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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a bullish note and made a high of 4222.54 on May 31, 2022. However, all its earlier gains were erased by the end of the week and the index settled at 4164.00 with a loss of ~0.62 percent for the week ending June 03, 2022. The recent week started on a marginally positive tone and now the prices are trading above the 4150 level. On the technical front, prices are trading around the lower band of an ascending channel formation and facing resistance of the same. On the weekly chart, the leading indicator RSI (14-period) is hovering around the mid-point and is currently at 54.12 levels. Prices are trading above 21-period and 50-period SMA, supporting an up-move.

As per the estimate released by the Office for National Statistics, the real GDP increased by 0.8% in Q1 (Jan to Mar) 2022 and is now estimated to be 0.7% above the pre-coronavirus level and supported the index.

Global Markets Wrap-Up

Wall Street indices settled in red last week after a sharp rally in prices in the prior week due to Russia-Ukraine War conditions. Notably, S&P 500 settled at 4108.54 with a decrease of ~1.19% while NASDAQ Composite Index also fell to reach 12,012.73 with a decrease of ~0.97% for the week ending June 03, 2022. Meanwhile, the US indices declined last week despite of fall in the US unemployment claims data. The seasonally adjusted initial US unemployment claims data published by the US Department of Labor, declined by 11k to 200k for the week ending 28^th May 2022 against the unrevised unemployment claims at 211k in the prior week. 

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 LSE listed stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for CMC Markets Plc (LON: CMCX) and Team17 Group PLC (LON: TM17) for the next 2-4 weeks duration:

CMC Markets Plc

CMC Markets plc (LON: CMCX) is a holding company. The Company is a provider of online and mobile trading servicing both retail and institutional clients. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

CMCX's prices broke a downward sloping trend line by upside and the prices are sustaining above the breakout level from past three weeks. Now the next important resistance level for the stock appears at GBX 375.50 and prices may test this level in the short-term (2-4 weeks). A further movement above GBX 375.50 may extend buying in the stock.  

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is showing a reading of 60.81, indicating a positive momentum build-up at the current levels. The volumes also seem supportive of an upside movement. The CMP is above the trend-following indicators 21-period SMA and 50-period SMA, further supporting an up-move.

General Recommendation:

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

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

TM17 Group Plc 

Team 17 Group PLC (LON: TM17), formerly Team 17 Group Limited, is a United Kingdom-based company that develops video games. The Company supports both owned first-party intellectual property (IP) and third-party IP in the development and publishing of games. Noted below are the key price indicators for the stock: 

Price Action Analysis (on the Daily Chart)

TM17’s prices broke a downward sloping trend line resistance by the upside and the prices are sustaining above the breakout level from past two weeks. Now the next important resistance level for the stock appears at GBX 520.00 and prices may test this level in the short-term (2-4 weeks). 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) moved up from oversold region to 37.22, indicating a positive momentum build-up at the current levels. The volumes also seem supportive of an upside movement. However, CMP is below the trend-following indicators 21-period SMA and 50-period SMA, acting as an immediate resistance levels.

 General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Team17 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 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:

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

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 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 6, 2022. 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.

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