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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a positive note and traded with a positive bias for the entire week. It made a high of 3738.39 during the week and managed to close above the psychological support level of 3700. Prices witnessed positive closing after 3 consecutive weekly losses and settled at 3709.95 with an overall gain of ~1.87 percent for the week ending February 05, 2021. The recent week also started on a positive tone and prices are moving towards an immediate resistance level 3800. On the weekly chart, RSI (14-period) is trading at ~54 levels and seems supportive of the upside movement. Prices are well placed above 21-period and 50-period SMA, providing strength to the Index.

As per the latest Monetary Policy Report released by the Bank of England on February 04, 2021, spending in the economy remains below normal levels and inflation is much lower than the target. To bring the inflation to the target level of 2%, the Bank of England kept the interest rate unchanged at 0.10% and the market reacted positively to the decision.

Global Markets Wrap-Up

Wall Street soared last week, and both benchmark indices witnessed significant gains. S&P 500 settled at 3886.83 with an overall gain of ~4.65 percent while Dow Jones Industrial Average settled at 31,148.24 with an overall gain of ~3.89 percent for the week ending February 05, 2021.

Last week, the employment data released by the Labor department of the US boosted the market sentiments. As per the data published, the US claims for jobless benefits decreased last week to 779,000 from 812,000 the prior week. The non-farm employment number increased by 49,000 while the unemployment data fell by 0.4% points to 6.3% in January 2021. The series of positive announcements helped the market to surge upside. 

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 Micro Focus International PLC (LON: MCRO) and Go-Ahead Group PLC (LON: GOG) for the next 2-4 weeks duration:

Micro Focus International PLC 

Micro Focus International PLC (LON: MCRO) is an FTSE-listed software and information technology company headquartered in Newbury, Berkshire, England. The company’s services allow organizations to transform and develop their business with four solutions namely Enterprise DevOps, Hybrid information management (IT), Predictive Analytics, and Security, Risk & Governance. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

MCRO’s prices formed the Head & Shoulders Bottom (bullish reversal) pattern on the weekly chart and currently trading near the neckline. The neckline breakout level is GBX 496 and any breakout above that level may reverse the trend in the stock from downward to the upside. The next important resistance level is at GBX 580 and prices may test that level in the coming sessions. Any further breakout above GBX 580 accompanied by volume may extend buying in the stock till the level of GBX 646.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~50 level 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 with a positive crossover, providing strength to the prices.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Micro Focus International PLC is as follows:

General Recommendation:

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

Go-Ahead Group PLC 

The Go-Ahead Group PLC (LON: GOG) is a public passenger transport company based in Newcastle, United Kingdom. The company operates bus and rail services in various targeted countries like UK, Ireland, Singapore, Norway, and Germany. The company operates via three segments: regional bus, London and international bus and rail. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

GOG's prices are continuously sustaining above the upward trend line and trading with a positive bias on the weekly chart. Recently prices started to move upside from the lower levels and for the short term (2-4 weeks), we can expect continuity of upside momentum in it. The next important resistance level is at GBX 1290 and prices may test that level in the coming sessions. Any further breakout above GBX 1290 accompanied by volume may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~52 level and indicating a positive trend in the stock. The weekly volumes showing an increasing trend and seem supportive of the upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing strength to the prices.

Financial Summary: 

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

General Recommendation:

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

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 risk, 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 February 08, 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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