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

Last week, the benchmark FTSE All-Share Index (.FTAS) started the journey on a positive note and traded near to almost 9-month high. It made a high of 3786.12 on December 29, 2020, and thereafter witnessed a profit booking led by thin volume and shortened trading week. It settled at 3673.63 with an overall weekly loss of ~0.52 percent for the week ending December 31, 2020. However, the year 2021 started on a positive tone and, prices are again trading around the 9-month high levels. The immediate resistance level appears to be at 3820 and any breakout above this level may bring bulls into action again that can move prices to the next resistance level of 3927. On the weekly chart, RSI is trading at ~62 levels and the CMP is above the 21-period and 50-period SMA, further providing strength to the prices.

The market sentiments boost up after the consensus on Brexit agreements between the UK and Northern Ireland and the European Union that supported the index prices. However, as per yesterday’s address to the nation by Prime Minister Boris Johnson, the region is going for another national Covid-19 lockdown from January 05, 2021 and expected till mid-February 2021, which can create pressure on the index as well as on its listed stocks. Investors may trade prudently in the coming sessions considering the expected volatility in the market due to the lockdown effect.

Global Markets Wrap-Up

Wall Street remained strong during the last week of 2020 and the benchmark indices settled near to all-time high. S&P 500 settled at 3756.07 with an overall weekly gain of ~1.43 percent while Dow Jones Industrial Average settled at 30606.48 with an overall weekly gain of ~1.35 percent for the week ending December 31, 2020.

As per the latest data released by the US Department of Labour, the US claims for jobless benefits decreased to 787,000 from 806,000 the prior week, and the markets reacted positively to the news. The major events that may impact the market sentiments in the coming weeks include the OPEC meeting, unemployment claims, and Non-Farm employment change.

Having understood the US market performance over the past one week, taking cues from major global news, and based on our technical analysis of 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 European Opportunities Trust PLC (LON: JEO) and Energean PLC (LON: ENOG) for the next 2-4 weeks duration:

 

European Opportunities Trust PLC 

European Opportunities Trust PLC (LON: JEO) is an FTSE-listed investment trust engaged in portfolio investment, established in 2000. The main objective of the trust is to invest in the securities of European companies, which has the potential for capital growth. The company invests in various sectors including consumer goods, healthcare, telecommunications, industrials, etc. Noted below are the key price indicators for the stock:

 

Price Action Analysis (on the Weekly Chart) 

On the weekly chart, JEO’s prices broke the symmetrical triangle pattern at GBX 705 on November 05, 2020, and since then prices are sustaining above the breakout level. Prices recently started to move upside after consolidating for 2 months above the breakout level. Now the next important resistance level appears to be at GBX 847.00 and in the short-term (2-4 weeks), the prices may test that level.  

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~57 levels and indicating a positive trend in the stock. The weekly volumes also seem supportive of the upside movement. The CMP is above the 21-period and 50-period SMA, further providing strength to the prices.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for European Opportunities Trust PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that European Opportunities Trust PLC is looking technically well-placed on the chart and we have a ‘Speculative Buy’ rating on the stock. The summary of our recommendation is as follows:

Energean PLC 

Energean PLC (LON: ENOG) is an FTSE-listed oil and gas company. The company provides exploration, production, vessel transportation, onshore, and offshore drilling services to its customers based in various countries. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

ENOG’s prices took the support of the downward trend line at GBX 640 on December 22, 2020, and since then prices are sustaining above the support level. Prices recently started to move upside after the consolidation of almost one month and in the short-term, we can expect further upside movement in it. The next important resistance level appears to be at GBX 854, and prices may test level in the 2-4 weeks duration.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~57 levels and indicating a positive trend in the stock. The weekly volumes also seem supportive of the upside movement. The CMP is above the 21-period and 50-period SMA, further providing strength to the prices.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Energean PLC is looking technically well-placed on the chart and we have a ‘Speculative Buy’ rating on the stock. 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 to 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 and we consider stocks with greater than or equal to 200,000 volumes as more liquid. 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 January 04, 2021.

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 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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