Market Sentiment Analysis for WE 010612

Sentiment Analysis Report: W/E 010612 Market Slips into Reversal Mode
Saturday, June 02, 2012/ Proshare Research

The Diagnosis Analysis of market activity in the week ended June 01, 2012 technically revealed the sustained weak market optimism and continued sell tendency in the investors trading pattern as against the moderate profit-taking tendency amid falling market optimism observed in the previous weeks performance. Further analysis would indicate that the market has slipped into a reversal mode technically as the market consecutively recorded losses over a 4-week period, plunging below its 22,000 pyschological line on the back of an unrellenting sell tendency amid increased volatility. In the week just ended, sustained weak bargain tendency was observed across the major sectors as price correction gained tempo, mainly towards big and medium CAP stocks due to their recent overbought postures. However, fresh and renewed bargain drive was observed towards bottomed-out 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 still experiencing price correction 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 growing activity level as sideline attendants appeared to take positions subtly, yet remain a significant feature. Prescription and the likely expectation in the coming periods: The depressed and oversold postures of value and liquid stocks accross the board remain the most likely game changers for the market in the coming period(s); due in the main, to their attractiveness while the market RSI appears deppressed as well. The point must be made that while the cycle of negativity has declined, the absence of positifve news in and to the market to drive impressive bargains would continue to give support to speculative and pessimistic activities in the coming periods - a pointer to further market price volatility in the coming period.

Market Diagnostic Score Card

Market Gauge Scores Remarks The negative posture was significantly impacted by activities towards big and medium cap stocks across the sectors. Weak bargain and continued sell tendency was observed when compared to -0.66% loss recorded in the previous week. This confirms the increase in pessimism and continued price correction witnessed in the week which further reflects the weak bargain The market RSI shows that market is gaining reversal momentum while it may move into weak posture. Market RSI closed lower as against previous week of 52.99. More importantly, this indicates further that market has slipped into a REVERSAL mode. The trend may persist due to lack of positive news to driver bargains. Illiquidity of some stocks, low purchasing power, low risk appetite, feeble confidence and wary posture of investors reflected here significantly- This is considered too high- an improved posture against 63.97% observed in the previous week.

ASI

-1.21%

Market Breadth

Negative

Market RSI

42.88 (weak)

Indecision level (%)

60.29%

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Market Sentiment Analysis for WE 010612 There is an increase in the optimism level of the market against the previous outlook of 10.29%. However, there was weak bargain tendency as the optimistic activity on the bourse closed lower at 31.74%, against total market activity, from 35.82% recorded in the previous week. There is slight decline in pessimism level in the market - an improved posture over the previous outlook of 53.74%. This shows that 22.79% of market participants in the week were pessimistic about the market.

Optimism Level

(%)

16.91%

Pessimism Level

(%)

22.79%

Proshare Research

Technically, market sentiments during the week favoured liquid and active stocks of Medium and Large CAP categories in Healthcare, Industrial Goods and Oil & Gas sector(s) in that order reflecting the sectors investors patronised in the week. On the other hand, it was observed that market sentiments moved against the Conglomerates, Services, ICT, Financial Services, Construction/Real Estate and Agriculture sector(s) as sell sentiment was stronger in the sector(s).
Sector Healthcare Industrial Goods Oil & Gas Natural Resources Consumer Goods Conglomerates Services Performance 4.85% 0.64% 0.36% 0.00% 0.00% -0.52% -0.73% CADBURY, DANGFLOUR, UNILEVER, PZ, HONYFLOUR, INTBREW UACN, AGLEVENT REDSTAREX, RTBRISCOE, LONGMAN, IKEJAHOTEL NCR FCMB, ZENITHBANK, SKYEBANK, FIDELITYBK, GTASSURE, WAPIC, STERLNBANK, CONTINSURE, GTBANK, CUSTODYINS, UBA Sector Movers NEIMETH, GLAXOSMITH, FIDSON, MAYBAKER ASHAKACEM, BAGCO, BERGER, CCNN JAPAULOIL Direction & Trading Psychology Renewed bargain sentiments observed in the sector(s) due to depressed and attractive prices that followed the heavy sell tendency observed in the previous week Indecisive (No active transactions) Sell pressure halts as bargain drive gained tempo in the sector(s) Mild sell tendency observed in the sector(s)- Speculative trading pattern dictates the direction as profit taking tendency sets in Active sell tendency observed in the sector(s) after prolonged flat positions

ICT

-0.82%

Financial Services

-0.87%

Continued and Growing sell tendency observed in the sector(s) as profiteering dominates

Construction/Real Estate

-1.53%

UAC-PROP, JBERGER

Heavy sell tendency observed in the sector(s)- Speculative trading pattern dictates the direction as profit taking tendency sets in Continued and Growing sell tendency observed in the sector(s) as profiteering dominates

Agriculture Proshare Research

-2.10%

LIVESTOCK, OKOMUOIL

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.

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Market Sentiment Analysis for WE 010612

THE BIG VOLUME

TRANSCORP experienced continued bargain tendency and sustained positive sentiments

in the week to record +7.8% gain as against +23.3% gain recorded in the previous week - the stock appears to be losing uptrend momentum amid weak performance even as the stock recorded 73.21% gain in the last five weeks. The stock remained in bullish trend, trading above both its short and long term postures as revealed by price moving average while the bullish posture of MACD confirms same. However, the candlestick pattern (Black Marubuso) revealed a strong sell tendency in the last session as bargain drive appeared weak due to the overbought posture of the stock. To buttress this further, the sharp fall in price uptrend momentum as revealed by RSI confirms this; just as a similar trend was observed in money flow index (MFI) as distribution dominated the trading pattern, buttressed by the huge bearish volume recorded. Technical Conclusion on Sentiments: The stock may extend the downtrend further as short-termist (profit-takers) would appear to be in control of the stock. The chance for a short term price correction has increased due to the prolonged overbought posture of the stock. The chart below shows MACD, candlestick, RSI and volume analysis.

GUARANTY experienced continued mild sell tendency and low bearish sentiments as the stock maintained gradual downtrend in the week to record -3.2% loss as against -1.3% loss recorded in the previous week a sustained weak bargain drive was observed as the stock booked -10.86% loss in the last four weeks while the outlook revealed some price correction after the stock recorded a 13-month high of N17.25kobo on May 3rd 2012. Nevertheless, the stock remained bullish in long term while maintaining a neutral posture in short term period, indicating that the stock is yet to attain full bearish mode as revealed by its price moving average - further indicating that the stock is likely to maintain its old support level (N15.40). However, the last candlestick pattern (inverted hammer) gives a reversal signal, revealing the presence of bulls as the trend sets to retrace for possible short term rally.

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Market Sentiment Analysis for WE 010612

The sharp upturn in RSI buttresses this further as this suggests an increase in uptrend momentum while a similar trend was observed in both accumulation and money flow index (MFI). Technical Conclusion on Sentiments: There is a high possibility that the stock will extend its uptrend in coming period as the emerging sentiments appear positive while we expect the bulls to hold their positions as stock is likely to maintain its old support level at N15.40. The chart below shows MACD, candlestick, RSI and volume analysis.

THE GAINERS MAYBAKER experienced active bargain tendency and positive sentiments in the week to record +14.60% gain against -14.60% loss recorded in the previous week - price retracement was observed as the stock regained the loss recorded in the previous week after hitting an all time low at N1.29kobo (recorded on 24 May 2012). The neutral posture of the stock in short term as revealed by its price moving average indicates the stock is yet to attain bullish mode as the stock still appears depressed in an oversold region as revealed by RSI, indicating moderate possibility to extend the uptrend. In addition, the bullish position of MACD reveals the active bargain tendency of the investors, further buttressing the moderate possibility of extending the uptrend as noted above while the Bollinger bands appeared narrower, suggesting possible sharp price movement in the near term. Also, accumulation was witnessed in the week with growing volume, buttressing active bargain as noted above while money flow index (MFI) closed northward. Technical Conclusion on Sentiments: There is a moderate possibility for the uptrend to continue as the stock remains depressed in an oversold region. Meanwhile, the price retracement is not in doubt as short-termist (profit-takers) retain control of market. The
chart below shows MACD, candlestick, RSI and volume analysis.

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Market Sentiment Analysis for WE 010612

FIDSON experienced an improved bargain drive and positive sentiments in the week to record the +10.0% gain as against -5.9% loss recorded in the previous week - an improved bargain posture was equally observed as the stock experienced retracement, after establishing support at N0.80kobo. Be that as it may, the stock closed neutral in both short and mid-long term as revealed by its price moving average, indicating the stock is yet to attain bullish mode due to the weak bargain posture observed. Also, the bearish posture of MACD further affirms the weak bargain position noted above while the low volume trend buttressed this further amid sustained distribution and southward trend in the money flow index (MFI). Technical Conclusion on Sentiments: The likelihood of the stock extending the uptrend remains low due to the sustained weak bargain drive amid the southward posture of its money flow index. The chart below shows MACD, candlestick, RSI and volume
analysis.

THE LOSERS

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Market Sentiment Analysis for WE 010612

FCMB experienced sustained sell tendency and growing bearish sentiments in the week to record -15.3% loss as against -6.0% loss recorded in the previous week a strong reversal trend was observed as the stock continued to plunge amid weak bargain drive to record -35.48% loss in the last 4weeks, after hitting an 8-month high at N5.58kobo. The bearish position of MACD further reveals the weak bargain position while the stock remained bearish in short term period as revealed by its price moving average. Also, the stock appears depressed to close below oversold line with a growing falling momentum as revealed by RSI - the low volume trend suggests lacklustre trading as investors continued to sell their positions. The prolonged negative trend in the money flow index buttressed this further. However, we observed a possible trend reversal in the last session with moderate reliability as suggested by the candlestick pattern (graveyard doji). Technical Conclusion on Sentiments: The falling trend is likely to reverse as the reversal signals indicated above suggests. Yet, this requires a bullish opening confirmation in the next session and we expect the bulls to hold their positions. However, if the reversal attempt fails, the stock may record new low for the year. The
chart below shows MACD, candlestick, RSI and volume analysis.

NASCON experienced continued sell tendency and sustained bearish sentiments in the week to record -14.1% loss as against -22.4% loss recorded in the previous week the price correction continued to dominate trading pattern in the week as strong sell tendency was observed towards the stock. The stock has booked -33.33% loss in the last two weeks, after recording an 11-month high of N6.30kobo on 18th May 2012. The stock appeared depressed to close below oversold region as revealed by RSI while the position of the MACD at oversold region buttressed this further. Meanwhile, the stock closed neutral in short term period and remained bullish in mid-long term period, indicating the stock is yet to attain a full bearish mode - an indication that the price correction trend may continue.

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Market Sentiment Analysis for WE 010612

Also, the bearish volume recorded throughout the week reflected the unrelenting sell tendency as noted above while a cash outflow persists, as revealed in the money flow index (MFI). Technical Conclusion on Sentiments: The stock has a moderate possibility of extending the price correction in the coming periods as investors sentiments toward the stock remained bearish. However, a price pull-back is not in doubt as the depressed posture of the stock at the oversold region could incite possible bargain. The chart below
shows MACD, candlestick, RSI and volume analysis.

Due Diligence
Valuation/Investment Ratio Book Value (N'm) Book Value/Per Share Price to Book EPS PE Profitability ROE (%) PAT Margin (%) PBT Margin (%) Revenue Growth Proshare Research 3.35% 100.78% 118.45% -22.44% 7.70% 36.70% 46.34% 22.02% -1.12% -3.79% -3.79% -3.45% 5.63% 6.57% 9.38% -7.16% 3.30% 20.71% 22.24% -67.71% 37.24% 22.25% 32.17% 8.85% TRANSCORP 15,514 0.60 0.00 0.02 48.25 GUARANTY 250,846 8.52 0.00 0.66 23.15 MAYBAKER 3,118 3.18 0.00 -0.04 -39.48 FIDSON 5,525 3.68 0.00 0.21 4.24 FCMB 124,167 6.64 0.00 0.22 16.46 NASCON 5,784 2.18 0.00 0.81 5.17

Price Trend
Price Performance
52 Weeks High 52 weeks Low 3 Month's (%) 6 Month's (%) 12 Month's (%) TRANSCORP 1.13 0.50 94.00% 73.21% 7.78% GUARANTY 17.25 11.64 7.65% 6.97% -6.70% MAYBAKER 4.05 1.23 -48.73% -25.79% -65.19% FIDSON 2.08 0.61 -3.30% -22.81% -54.87% FCMB 7.80 3.60 -13.25% -9.32% -53.61% NASCON 6.70 3.65 5.00% 5.00% -34.38%

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Market Sentiment Analysis for WE 010612 Price Trend Current Price 15 Days MA 30 Days MA 50 Days MA 200 Days MA Proshare Research 0.97 0.80 0.67 0.61 0.64 15.19 15.78 15.99 15.33 14.05 1.41 1.36 1.63 1.85 2.53 0.88 0.87 0.90 0.90 1.06 3.60 4.45 4.90 4.69 4.41 4.20 5.40 5.49 4.96 4.35

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