Last week, the benchmark FTSE All-Share Index (.FTAS) started on a positive note and maintained an upside momentum for the entire week. It broke the resistance level of 3820 during the week and made a high of 3893.32 on January 07, 2021. The Index settled at 3880.43 with an overall impressive weekly gain of ~5.63 percent for the week ending January 08, 2021. Although the recent week started on a negative tone, prices are still sustaining above the resistance breakout level. Now the immediate resistance level for the index is at 4022 whereas the immediate support is at 3670 levels. On the weekly chart, RSI is trading at ~65 levels and the CMP is above the 21-period and 50-period SMA, further providing strength to the prices. 

The announcement of a £4.6 billion grant in the new lockdown by the UK government on January 05, 2021, boosted the market sentiments. On January 08, 2021, the Medicines and Healthcare products Regulatory Agency (MHRA) of the UK had also authorized the Moderna (NASDAQ: MRNA) vaccine for the COVID-19 which acted as a catalyst for the upside movement.

Global Markets Wrap-Up

Wall Street continued its bullish momentum last week as well and the two benchmark indices made an all-time high during last week. S&P 500 settled at 3824.68 with an overall weekly gain of ~1.83 percent while Dow Jones Industrial Average settled at 31097.97 with an overall weekly gain of ~1.61 percent for the week ending January 8, 2021.

As per the latest data released by the US Department of Labour for the US claims for jobless benefits, the number decreased to 787,000 from 790,000 in the prior week and impacted the market positively. The major upcoming events such as the Consumer Price Index, Unemployment Claims, US Monthly Retail Sales, etc. may further provide direction to the market . 

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 Network International Holdings PLC (LON: NETW) and Sabre Insurance Group PLC (LON: SBRE) for the next 2-4 weeks duration:

Network International Holdings PLC 

Network International Holdings PlC (LON: NETW) is an FTSE-listed company engaged in the development and marketing of digital payment solutions. The company is providing technology-enabled payment solutions for digital commerce across the Middle East and Africa. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

NETW’s prices formed the Head and Shoulders Bottom pattern (bullish reversal pattern) on the lower levels and broke the pattern neckline at GBX 315 on December 29, 2020. Prices are sustaining above the neckline breakout level from the last 2 weeks and as per the pattern formation, we can expect further upside movement in it. Now the next important resistance level appears to be at GBX 418.00 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 ~53 levels and indicating the start of 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 SMA and providing strength to the prices; however, the 50-period SMA acting as the resistance for the stock.

Financial Summary:

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

General Recommendation:

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

Sabre Insurance Group PLC 

Sabre Insurance Group PLC (LON: SBRE) is a UK-based motor insurance company. The company provides motor insurance including private cars, taxis, and commercial vehicles. The company operates through three direct Go Girl, Insure2Drive, and Drive Smart. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

SBRE’s prices broke the downward trend line resistance at GBX 281.50 on December 29, 2020, and since then prices are hovering around the breakout level. Prices recently started to move upside and for the short-term (2-4 weeks), we can expect upside movement in it. The next important resistance level appears to be at GBX 322, and prices may test that level. Any further breakout above GBX 322 accompanied by higher volume may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~60 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 Sabre Insurance Group PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Sabre Insurance 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 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 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 January 11, 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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