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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a negative note and continued the same till the end. It broke the major support level of 3670 during the week and made a low of 3634.30 on January 29, 2021. Prices witnessed three consecutive weekly loss and settled at 3641.93 with a significant loss of ~3.81 percent for the week ending January 29, 2021. However, the recent week started on a positive note and prices are moving towards the immediate resistance level 3700. On the weekly chart, RSI (14-period) is trading at ~55 levels and seems supportive of upside movement. Prices are still sustaining above 21-period and 50-period SMA, providing strength to the index. Now the immediate support for the index is at 3541 level, whereas major resistance is at 3893 levels.

As per the data released by the UK’s Office of National Statistics on February 01, 2021, the quarterly GDP (April to June 2020) of all four countries in the UK showed negative growth. Scotland’s GDP in Q2 fell by 19.4%, followed by England, which fell 19.0%, Wales fell by 15.1%, and Northern Ireland fell by 13.6%. The market did not react negatively after the release as it had already discounted the data.

Global Markets Wrap-Up

Wall Street slumped last week, and both benchmark indices witnessed significant losses. S&P 500 settled at 3714.24 with an overall weekly loss of ~3.31 percent while Dow Jones Industrial Average settled at 29,982.62 with an overall weekly loss of ~3.28 percent for the week ending January 29, 2021.

The recent downfall in Wall Street was due to the group of day traders who have been pushing up the prices of few stocks primarily the video game retailer GameStop (NYSE: GME) which led to the sell-off in the market by some big hedge funds to cover the losses. However, the latest data released by the US Department of Labour for the US claims for jobless benefits, the number decreased last week to 847,000 from 914,000 in the prior week and restricted further downside movement in the indices.

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 Tate & Lyle PLC (LON: TATE) and Picton Property Income Ltd (LON: PCTN) for the next 2-4 weeks duration:

Tate & Lyle PLC 

Tate & Lyle PLC (LON: TATE) is the leading supplier of food and beverages to the industrial markets across the globe. The company was originally into the sugar refining business but divest in 2010. The company specializes in making ingredients out of corn and tapioca that add taste, texture, and nutrients to food and beverages. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

TATE’s prices broke the downward trend line resistance around GBX 670 on December 12, 2020, and for the past one month, prices are hovering around the breakout level. Recently prices started to move upside and for the short-term (2-4 weeks), we can expect upside movement in it. The next important resistance level is at GBX 812 and prices may test that level in the coming sessions. Any further breakout above GBX 812 accompanied by volume may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~59 levels and indicating a positive trend in the stock. The weekly volumes are 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, providing strength to the prices.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Tate & Lyle PLC is as follows:

General Recommendation:

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

Picton Property Income Ltd

Picton Property Income Limited (LON: PCTN) is an FTSE-listed real-estate investment trust company that invests in a diversified commercial real estate portfolio across the United Kingdom. The company has approximately 60 commercial property and its segments include industrial, office, retail, and leisure sectors. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

PCTN’s prices broke the ascending channel pattern by the upside at GBX 81 on January 14, 2021, and for the past 3 weeks, it is hovering around the breakout level. Prices also broke the resistance level of GBX 83.30 in the previous trading session and now we can expect further upside movement in it. The next important resistance level is at GBX 96 and in the short-term (2-4 weeks), the prices may test that level. Any further breakout above GBX 96 accompanied by volume may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~62 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 with a positive crossover, further providing strength to the prices.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Picton Property Income Ltd is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Picton Property Income Ltd 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 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 February 01, 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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