Sentiment Analysis Report – W/E May 11, 2012

Category: Cap Mkt Sentiments

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Sentiment Analysis Report – W/E May 11, 2012

Sunday, May 13, 2012/ Proshare Research

The Diagnosis

Analysis of the market activity in the week ended May 11^th 2012 technically revealed a decline in market optimism and weak bargain drive with significant increase in speculative activities in the investors’ trading pattern as against an improved market optimismis and sustained positive sentiments with steady active bargain tendency observed in the previous week’s performance.

In the week just ended, weak bargain and profit taking tendency was observed across the major sectors as market sentiments turned negative, mainly towards big and medium CAP stocks. However, there is concentration of weak bargain postures is some active sectors while we observed fresh and sustained moderate sell tendency in some unattractive sectors.

Nevertheless, the fresh and sustained moderate sell tendency outweighed the weak buy side as most active and liquid stocks appeared ripened for profit taking while the short termist remained in control of market direction - a major reason for the increase in speculative propensity and pessimistic activities in the market.

To date, the indecisive posture of the market remains high, alongside a sustained reduced activity level as sideline attendants appeared to take positions subtly, yet remain a significant feature.

Prescription and the likely expectation in the coming periods: The presence of short term players in the market is likely to increase speculative trading in the coming sessions as the All Share Index (ASI) is still within the overbought range, indicating possible extension of price correction to more sectors.

We however envisage a balanced outlook in the coming week as more sustained and renewed bargain tendency will likely cushion the impact of speculative trading - a pointer to market price volatility as the bulls and bears will jostle for supremacy.

Technically, market sentiments during the week favoured liquid and active stocks of Medium and Large CAP categories in the Agriculture, Conglomerates, Consumer Goods, Services, Industrial Goods, Oil & Gas and Construction/RealEstate sector(s) in that order which further revealed the sectors investors patronised in the week.

On the other hand, it was observed that market sentiments moved against the Financial Services, Healthcare and ICT sector(s)as sell sentiments was stronger in the sector(s).

Stock Trend & Direction

We conducted a review of stocks that have sharpened market direction and performance in the week - using technical tools like RSI, MACD, VOLUME, MFI, CANDLESTICK, MOVING AVERAGES, BOLLIGER BANDS and ACCUMULATION & DISTRIBUTION to reveal investors’ sentiments towards the market movers.

THE BIG VOLUME

UBA Plc experienced moderate sell tendency and bearish sentiments in the week to record -5.5% loss as against 12.9% gain recorded in the previous week - price correction (profit taking) was observed towards the stock due to a 7-month high recorded recently amid increased market volatility during the week.

The stock experienced distribution and cash outflow throughout the week as revealed by its money flow index while the growing bearish volume buttressed the negative sentiments witnessed in the week.

However, the stock remained bullish in both short and mid-long term period as revealed by its price moving average, buttressed by MACD. This indicates that the stock is still within the bullish range.

To buttress this further, the stock ended the week with strong bullish sentiments as revealed by candlestick (bullish engulfing) pattern in the last trading session while the stock likely to establish new support level at N3.50 as the chance of consolidating into less volatile trading range has increased with corresponding bullish volume.

Technical conclusion on sentiments: barring any unforeseen market volatility in the coming week, the emerging sentiments towards the stock appears positive with moderate bullish tendency as the stock ended the week with an impressive bargain posture and a corresponding bullish volume. The chart below shows MACD, candlestick, RSI and volume analysis.

FIRST BANK Plc experienced mixed sentiments and weak bargain tendency in the week to record -2.0% loss as against 7.0% gain recorded in the previous - increased price volatility was witnessed towards the stock amid weak bargain posture and increased market volatility.

The stock experienced more distribution in the week as revealed by its volume trend while money flow index maintained a downtrend throughout the week - indicating persistent sell tendency in the week. Nevertheless, the stock retained its bullish posture in both short and mid-long term period as revealed by price moving average, buttressed by MACD.

Technical conclusion on sentiments: The emerging sentiments appear positive with moderate reliability as bargain tendency appears weak. Though, the stock retains its bullish mode as revealed by price moving average and MACD – indicating that the stock is within the ambit of the bulls. The chart below shows MACD, candlestick, RSI and volume analysis.

THE GAINERS

DANGFLOUR Plc experienced a strong bargain tendency in the week to record 26.8% gain against 9.00% recorded in the previous week - sustained buying and impressive positive sentiments was observed towards the stock in the week while the stock recorded a new high of N6.01 slightly above the N6.00 recorded on 6th Jan 2012.

The stock witnessed active bargain trend, recording maximum gain throughout the week while the price position above upper Bollinger band buttressed the strong bargain tendency.

This suggests that the price uptrend has a good chance to continue as the stock appeared to be in bullish mode as revealed by its price moving average and buttressed by MACD, though the volume trend revealed more of distribution in the week while money index flow recorded a zigzag pattern, indicating unstable money flow into the stock.

However, the stock closed in the overbought range as revealed by RSI buttressed by price position above upper Bollinger band, suggesting the possibility of short-term pull back within the bands while price volatility is not in doubt as the bands are wider than normal.

Technical conclusion on the sentiments: The stock remains bullish in the short term, indicating the stock is yet to attain full bullish mode while short term pull-back is possible in near term with moderate reliability due to its overbought posture as revealed by RSI. Nevertheless, the stock appears positioned to sustain its uptrend, considering its gain pattern. The chart below shows MACD, candlestick, RSI and volume analysis.

DANGSUGAR Plc experienced moderate bargain and positive sentiments in the week to record 16.0% gain as against -10.4% loss recorded in the previous week - improved bargain sentiments observed towards the stock in the week.

The stock maintained a neutral posture in the short term while appearing bullish in the mid-long term period - buttressed by MACD; indicating that the stock is yet to attain full bullish mode as revealed by its price moving average.

Also, the volume trend revealed active buying pattern as growing accumulation was observed throughout the week while the money flow index maintained northward trend, buttressing the active buying.

Technical conclusion on sentiments: There is no signal of price volatility in the coming period as the stock has moderate possibility to sustain its uptrend, considering the growing momentum revealed by RSI. However, profit taking is not in doubt as its candlestick analysis revealed the presence of bears in the week. The chart below shows MACD, candlestick, RSI and volume analysis.

THE LOSERS

MAY & BAKER Plc experienced continued sell tendency and sustained bearish sentiments to record -13.4% loss as against -13.6% loss recorded in the previous week - an unrelenting sell tendency which continued to further depress the stock (since 7weeks ago) while the stock recorded an all time low to close at N1.49.

The stock has been in a prolonged bearish mode both in short and long term period as revealed by price moving average, buttressed by MACD while the stock appeared depressed and bottomed-out as revealed by RSI. To buttress this further, the money flow index maintained a prolonged negative posture.

However, there was significant volume growth at the bottom, indicating new interest towards the stock while there was slight buying tendency in the last session as revealed by candlestick. This suggests possible trend reversal.

Technical conclusion on sentiments: The stock appears depressed and bottomed-out while exhibiting traits of a moderate possibility of trend reversal in the near term, considering the buying tendency as revealed by candlestick in the last session and the corresponding volume growth. The chart below shows MACD, candlestick, RSI and volume analysis.

SKYE BANK Plc experienced bearish sentiments and consistent sell tendency in the week to record -16.3% loss as against 2.6% gain recorded in the previous month - an overwhelmed sell tendency was observed towards the stock as market volatility increased during the week.

The stock appears to be in a bearish mode in both short and mid-long term period as revealed by its price moving average while MACD buttressed the bearish posture. Also, the price position below bottom Bollinger band confirms the overwhelmed sell tendency as noted above.

To buttress this further, the stock appears depressed as revealed by RSI while the stock is falling towards its 3months support level at N3.19.

Technical conclusion on sentiments: There is an overwhelmed sell tendency towards the stock which may continue, considering the falling momentum while the price position below bottom Bollinger band buttresses this outlook. However, a trend reversal is not in doubt as the stock appears depressed and bottomed-out which could encourage a bargain drive. The chart below shows MACD, candlestick, RSI and volume analysis.

Disclaimer: The information provided herein is our opinion only. Under no circumstances do any statements here represent a recommendation to buy or sell your stocks or make any kind of an investment. You are responsible for your own due diligence. To summarize, we do not provide recommendations nor do we make any claims or promises that any information here will lead to a profit, loss or any other result. They are for your guidance purpose only.