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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a slightly negative note, thereafter, trading in a tight range of 3666.58–3728.55 for the entire week. It settled at 3680.43 with an overall weekly loss of ~0.59 percent for the week ending December 11, 2020. The current week started on a flat tone; however, prices are still sustaining above the resistance level of 3660 and hovering around the 3700 levels. Now the immediate resistance level appears to be at 3820 and prices may test that level in the coming sessions. On the weekly chart, RSI is trading at ~61 levels and the CMP is above the 21-period and 50-period SMA, further providing strength to the prices.

Global Markets Wrap-Up

Last week, Wall Street witnessed a halt in the upside rally due to profit booking from the higher levels. S&P 500 settled at 3663.46 with an overall weekly loss of ~0.96 percent while Dow Jones Industrial Average settled at 30046.37 with an overall weekly loss of ~0.57 percent for the week ending December 11, 2020. The recent surge in the COVID-19 cases in the US weighed on the market sentiments; however, the approval by the US Food and Drug Administration (FDA) for the emergency use authorization (EUA) of Pfizer Inc. (NYSE: PFE)-BioNTech (NASDAQ: BNTX) vaccine on December 12, 2020, has limited the downside movement in the indices. As per the recent data by the U.S Department of Labour, the US claims for jobless benefits surged to 853,000 from 712,000 the prior week which is the highest number of initial claims filed since September 2020, further restricted the upside movement in equity.

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 Victrex PLC (LON: VCT) and Imperial Brand PLC (LON: IMB) for the next 2-4 weeks duration.

Victrex PLC

Victrex PLC (LON: VCT) is an FTSE-listed British company that supplies high-performance polymer solutions. The company caters to the strategic markets of automotive, aerospace, energy, electronics, and medical and serving in more than 40 countries.

Price Action Analysis (on the Weekly Chart)

VCT’s prices broke the downward trend line resistance of GBX 2100 on the weekly charts on November 23, 2020, and for the last 3 weeks, prices are sustaining above the breakout level. Prices also formed positive divergence with the RSI where prices made lower lows and RSI made higher lows, supporting the upside movement. Now the next important resistance level appears to be at GBX 2575.00 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 ~61 levels and formed a positive divergence with the price action, indicating a positive trend in the stock. The weekly volumes are showing an increasing trend and seems 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 Victrex PLC is as follows: 

General Recommendation:

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

Imperial Brands PLC

Imperial Brands PLC (LON: IMB) is an FTSE-listed British multinational company headquartered in Bristol, England that deals in consumer goods. The company is the world’s leading producer of cigars, fine-cut tobacco, and tobacco papers.

Price Action Analysis (on the Weekly Chart)

IMB’s prices broke the downward trend line resistance of GBX 1470 on the weekly charts on November 17, 2020, and since last one month, prices are sustaining above the breakout level. Prices also formed positive divergence with the RSI where prices made lower lows and RSI made higher lows, supporting the upside movement. Now the next important resistance level appears to be at GBX 1850.00 and in the short-term (2-4 weeks), the prices may test that level. Any further movement about the GBX 1850 with the higher volumes may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~59 levels and formed positive divergence with the price action, 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, further providing strength to the prices.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Imperial Brands PLC is looking technically well-placed on the chart and we have a ‘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.

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 December 14, 2020.

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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