This report is an updated version of the report published on September 06, 2022, at 08:15 AM GMT+1.

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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a negative note and continued its weak momentum. The index made a low of 3919.160 during the week and settled at 3998.480 with a loss of ~1.91 percent for the week ending September 02, 2022. The recent week started on a slightly negative note and prices are hovering around the 4000 level.

On the technical front, prices recently started to move upside after taking support from a rising trendline. On the weekly chart, the leading indicator RSI (14-period) is showing a reading of 44.27 and the current market price (CMP) is below the trend-following indicators 21-Period SMA and 50-Period SMA, which may act as the resistance levels.

As per the Office for National Statistics, UK Gross Domestic Product (GDP) growth rose by 1.3% in Q4 (Oct to Dec) 2021, where all four countries (Wales, Scotland, England, and Northern Ireland) in the UK had positive QOQ growth.

Global Markets Wrap-Up

Wall Street inched lower last week as well and the two benchmark indices ended in the red. The S&P 500 settled at 3924.26 with a loss of ~3.29 percent, while the NASDAQ Composite Index settled at 11630.864 with a loss of ~4.21 percent for the week ending September 02, 2022. The indices witnessed downside movement despite the release of improved Unemployment Insurance Weekly Claims economic data during the week. 

Having understood the US market performance over the past week, taking cues from major global news, and based on technical analysis of the FTSE All-Share Index (.FTAS) for the upcoming week, now have a look at the two LSE-listed stock picks from the technical standpoint. Noted below are the recommendations based on entry price, target prices, and stop-loss for Bens Creek Group PLC (LON: BEN) and Rockhopper Exploration PLC (LON: RKH) for the next 2-4 weeks duration:

Bens Creek Group PLC

Bens Creek Group PLC (LON: BEN) is a United Kingdom-based company engaged in the operation of metallurgical coal mines. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart) 

BEN’s prices recently broke a downward sloping trendline by an upside and are trading above the breakout level, indicating the possibility of further upside movement. Now the next important resistance level for the stock appears at GBX 44.00 and prices may test this level in the short-term (2-4 weeks). A further movement above GBX 44.00 backed by volumes may extend buying in the stock. 

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, the RSI (14-Period) is moving above the midpoint and showing a reading of ~53.91, indicating the possibility of further upside movement. The volumes seem supportive of an upside movement. The CMP is above the trend-following indicator 21-period SMA, further supporting an up move; however, the 50-period SMA is moving above the CMP, which may act as a resistance.

General Recommendation: 

As per the above-mentioned price action and technical indicators analysis, Bens Creek Group PLC is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decisions should be made depending on an individual’s 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 recommendation is as follow:

Rockhopper Exploration PLC

Rockhopper Exploration PLC (LON: RKH) is a United Kingdom-based company engaged in the exploration and production of oil and gas. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart) 

RKH's prices were recently given a falling channel breakout by an upside and are trading above the breakout level, indicating the possibility of further upside movement. Now the next important resistance level for the stock appears at GBX 16.50 and prices may test this level in the short-term (2-4 weeks). A further movement above GBX 16.50 backed by volumes may extend buying in the stock. 

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, the RSI (14-Period) is showing a reading of ~70.31, indicating a positive momentum build-up at the current levels. The volumes 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, Rockhopper Exploration PLC is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decisions should be made depending on an individual’s 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 recommendation is as follow:

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.

Related Risks: This report may be looked at from a high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the 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, social and political instability risks, etc.

Note 1: Individuals 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 and 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 at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: In general, 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. This report is based on ~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. Individuals can Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Individuals 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, currency, technical indicators, support, and resistance levels is September 05, 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 

Note: Trading decisions require a thorough analysis by individuals. Technical reports in general chart out metrics that may be assessed by individuals 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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