This report is an updated version of the report published on 16 April 2024 at 07:07 AM GMT.

Company Overview: BAE Systems PLC (LON: BA.) is a FTSE 100 Index-listed United Kingdom-based defense, aerospace, and security company specializes in various sectors. Its Electronic Systems segment includes electronic warfare systems, navigation systems, electro-optical sensors, military and commercial digital engine and flight controls, precision guidance, and seeker solutions, among others. Additionally, its Platforms & Services segment focuses on manufacturing and upgrading combat vehicles, weapons, and munitions, along with providing services and sustainment activities. The company primarily operates within the United States, United Kingdom, and European markets. This Report covers the Price Action, Technical Indicators Analysis along with the Target Levels, Stop Loss, Support Levels, Resistance Levels, and Recommendations on the stock.

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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on the positive side and remained in range bound trading zone with a positive bias for the entire week. The index made a low of 4303.46 during the week and settled at 4353.66, with a gain of ~0.92 percent for the week ending April 12, 2024. The recent week started with a negative sentiment due to the Israel and Iran conflict and the negative global market sentiment and closed at 4338.90 level.

On the technical front, last week index has broken the upper channel and remained above it, suggesting positive momentum to continue along with the global market trend. The Leading indicator RSI 14-Period (Relative Strength Indicator) is moving northward with a reading of 61.07, bullish for the index and the current market price (CMP) is also above the trending indicator 21-period SMA and 50-period SMA, which will act as a support.

Global Markets Wrap-Up

Last week, Wall Street experienced a sharp reaction and profit booking amid tensions between Iran and Israel. With negative market sentiments prevailing, Wall Street surrendered gains and closed in the negative territory by the trading weekend. The S&P500 settled at 5123.40, marking a loss of approximately ~1.55% percent, while the NASDAQ Composite Index closed at 16175.09, registering a loss of around ~0.45% percent for the week ending April 12, 2024.

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.

stocks pick from the technical analysis standpoint. Noted below are the recommendations based on entry price, target prices, and stop-loss for BAE Systems PLC (LON: BA.) for the next 2-4 weeks duration:

 BAE Systems PLC (LON: BA.) Noted below are the key price indicators for the recommended stock:

Price Action Analysis (on the Daily Chart)

On the daily chart, BA.'s share prices are displaying bullish momentum and are currently above the lower trendline support, suggesting a potential continuation of the upside movement. The stock price is supported by robust volumes and Stochastic data indicating an oversold zone, signaling a potential fresh upward movement. An important resistance level for the stock is identified at GBX 1578.00, and prices may test this level in the short term (2-4 weeks).

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, the RSI 14-Period (Relative Strength Indicator) is currently in the positive zone with a reading of 58.49. Additionally, the volumes appear supportive for an upside movement. The current market price (CMP) is trading above the trend-following indicators, the 21-period SMA and the 50-period SMA, indicating that they will act as support levels.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, BAE Systems PLC  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 recommendations 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.

Related Risks: This report may be looked at from a high-risk perspective and recommendations are provided 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 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 trends. 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 unfavorable 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 April 15, 2024. 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 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.