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

Last week, the benchmark FTSE All-Share Index (.FTAS) traded in a thin range of ~3826 - 3868 for the entire week ahead of the long Easter weekend. The index settled at 3849.24 with a marginal gain of ~0.18 percent for the week ending April 01, 2021. On the weekly chart, prices sustained above a downward sloping trend line breakout. The momentum indicator RSI (14-period) is trading at ~61 levels and seems supportive of an upside movement. Prices are well placed above trend-following indicators 21-period and 50-period SMA, providing further strength to the index.

As per the latest quarterly economic commentary published by the UK’s Office of National Statistics on March 31, 2021, there was a 9.8% contraction in the UK economy in 2020, the largest decline since "The Great Frost" of 1709, thereby creating some pressure on the index. However, the GDP in the last Quarter of the year (Q4, Oct to Dec) increased by 1.3% and seems to be an encouraging sign for the index.

Global Markets Wrap-Up

Last week, Wall Street edged higher and the two benchmark indices ended in the green. The S&P 500 broke the major psychological resistance level of 4000 for the 1st time and made a new lifetime high of 4020.63. The index settled near the lifetime high at 4019.87 with an overall weekly gain of ~1.14 percent while NASDAQ Composite Index settled at 13,480.106 with an overall gain of ~2.60 percent for the week ending April 01, 2021.

There were mixed data events reported by the US Bureau of Labor Statistics last week. The US weekly claims for jobless benefits increased last week to 719,000 from 684,000 the prior week. However, the jobs data for the non-farm payrolls increased by 916,000 in March 2021 which supported the market sentiments in the latter half of the week and offsetted the impact of higher jobless claims data.

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 FTSE listed stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss Meggitt PLC (LON: MGGT) and Card Factory PLC (LON: CARD) for the next 2-4 weeks duration:

Meggitt PLC

Meggitt PLC (LON: MGGT) is an engineering company engaged in designing and manufacturing high-performance components and sub-systems for the aerospace, defense, and selected energy markets. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

MGGT’s price broke the major resistance level GBX 481 on March 15, 2021, and since then hovering around the breakout level. Prices broke the resistance level after more than 2 months of consolidation which indicates an upside movement for the stock. Now the next major resistance level appears at GBX 570 and prices may test that level in the coming sessions. A decisive breakout above GBX 570 accompanied by the volume may extend buying in the stock till the next resistance level of GBX 607 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~64 levels and indicating a positive trend for the stock. The weekly volumes also seem supportive of an upside movement. The CMP is above the 21-period and 50-period SMA, further providing support for an upside movement.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Meggitt PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Meggitt PLC is looking technically well-placed on the chart and we have a ‘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:

Card Factory PLC

Card Factory PLC (LON: CARD) is a specialist retailer engaged in greeting cards, dressings, and gifts. The company operates through two divisions i.e., Card Factory and Getting Personal and runs through a chain of approximately 800 card factory stores. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

CARD's prices broke the major resistance level of GBX 60.60 on February 03, 2021, and for the past 2 months they are sustaining above the breakout level. Recently prices started to move upside after one month of consolidation and for the short-term (2-4 weeks), we can expect continuity of an upside trend. The next major resistance level for the stock is GBX 102 and prices may test the level in the coming sessions.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~74 levels and still indicating a positive trend for the stock. The weekly volumes seem supportive of an upside movement. The CMP is above the 21-period and 50-period SMA, further providing support for the positive trend. (too much of upside movement mentioned in the entire report).

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Card Factory PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Card Factory PLC is looking technically well-placed on the chart and considering the stock is trading near to the 52-week high, 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:

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.

Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note: 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.

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.

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.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is April 01, 2021.

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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