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

Last week, the benchmark FTSE All-Share Index (.FTAS) started the week on a negative note and continued the same for the entire week. It made a low of 3773.32 on January 15, 2021 and settled at 3803.75 with an overall significant weekly loss of ~1.98 percent for the week ending January 15, 2021. The recent week also started on a marginal negative tone; however, prices are still hovering around 3800 level and unable to provide any decisive closing below the level for further downside indication. The immediate resistance level for the index is at 3900 whereas  the support is at 3670 levels. On the weekly chart, RSI is trading at ~62 levels seem supportive for upside movement and prices are also sustaining above 21-period and 50-period SMA, providing strength to the index.

The lack of any major economic event last week also helped the bears to control the market sentiments and created pressure on the index prices.

Global Markets Wrap-Up

Wall Street slumped last week from the higher levels and both benchmark indices witnessed significant losses. S&P 500 settled at 3768.25 with an overall weekly loss of ~1.48 percent while Dow Jones Industrial Average settled at 30814.26 with an overall weekly loss of ~0.91 percent for the week ending January 15, 2021.

As per the latest data released by the US Department of Labour for the US claims for jobless benefits, the number increased sharply last week to 965,000 from 784,000 in the prior week and impacted the market negatively. 

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 Robert Walters PLC (LON: RWA) and Wood Group (John) PLC (LON: WG) for the next 2-4 weeks duration:

Robert Walters PLC 

Robert Walters PLC (LON: RWA) is a professional services company engaged in professional recruitment. Established in 1985, the company recruits people for permanent, contract, and interim roles across the world. The company deals in the Asia Pacific, UK, Europe, US, Middle East, Brazil, and South Africa. Noted below are the key price indicators for the stock: 

Price Action Analysis (on the Weekly Chart) 

RWA’s prices broke the downward trend line resistance at GBX 503 on January 13, 2021 and sustaining above the breakout level. Prices broke the downward trend line resistance after almost one month consolidation and trading above another upward trend line, indicating positive movement. Now the next important resistance level appears to be at GBX 614.00 and in the short-term (2-4 weeks), the prices may test that level. Any breakout above GBX 614.00 accompanied by higher volumes may extend buying in the stock till GBX 676.00.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~66 levels 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, further providing strength to the prices.

Financial Summary:

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

General Recommendation:

Wood Group (John) PLC 

Price Action Analysis (on the Weekly Chart)

WG’s prices sustaining above the downward trend line breakout from the past 2 months and now heading towards the next major resistance level of GBX 426.40. Prices recently started to move upside after the consolidation of one month and for the short-term (2-4 weeks), we can expect further upside movement in it. Prices may test the important resistance level of GBX 426.40 in the coming sessions

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~65 levels 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, further providing strength to the prices.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for Wood Group (John) PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Wood Group (John) 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:

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 rate 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 January 18, 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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