 74.61 which is overbought. All the momentum indicators are signaling BUY. MFI is indicating that funds are entering the stock.  The Buy to sell volume indicator reveal 100% buy volume of the stock as at Friday trading.

 

ETI

 

 

ETI moved 21.13% higher over the past week on a positive sentiment after trending down for almost two years with various attempt to rebound, but after two months of side trending is trying to break out of the bearish channel.  The move is still weak on a weekly time frame but strong on daily outlook as positive D1 is 69.36 and negative D1 is 19 .14 while ADX is at 22.88. Traders should watch for a break out to first resistance level of N12.74 and second resistance level of N13.84 or reverse down to touch first support level at N11.20 and the second support level will be at N9.98 per share. The stock is trading above its 20 and 50-Day moving average at N12.04 per share.

Looking at the technical indicators, ETI closed above the upper band by 36.3%.  This combined with the steep uptrend suggests that the upward trend in prices has a good chance of continuing.  However, a short-term pull-back inside the bands is likely. MACD is bullish while RSI is reading 78.84.  MACD and CC1 indicators have signaled BUY in more a week ago.   MFI is looking up to indicate that funds are entering the stock. The Buy to sell volume indicator reveal 100% buy volume on the week and daily while sell position 0%.

 

SEPLAT

 

Seplat rose 20.59% over the past week on a bullish sentiment on positive outlook of upstream oil companies that are into crude export business. Its price action has form ascending triangle   chart pattern in recent time with a break out of its resistance level at N386 on a strong trend and direction as ADX on weekly and daily time frame is above 20.

Traders should watch the uptrend and ride with it as reversal is imminent at N445.  The trend has broken outthe first resistance level of N386 of October 21, 2016.Any move down to the first support level of N361. The stock is trading above its 20 and 50 day moving average.

 

Looking at technical indicators,SEPLAT closed above the upper band by 7.7%.  Although prices have broken the upper band and an upside breakout is possible, the most likely scenario is for the current trading range that SEPLAT is in to continue.   MACD has been bullish for 3 trading days at overbought range. RSI is reading 81.44 on overbought region, while other momentum indicators like MACD, SO and CCI are in their overbought range, signaling buy but RSI is still indicating sell. MFI is looking up, to indicate that funds are entering  the stock, with buying volume position of 100%  and sell position of 0% for the week.

UNILEVER

Unilever moved 12.07% lower over the past week on a bearish sentiment as market players exit position to target income stocks despite the improving financials in a tight business environment to form a bullish channel the stock is trading within.  The trend momentum and direction as the weekly and daily ADX are above 20 at 30.07 and 50.85 respectively.

Traders should watch the downtrend to break down thelower line of the bull channel at N36.53 and second support price of N34.  Any move up the first resistance level of N45 and second resistance level (R2) at N48.13 per share.The stock is trading below its 20 and 50 day moving average.

Looking at technical indicators, UNILEVER closed below the lower band by 31.6%.  This combined with the steep downtrend suggests that the downward trend in prices has a good chance of continuing.  However, a short-term pull-back inside the bands is likely. MACD is bearish for more than a month at oversold range. RSI is reading 5.79 on oversold region. All the momentum indicators like SO, RSI, MACD and CCI are in their oversold range signaling sell.  MFI is looking down on daily and weekly, to indicate that funds are exiting the stock with selling volume position of 100% for the week and last Friday.

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