The increasing fear and declining investors’ confidence on the market and the economy as the negative macro-economic indicators are deepened in their red terrain as the consumer price index for October stands at 18.33 percent from September 17.85 percent according NBS beating analysts for forecast despites harvest season. The government and its economic management team have continued to emphases that investment so far in agricultural food prices will fall immediately harvest time comes, now that we are in the season prices of food stuffs are still high as revealed by the inflation rate weakening the purchasing powers of the people on a rising cost of doing business and living.
The falling earnings of Nigerian is affecting the listed companies as high cost of operation cannot be passed to consumers as the demand for products and services are falling as a result of low disposable income. It’s the company earnings that drive price in the short to longer term and if the earnings are negative what do you expect of the stock market, the government should revisit all their policies and reverse the reversible in adopting policies that will reflate the economy again in urgent manner to safe Nigerians from this hardship and protect investors.
Meanwhile the composite index NSEASI shed 129.75 basis points to close yesterday at 25,857.06 points, from an opening figure of 25,986.81points, representing a 0.50% decline on a relative improved volume of trades to continue the bearish run, as demand for stocks are diminishing as a result of weak economic and market fundamentals. Similarly, market capitalisation of listed equities shed N44.67 billion to close at N8.99 trillion from the opening value.
The NSE All Share Index Year-to-Date negative returns sank deeper to 9.72%, just as market capitalization has declined YtD by N949.54 billion.
Market breadth yesterday was negative as the number of decliners outpaced advancers in the ratio of 21:11 on a bearish mood, with buy position improving to 27% of total volume traded, while sell volume for the day decline to 73%.
Volume of traded increased by 8.13% from 160 million shares worth N1.11billion in the previous session to 189 million units valued at N905 million, representing a 18.47% decline from the previous trading level.
Transactions in the shares of STANDARD INSURANCE, UCAP, FBNH, ETERNA, and UBA topped the activity chart as most traded equities by volume.
NSEASI and all sector indices were in red, except for the NSE Banking, NSE Consumer Goods, NSE Pension and NSE Mainboard, while NSE Asem was flat.
DAILY TIME FRAME NSEASI
The general market direction is said to make up 50 percent of a stock’s move. Market tops always coincide with sign of weakness in the major market indices. This weakness is defined by days of heavy selling. When the market index closes a day lower when the volume for that index increases over the previous day, the market is said to be under ‘distribution’. Many of these distributions (four or five days) in a short amount of time, say in a few weeks, for example, is cause for concern.
The NSEASI on a daily time frame continues a downward trend, outside the the symmetric triangle chart pattern to break down the strong support level of 25,865.31 on a negative market forces which if not change this morning as market open may further break the red line at 25,535.30. The momentum and trending ability of the market on a daily time frame is strong as ADX is above 20, meaning the bear is in charge. The possibility of the market remaining in this direction for the rest of the week is high unless there is positive news in the market. Again once the red line is broken it confirms a weaker market. The index is trading below its 20 and 50-Day moving average. Traders should watch out.
NSEASI has broken the 61.8% Fibonacci Retracement (23,308.84, 31,121.14) heading to 100% which is at 24,708.39 Please note that the Fibonacci covers the highest and lowest trading points in 2016. Relative Strength Index’s (RSI) is reading 17.88 and Bollinger Band signaled buy.