The Composite index of the Nigerian Stock Exchange extended it losing strike today as highly capitalized stocks shed value on improved volume of trades. The global Stock markets were mixed as Americans chose their president today. The outcome of the election will determine the next face of economic and financial markets direction as the ongoing global economic transition will demand more concrete fiscal and monetary policies to boost trades and revive dying economies. The world central banks monetary policies coup of keeping rate unchanged will start fading way to charting a new economic policies to boost productivities at all level.
The NSE All Share Index shed 523.27 points to close today at 26,364.27 points, from an opening figure of 26,885.54 points, representing a 1.95% on a relatively improved volume of transactions to continue the bearish run that commenced in the earnings season month, due to weak market and economic fundamentals. Similarly, market capitalization of listed equities shed N180.13 billion close at N9.08 trillion from opening value of N9.26 trillion, representing 1.95% decline in value. The negative position NSE All Share Index Year-to-Date returns deep farther to 8.08%, just as Market Capitalization has declined YtD by N612.46 billion.
Market breadth today was negative and negative as the number of decliners outpaced advancers in the ratio of 26:13 on a strong bearish mood of buy position of 6% of total volume traded, while selling volume for the day was 94%.
Volume of trades increased by64.24% from 115million shares traded in the previous session 189 million shares traded today, while value recorded N1.60 billion as against N1.16 billion, representing a 38.27% incline from the previous trading level. Transactions in the shares of CHAMS, UBA, TRANSCORP, GUARANTY, and ZENITHBANK topped the activity chart as most traded equities by volume. NSEASI and all sector indices closed in red zone save for NSECNSMRGDS which closed upbeat with 0.52% while NSEASEM remained flat.
Playing the equities market seems to be getting more technical than it was during the earnings season, just as it appears equities are currently going through a period of market correction by giving up some of the price increases recorded, particularly while investors positioned for the nine months earnings expectations.
Currently, smart traders and investors may be sitting on the fence, the idea being to allow the market forces determine the next direction or trend. Technical tools like resistance and support will be of great help in this kind of market movement to manage risk.
Although we recommend positioning for both cash and scrip dividend, we are of the opinion that this could be achieved at cheaper prices.
Nevertheless, investors with high level of risk tolerance may start positioning in tranches from now. But to avoid dividend disaster of 2017 which is already underway, join us at the one-day INVEST 2017 Summit, slated for Saturday, December 3, 2016, at the Ostra Gardens, Alausa, Ikeja, Lagos
DAILY TIME FRAME OF NSE ASI
The NSEASI on a daily time frame continues a downward trend to break down the symmetrical triangle chart pattern and the strong support level of 26,400 to ride on the three-week bearish run. The momentum and trending ability of the market on a daily time frame is weak as ADX is below 20. The probability of the market remaining in this direction for the rest of the week is high as momentum is low. Once the doted trend line is broken it confirms weaker market. The index is trading below its 20 and 50-Day moving average. Traders should watch out.
Looking at technical indicators, the NSEASI closed below the lower band by 12.5%. Although prices have broken the lower band and a downside breakout is possible, the most likely scenario is for the current trading range that NSEASI is in to continue, while MACD has been bearish for more than three weeks. RSI is reading 20.48, which is at oversold region. Money flow index just turn, indicating that funds just started entering the market. CCI, RSI and SO are signaling buy position, while MACD is indicating sell.
Analyst Opinion; Reversal is imminent as smart money cash on the market correction to reposition their portfolio for end of the year and seasonal trend pattern.