This report is an updated version of the report published on 12th April 2022 at 08:17 AM GMT+1.

FTSE All-Share Index (.FTAS) Market Round-Up

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a marginally positive note and maintained its momentum. The index made a high of 4258.23 during the week and settled at the same level with a gain of ~1.40% for the week ending April 08, 2022. The recent week started on a negative tone and prices are trading around the 4200 level. On the technical front, prices are approaching the upper band of an ascending channel pattern, indicating an upside direction. On a weekly chart, the leading indicator RSI (14-period) is above mid-point at 55.60 levels. Prices are sustaining above the trend-following indicators 21-period SMA and 50-period SMA, further supporting a positive stance. On the macroeconomic front, the lack of any important data during the last week further supported the index to retain at the higher levels.

Global Markets Wrap-Up

Wall Street witnessed a bearish movement last week and the two benchmark indices ended in the red. The S&P 500 settled at 4488.28 with a loss of ~1.27 percent, while NASDAQ Composite Index settled at 13710.996 with a loss of ~3.86 percent for the week ending April 08, 2022. The market remained in negative territory despite the release of positive economic data during the week such as ISM Services PMI and US initial jobless claims.  

Having understood the US market performance over the past one week, taking cues from major global news, and based on our technical analysis of the FTSE All-Share Index (.FTAS) for the upcoming week, now let us have a look at the two LSE listed stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Chrysalis Investments Limited (LON: CHRY) and MJ Hudson Group PLC (LON: MJH) for the next 2-4 weeks duration:

Chrysalis Investments Limited

Chrysalis Investments Limited (LON: CHRY) is a Guernsey-based closed-ended investment company that aims to generate long-term capital growth. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart) 

CHRY's prices recently broke a crucial resistance level of GBX 184.85 and are hovering around the breakout level, indicating the possibility of an upside movement hereon. Now the next important resistance level for the stock appears at GBX 216.00 and prices may test this level in the short-term (2-4 weeks). A further movement above GBX 216.00 backed by volumes may extend buying in the stock to GBX 226 level.

Technical Indicators Analysis (On the Daily Chart)

On the weekly chart, RSI (14-period) shows a reading of 57.58, indicating a positive momentum build-up at the current levels. The volumes also seem supportive of an upside movement. The CMP is above the trend-following indicators 21-period SMA and 50-period SMA, further supporting an up-move.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Chrysalis Investments Limited is looking technically well-placed on the chart, and we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite on upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

MJ Hudson Group PLC 

MJ Hudson Group PLC (LON: MJH) is a Jersey-based asset management consultancy company that focuses on the area of alternative investments. Noted below are the key price indicators for the stock: 

Price Action Analysis (on the Daily Chart)

MJH's prices started to recover from the lower after forming a positive divergence with the RSI (14-period), indicating the possibility of an upside reversal. The prices recently broke a downward sloping trend by the upside, further supporting a positive bias. Now the next important resistance level for the stock appears at GBX 43.50 and prices may test this level in the short-term (2-4 weeks). A further movement above GBX 43.50 backed by volumes may extend buying in the stock.

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, RSI (14-period) shows a reading of 55.13, indicating a positive momentum build-up at the current levels. The volumes also seem supportive of an upside movement. The CMP is above the trend-following indicator 21-period SMA, further supporting an up-move; however, below the 50-period SMA which may act as the resistance level.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that MJ Hudson Group PLC is looking technically well-placed on the chart, and we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the FTSE All-Share Index and listed stocks’ prices.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Note 1: Investors can consider exiting from the stock if the Target Price mentioned as per the technical analysis has been achieved and subject to the factors discussed above. 

Note 2: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point. 

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1. 

The reference date for all price data, volumes, technical indicators, support, and resistance levels is April 11, 2022. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

GBP: British pound sterling

GBX: British pence sterling

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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