Sunday, June 10, 2012/ Proshare Research 

The Diagnosis
Analysis of the market activity in the week ended June 08, 2012 technically revealead an increase in pessimistic trading and growing sell tendency in the investors’ trading pattern as against weak market optimism and continued sell tendency observed in the previous week’s performance.
 

Digging deeper, we discovered a strong reversal mode as the falling trend garned momemtum in the week, plunging futher the ASI below the 21,000 pyschological line driving by the growing sell tendency on top of increased market volatility.
 

In the week just ended, sustained weak bargain tendency was observed across the major sectors as reversal mode continued to gain tempo, mainly towards big and medium CAP stocks. However, renewed and growing bargain drive was observed towards depressed stocks in few active sectors while their depressed postures remained attractive.
 

Nevertheless,  the sustained sell tendency continued to outweigh the weak buy side as most active and liquid stocks are yet to stablize while the short termist remained in control of market direction - a major reason for the continued pessimistic activities in the market.
 

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

Prescription and the likely expectation in the coming periods: More bottomed-out stocks are likely to decamp to gainers’ list in the coming period – and so act as a possible game changer; while the expectation is that the blue chip stocks would successfully stabilize within trading range (and find new support levels).
 

Meanwhile, the absence of more positive news in the market continues to stoke more pessimistic activities as stakeholders envisage a mild sell tendency to lure market participants into transactions in the coming periods.   

Technically, market sentiments during the week favoured liquid and active stocks of Medium and Large CAP categories in Healthcare, Agriculture, Conglomerates and Oil & Gas 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  Services, Consumer Goods, Financial Services, Construction/Real Estate and Industrial Goods sector(s) as sell sentiment 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

First Bank experienced moderate sell tendency and negative sentiments to record -6.1% loss in the week as against the modest gain of +0.8% gain recorded in the previous week – supporting the weak bargain drive witnessed towards the stock as distribution dominated the trading activities in the week while the general bearish trend in the market had an overbearing impact on the performance of the stock.
 

Be that as it may, the stock maintained its bullish range to close neutral and bullish in short and mid-long term period respectively as revealed by price moving average, indicating the stock is yet to attain bearish mode. In addition, the two days bearish position of MACD further buttressed the weak bargain drive observed in the week while the sharp fall in RSI revealed the active distribution and sell momentum amid bearish volume posture.
 

Technical Conclusion on Sentiments:  Barring unforeseen market price volatility, the stock has moderate possibility to extend the trend as the sell tendency gained momentum in the last session. The chart below shows MACD, candlestick, RSI and volume analysis. 

Zenith Bankexperienced waning sell tendency and mixed sentiments to record modest gain of +0.4% as against the -9.1% loss recorded in the previous week - a better performance when compared with the recent four weekly consecutive losses, following the 12-months high of N15.59  recorded on May 3th 2012.
 

The outlook for the stock will suggest that we may have reached the end of current price correction taking place, as the stock seems to stabilise around N13.25k to form a new support level. On the other hand, the bearish position of MACD suggests a weak bargain posture while the stock closed neutral and remained bullish in short and mid-long term respectively as revealed by its price moving average – indicating that the stock is yet to attain bearish mode.
 

Technical Conclusion on Sentiments: The stock has a moderate possibility of experiencing an uptrend in the coming periods as sell pressures appear to have waned, suggesting that the depressed posture of the stock may actually encourage new bargains  as revealed by RSI. The chart below shows MACD, candlestick, RSI and volume analysis.  

THE GAINERS

MAYBAKERexperienced an improved bargain drive and sustained positive sentiment in the week to record +26.2% gain as against +14.6% gain in the previous week – as a sustained bullish sentiment was observed towards the stock as its depressed posture continued to stoke sustain bargain drive in the week, just as we had envisaged in our previous sentiments analysis dated June 1st 2012.

Further analysis indicates that the stock is yet to attain bullish mode as it closed neutral and remained in bearish range in both short and mid long term respectively as revealed by its price moving average, indicating a ‘possible uptrend potential’ with growing bargain drive. The strong bullish position of MACD buttressed this further. 
 

Additionally, we observed a continued inflow of funds into the stock while a similar positive pattern was witnessed in the accumulation trend, buttressing the uptrend potential further.
 

Curiously, the low volume trend affirms a hold position taken by investors who believe in the company and have adopted the sentiment analysts’ position.
 

Technical Conclusion on Sentiments: the stock is yet to record weakness in uptrend momentum since picking up, thus indicating a further uptrend potential in the coming periods as revealed by its moving averages. However, a trend reversal is not in doubt as bears remain in control of the market. The chart below shows MACD, candlestick, RSI and volume analysis.

TRANSCORP experienced continued bargain tendency and sustained positive sentiments in the week to record +24.7% gain as against the +7.8% gain recorded in the previous week - renewed strong bargain tendency was observed as the stock broke its 9-mth resistance level of N1.07 (high price recorded on 02 August, 2011) during the week.
 

The outlook reveals an extra ordinary bargain drive as the stock sustained a 6-wks uninterrupted uptrend, recording a 137% price appreciation to settle at a new 12-mths high of N1.21 with a growing bargain posture, despite the 5-wks general bearish trend in the market. However, analysis suggests that the stock is overbought i.e. trading at its top, indicating possible reversal anytime soon as revealed by RSI and MACD. Though, the stock is yet to display bargain weakness as most momentum indicators maintained a northward trend while the stock remained bullish in both short and mid-long term period as revealed by its price moving average.
 

Technical Conclusion on Sentiments: The stock is overdue for price correction due to its prolonged overbought posture with a 137% price growth in the last six weeks. However, the bargain drive appeared very strong with potential to extend the uptrend as the market is yet to see any weakness in the uptrend momentum. Nevertheless, we advise a cautious bargain approach as short term retracement is not in doubt anytime soon. The chart below shows MACD, candlestick, RSI and volume analysis. 

THE LOSERS

UBN experienced renewed sell activities and negative sentiments in the week to record a15.5% loss as against the +5.6% gain recorded in the previous week - sustained price correction trend was observed as the stock has been on the downtrend since 4weeks ago, following the 5weeks uptrend experienced recently.
 

The outlook revealed active sell tendency as the stock recorded new lows throughout the week. The bearish posture of MACD buttresses the sell tendency further as the stock continues to slide towards the oversold region amid its bearish posture in both short and mid-long term period as revealed by the price moving average. In addition, the sustained bearish volume trend further reveals the active sell tendency as more of distribution was observed in the week amid sustained southward trend in money flow index.
 

Technical Conclusion on Sentiments: the stock has a moderate tendency to extend the downtrend in the coming sessions. However, a trend reversal is not in doubt as the stock tried to stabilize at N3.17kobo in the last two sessions while the contraction of Bollinger bands reveals the high possibility of a sharp price movement in near term. The chart below shows MACD, candlestick, RSI and volume analysis. 

ASHAKACEM experienced continued sell tendency and sustained negative sentiments to record a -16.0% loss in the week as against the -2.9% loss recorded in the previous week - continued price correction with significant growth in sell tendency was observed in the week as the stock has been on a downtrend for upwards of 5-wks to record the -19% loss, following the 2-weeks rally witnessed recently.
 

The outlook reveals a growing active sell tendency and bearish sentiment while the stock remains in a bearish mode in both short and mid-long term period as revealed by the price moving average. Additionally, the stock appeared depressed to close weak at an oversold region; the prolonged bearish posture of MACD buttressed this further while the volume trend and money flow index revealed similar negative trend amid continued distribution.
 

Technical Conclusion on Sentiments:  The sell tendency towards the stock remained strong, pointing to a moderate possibility of a further decline in the price movement. However, a trend reversal may not be in doubt as the depressed posture of the stock creates incentives for a bargain drive. The chart below shows MACD, candlestick, RSI and volume analysis.

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