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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a positive note and maintained the momentum. The index made a high of 4068.56 during the week and settled at 4067.79 with a gain of ~1.64 percent for the week ending June 25, 2021. The recent week started on a negative note; however, prices are still sustaining above the 4000 mark. Prices are trading in an ascending channel pattern on the weekly chart and currently trading around the upper band of the pattern, indicating the possibility of a downside correction. However, the leading indicator RSI (14-period) is trading at ~61.02 levels and seems supportive of a positive movement. Prices are well placed above the trend-following indicators 21-period and 50-period SMA, further providing strength to the index.

The Bank of England's Monetary Policy Committee (MPC) decision to maintain the bank rate at 0.1% in the latest Monetary Policy summary supported the index. However, a fall in the UK Services Business Activity Index and Manufacturing Output Index limited the gains. As per the data released by IHS Markit, Flash UK Services Business Activity Index declined to 61.7 in June compared to 62.9 in May, and the Flash UK Manufacturing Output Index also declined to 62.0 compared to 63.0 in May.

Global Markets Wrap-Up

Wall Street soared last week, and the two benchmark indices ended in green. S&P 500 settled at 4280.70 with a gain of ~2.74 percent, while NASDAQ Composite Index settled at 14360.39 with a gain of ~2.35 percent for the week ending June 25, 2021. A decrease in the US weekly Unemployment Claims coupled with the record-high Flash Manufacturing PMI boosted the market sentiments. As per the data released by the US Bureau of Labor Statistics, US weekly unemployment claims decreased to 411,000 from 418,000 (revised level) in the prior week. The Flash U.S. Manufacturing PMI Index (released by IHS Markit) reached 62.6 in June compared to 62.1 in May and recorded series high.

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 for Experian PLC (LON: EXPN) and Ocado Group PLC (LON: OCDO) for the next 2-4 weeks duration:

Experian PLC 

Experian PLC (LON: EXPN) is an Ireland-based global information company. The company aggregates and provides information on over 1 billion people and businesses of US consumers and businesses. The company has business operations in 37 countries with offices in UK, Brazil, and the US. Noted below are the key price indicators for the stock:-

Price Action Analysis (on the Weekly Chart) 

EXPN's prices broke a downward sloping trendline by an upside on June 16, 2021 and since then trading above the breakout level, indicating an upward direction for the stock. Now the next major resistance level for the stock appears at GBX 3200, and prices may test the level in the short-term (2-4 weeks). A further breakout above GBX 3200 backed by volumes may extend buying in the stock till the next resistance level of GBX 3500.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is trading at ~56.25 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 upward direction.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Experian 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:

Ocado Group PLC

Ocado Group PLC (LON: OCDO) is a UK-based online grocery retailer. The company business segment includes grocery retailing, monetization, and development of Intellectual property (IP) used for online retailing. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

OCDO's prices recently broke a falling wedge (bullish continuation) pattern by an upside at GBX 1942 and since then trading above the breakout level, indicating a positive stance for the stock. For the short-term (2-4 weeks), we may expect continuity of an upside movement in the stock. Now the next major resistance level appears at GBX 2450, 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 ~45.45 levels and indicating a positive trend for the stock. The weekly volumes also seem supportive of an upside movement. However, the 21-period and 50-period SMA are above CMP and acts as the resistance levels for the stock.

Financial Summary: 

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Ocado Group 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 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 1: 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 June 28, 2021. 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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