2014 Outlook and analysis

For H1 2014, I expect a positive outlook for the equities market due to expected release of full year results with corporate actions and the msci rebalancing coming on stream, this should boost foreign participation in this market. I have a muted sentiments towards banking, i prefer the non banking stocks.


One of the technical strategies I will be looking at for 2014, its called the Pivot strategy, you can google this up, i have also set the price target i will be looking at for the top 40 stocks. I have attached the sheet in pdf (see link: http://www.stockmarketnigeria.com/forums/nigerian-stock-exchange/2991-technical-analysis-edge.html#post196308). I have sorted the securities based on the highest to lowest expected return, this securities will be my analysis framework for 2014 except i get a request to analyse specific securities.

Please send me an email should you require further clarification.

Thank you

I have attached a First bank Chart, to illustrate some basic concepts,the chart is a 8 months chart and from that chart we can see that in the last 5 months we have being in an uptrend, as described by the Andrew median line or the channel.

We should not forget that when we have uptrends like this we also have mini- pullbacks, waiting for these will help us to time our entry and make us take trades with high probability of success.

Also note that each securities has its own cycle, understanding this will also be an added advantage.

How to trade:

Going forward i will be willing to buy half of my position at 15 naira and load the other half at the lower end of the trend-line which is the open of the year depending on market condition.

A break above the upper trend-line which i envisage will happen will signal another set of upward movement.

Below are the monthly levels i was looking at for February:

R3 18.94
R2 17.57
R1 16.36
Pivot 14.99
S1 13.78
S2 12.41
S3 11.2

Market is currently trading around the monthly Pivot, one of the reasons am buying. I will update as deem fit.

Thank you.

Typical example

Looking at the price chart above,the chart is a 6-month sterling bank,there are two horizontal lines drawn on the chart,the first resistance linewas broken mid-january 2010 and price has not retraced to this level,but the second resistance line was broken mid-february and it is being tested the fourth time,see how prices kept bouncing off this point,this line is resistance turned support.this is a very good illustration.

Pricinple of Price movement

Principle of price movement

I will like to talk about what I believe is one of the foundations of Technical analysis, it is key to understanding technical analysis, which is how price moves, this principle is universal it can be applied in any market, but it does not always happen but it occurs frequently, but with skill and experience you will be able to master it.

Price moves vertically then diagonally or horizontally after which you can expect a Continuation or Reversal. Vertical moves define trend. Diagonal moves continue with the momentum. Horizontal moves consolidate the conquest.

As price moves it will hit a ceiling (resistance) or a floor (support) which it can not penetrate with ease. At these levels you will see on your charts turning points in the price. When the price penetrates these levels we have a breakout. When we have a breakout of the resistance level the price will initially accelerate away from it very quickly. It should then make a parabola type u-turn and retest the resistance level which now acts as support and vice versa. Illustration below.

This formation is something that will take place over several candles/days. Sometimes the parabola forms a hook, which will require a different approach, see illustration below.

Sometimes it fails or doesn’t break the support/resistance totally and the support/resistance looses significance, see illustration below.

If you understand this basic concept, then what is required is skill and experience in playing them. In subsequent post I will be drawing up illustrations to further buttress this point.

Opportunities......

The time has come for massive buying opportunities in the NSE,this kind of opportunities present itself last 6-7months ago,my recommendations are listed below as usual based on technicals
-Firstbank
-Diamond
-fidelity
-intercontinental
-Ibtc

N.B. trade at your own risk,but such opportunities can return 50% in 6months

More to come.....

Update and Positions

Guess you all had a nice weekend,I will like to update my position on the NSE index(Nigeria Stock exchange) and also tell you about my positions.

Firstly I will like to talk about my positions,I am presently in Fidelity,Gt-assurance,Oceanic and

Platinum and am thinking of holding them for some time.On the index we are gradually approaching 30,000 where our W-formation will be completed.And i expect the index to close higher on Monday.

I have attached a chart of the index for illustration.

My pick for the week ahead is Sterling bank,looking at first-inland.

NSE FORECAST

In my technical analysis of securities,I usually do a top down or bottom up analysis based on market conditions,but I will do a top-down analysis now.

Looking at the NSE index I can say that the market is about resuming the up-trend,don't let us forget that the crash of the market was just a major retracement of the long term uptrend.

Reasons why I believe it is resuming up-trend:

-Formation of the W-formation(also called double bottom) which is a significant reversal pattern,I have highlighted it in the chart attached

-Since the index touched 20,000 as earlier said,subsequent swing lows has been higher(higher lows)

Targets:

-Confirmation of resumed up-trend is when the index is able to break 30,000.When it breaks 30,000 it will retrace before moving higher.

Please note:It will not be an easy ride the second bottom might be extended,but this is how it will look like when looking at the big picture,this analysis is for long term investment horizon,but we should get to 30,000 before the year runs out.


As earlier said,UNHOMES and AFRIBANK are very good stocks to buy now.






Humble regards.

My Position

Sorry it has being a while,I am extremely busy,I believe I would be able to resurrect this blog.
I will like to share my present positions with you and a postion I am planning to take this morning when the market opens.

Recently I bought UNHOMES and STDINSURE and I am buying AFRIBANK today because price is at support,am sorry I can give the detailed analysis but I will do that as the blog grows.I looking at 2 weeks to 2months horizon depending on market conditions.

Humble Regards.

Comeback

Sorry its being a while,I have been busy,I hope I will be able to update you as regards my positions.Presently I am in Sterling bank,Platinum and Aiico,am also considering firstbank and Zenith seriously,when I am chanced i will update my charts,this is the best time to make money in NSE,pls dont miss out.Merry Xmas

Investor's Sentiment Part 1

First of all, when people talk about investor sentiment, or market sentiment, they are referring to the aggregate attitude in the investment community. Essentially, investor sentiment is an approximate measurement of the stock market's attitude at a given time - it could be overly bullish, bearish, or somewhere in the middle. This type of analysis would usually be employed by a short-term trader or technical analyst trying to reap profits from short-term movements in stock prices.
In the analysis of securities to trade,the most important thing to consider after considering other things is the investor's sentiments.No matter how sound your analysis is both fundamentally and technically if you refuse to consider what investors are doing then you might be in for a goof,for instance my analysis of first inland and flour mills was faulty due to partial lack of investor's sentiment on these stocks but i have rectified that.
Infact it has being found that traders who had a background in psychology are better traders because they can study human behaviors to trading(investor's sentiment inclusive).
How to decipher investor's sentiment
Knowing investor's sentiment requires skill and research,in my own opinion every sentiment is based on either experience or information,for instance the financial statement is an information that determines bias,the charts are also pictorial information that investor's can use to determine their bias(whether to be long or short).
In part 2 I will discuss how technicals and fundamentals reveal investor's sentiment.

Update

I will like to apologize for not updating this blog,I have got many thing on my hands and alot of research has also being going on to fine-tune my analysis.
The first inland trade and flour mills trade was a technical goof,the only advantage is we can turn it to long term.
I will try my best to always update the blog as at when due,thank you

Flourmills Analysis

Background:

Flour Mills of Nigeria Plc (FMN) is one of the largest and most successful industrial conglomerates in Nigeria.

The Company’s activities span flour milling, pasta manufacturing, port operations, cement trade & manufacturing, fertilizer blending, bags & other packaging materials manufacturing and agricultural business.

Since its incorporation in 1960, FMN has not only survived all macroeconomic challenges but also grown into a market leader with popular and highly recognizable brands, an extensive distribution network, a turnover in excess of N90 billion (USD 700 million), strong profitability, healthy Balance Sheet and a highly skilled workforce.

FMN has been listed on the Nigerian Stock Exchange since 1978. With a broad ownership base of approximately 67,000 shareholders, it is constantly ranked amongst the top 25 companies in terms of market capitalization. In 2005 the Company successfully completed a N5.24 billion (US$40.7 million) rights issue which was oversubscribed by 8%.

FMN group employs approximately 5,200 staff with diverse ethnic, cultural and religious backgrounds who work harmoniously together to deliver superior value to Nigerian consumers nationwide.

Analysis:

Looking at the chart attached,we see that the price is in a downward range,with the downward channel in place price tested labelled areas 1 and 2 before going south,tested 3 and went up to 4 before going down to 5.
If you observe the movement,that its ranging and going down.Presently price touched 5 and its moving up(the circled area consist of a reversal candle),we are looking to catch the move up.Also if you look at the second attachment price is turning at a resistance(turned to support) of 12/7/2002 as seen below.




Recommendation/Conclusion:

- Buy flourmills at the present price and our first target will be 40 naira,personally this is a good price to buy.




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

New Season/Update

Happy New yr to everybody,we hope this year will bring better ROI(returns on investments),Concerning the wapco Trade we can exit now or sell 80% of our position,but for the first inland we hold it.

Update on Wapco and Firstinland

The market closed higher than the previous close,and divergence can be seen on the Wapco chart,with firstinland around our missed entry point.

Reccomendations:
- Conservatively.we can buy at the high of yesterday's(15/12/08) close(1 or 2 naira above) on both equities or buy at the present price now,if you check the firstinland equities chart the market is around the missing entry point shown on the previous 1stinland chart you can check previous post,so i think its a good place to place an order.
- For the fearful ones you can wait till next year to buy after the new year.


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.

Technical analysis of FIRSTINLAND BANK

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 FIRSTINLAND this year is around 13.2 naira and that was in early March, and since then it has depreciated to 5.98 naira as of writing (loss of 7.22 naira).

Analysis:

Our analysis is based on the attached daily price charts of FIRSTINLAND 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 late April to late August, also from late August to early November. Another upward trend line from mid march across late April, and we note where the prices bounced off, we will be able to determine our likely buy entry point.

Looking at the upper red trend line, price broke it on the fourth attempt@ around 5.5 naira and after breaking it formed a bearish candle, price retraced by 50% before moving back up, the break is an ideal break-retrace-continue, presently the price is around the first breakout, impatient trading will be to enter at the break of the upper trend line (red).Attached below is the graph.

RECOMMENDATIONS:

-With reference to where you have missed entry point on the graph, you can buy at the present price (around 5 naira), and looking at price reaching around 6.5 naira (the upper black trend line) and see how price action will play out there, the other alternative is to buy at the high of the breakout candle (marked X on the graph: around 6.2 naira).

- 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.

Technical analysis of WAPCO

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 3^rd and 4^th 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.