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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a positive note and made a new 52-week high of 4107.40 on June 16, 2021. However, till the end of the week, all its earlier gains were erased, and the index settled at 4002.07 with a loss of ~1.63 percent for the week ending June 18, 2021. The recent week started on a positive note and prices are trading above the 4000 mark. Prices are trading in an ascending channel pattern on the weekly chart and facing resistance from the upper band of the pattern, indicating the possibility of a downside correction. However, the leading indicator RSI (14-period) is trading at ~61.81 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.

As per the data released by the Office for National Statistics, the retail sales volumes declined by 1.4% between April and May 2021 after a sharp increase in April. The Consumer Prices Index (CPI) also rose by 2.1% in May 2021, up from 1.6% to April and supported the downside direction. However, an improved labour market overview for June-21 restricted a sharp decline in the index. As per the data, the number of payrolled employees are up by 197,000 in May 2021 to 28.5 million and increased for the sixth consecutive month.

Global Markets Wrap-Up

Last week, Wall Street bull run took a pause, and the two benchmark indices ended in red. S&P 500 settled at 4166.45 with a loss of ~1.91 percent, while NASDAQ Composite Index settled at 14030.38 with a loss of ~0.28 percent for the week ending June 11, 2021. Indices witnessed negative movement after the US Federal Reserve’s Federal Open Market Committee signalled the possibility of two interest rate hikes in 2023. The increase in the US weekly Unemployment Claims further supported the downside direction. As per the data released by the US Bureau of Labor Statistics, US weekly unemployment claims increased to 412,000 from 375,000 in the prior week and acted as the catalyst for a downward movement.

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 Sage Group PLC (LON: SGE) and Saga PLC (LON: SAGA) for the next 2-4 weeks duration:

Sage Group PLC 

Sage Group PLC (LON: SGE) is a UK-based software company. The company provides business management and accounting software to clients based in North Europe, Central Europe, South Europe, and North America. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

SGE's prices broke a major resistance level of GBX 677.60 by an upside on June 15, 2021, and since then hovering around the breakout level. Prices are also sustaining above a downward sloping trend line breakout and above an upward sloping trendline, indicating an upside direction for the stock. Now the next major resistance level appears at GBX 775.00, and prices may test the level in the short-term (2-4 weeks). A further breakout above GBX 775.00 backed by volumes may extend buying in the stock till the next resistance level of GBX 795.00.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~61.58 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seem supportive of an upside movement. The CMP is above the 50-period, providing support for an upward direction, however, the 21-period SMA acting as a resistance for the stock.

Financial Summary:

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

General Recommendation:

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

Saga PLC

Saga PLC (LON: SAGA) is a consumer discretionary services provider for customers aged 50 and above. The Company operates through three divisions: Insurance, Travel, and Emerging Businesses and Central Costs. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

SAGA's prices broke a major resistance level of GBX 421.00 by an upside on June 08, 2021 and since then hovering around the breakout level, indicating a positive stance for the stock. Prices are continuously taking support from an upward sloping trend line and for the short-term (2-4 weeks), we may technically expect an upside movement. Now the next major resistance level appears at GBX 573.50 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 ~65.21 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seem supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Saga 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 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: 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 21, 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.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.