This report is an updated version of the report published on December 13, 2022, at 08:00 AM GMT.

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

Last week, the benchmark FTSE All-Share Index (.FTAS) started flat and thereafter witnessed a bearish momentum. The index broke the 4100 level during the week and settled at 4087.39, with a loss of ~1.24 percent for the week ending December 09, 2022. The recent week started on a slightly negative note, and prices are sustaining below the 4100 level.

On the technical front, prices recently broke the upper band of the falling channel pattern by an upside but were unable to sustain above the same, indicating the possibility of a downside correction. However, the prices are sustaining above the trend following indicator 21-period SMA, which may act as immediate dynamic support in the near term. The leading indicator RSI (14-period) is moving above the midpoint and is showing a reading of 53.22.

Global Markets Wrap-Up

Wall Street inched lower last week and the two benchmark indices ended on a bearish note. The S&P 500 settled at 3934.38 with a loss of ~3.37 percent, while the NASDAQ Composite Index settled at 11004.62 with a loss of ~3.99 percent for the week ending December 09, 2022.  

Having understood the US market performance over the past week, taking cues from major global news, and based on technical analysis of the FTSE All-Share Index (.FTAS) for the upcoming week, now have a look at the one LSE-listed stock pick from the technical standpoint. Noted below recommendation is based on entry price, target prices, and stop-loss for Harvest Minerals Ltd (LON: HMI) for the next 2-4 weeks duration:

Harvest Minerals Ltd

Harvest Minerals Ltd (LON: HMI) is an Australia-based producer of natural fertilizer and agriproducts. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

HMI’s prices recently broke a falling wedge pattern by an upside, indicating the possibility of an upside movement. The pattern breakout is supported by increased volumes as well, further supporting a positive bias. Now the next important resistance level for the stock appears at GBX 10.50, and prices may test this level in the short-term (2-4 weeks). A further movement above GBX 10.50, backed by volumes, may extend buying in the stock. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the RSI (14-Period) is hovering around the midpoint and showing a reading of ~49.14. The volumes also seem supportive of an upside movement. The CMP is below the trend-following indicators 21-period and 50-period SMA, which may act as the resistance levels in the near term.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, Harvest Minerals Ltd is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decisions should be made depending on an individual’s 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 recommendation is as follow:

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.

Related Risks: This report may be looked at from a high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the 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, social and political instability risks, etc.

Note 1: Individuals 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 and 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 at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: In general, 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. This report is based on ~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. Individuals can Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Individuals 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, currency, technical indicators, support, and resistance levels is December 12, 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 

Note: Trading decisions require a thorough analysis by individuals. Technical reports in general chart out metrics that may be assessed by individuals 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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