Assumption/Facts:
- Analysis is purely technical.
- Analysis is not always 100% correct apply money management.
- We are strictly interested in price action because it is the most reliable.
- Recommendation(s) is for short term (days to weeks) trading only, except otherwise stated.
Background:
According to information available, the peak price for WAPCO this year is around 85 naira and that was in January 3rd and 4th to be precise, and since then it has depreciated to 23.47 naira as of writing (loss of 61.53 naira).
Analysis:
Our analysis is based on the attached daily price charts of WAPCO for this year, we can clearly see that the stock is in a down-trend(substantiated by the fall in price).What we are trying to look for is a buy entry point, if we draw a downward trend line from mid-January to December, and we note where the prices bounced off, we will be able to determine our likely buy entry point.
The first bounce off after peaking@ around 85 naira was at 65 naira in late January.
The second bounce off after peaking@ 80 naira was at around 60 naira in late February.
The third bounce off after peaking@ around 72 naira was @ 49 naira in early May.
The fourth bounce off after peaking@ 60 naira was @ around 34 naira in late August.
The projected fifth bounce off after peaking @ 45 naira is around 17-19 naira and the present closing price is 23.47(2/12/2008).
Observation:
- Every time it bounced off the trend-line it moved at least between 7-8 naira upwards.
- The general trend is down (bearish) what we are doing is trying to profit from retracement from the main trend.
Recommendations:
-For short-term investors, you wait for the next bounce off @ around 17-19 naira and you wait for a higher close price than the previous day’s close, then you buy on the next day opening price, only go for 5-7 naira profit i.e. assuming you buy 1000000 units at 22 naira (22,000,000 naira)you will sell at 27 -30 naira(27,000,000naira).
- For those who can’t wait for the projected bounce you can buy now but sell at a loss if price goes below 22 naira(below red line) or 17 naira(below black line) depending on your risk appetite or cash in your profit at around 28-30 naira if the market moves in your favor.
Conclusion:
- Patience is the key.
- In case of any changes I will update the blog
- Any question/suggestion please send a mail to lordgbengs@gmail.com
Disclaimer: Use of recommendations cited on this blog is at personal monetary risk, the owner of the blog does not accept loss as a result to the use of this information.
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