This report is an updated version of the report published on 05 July 2022 at 08:00 AM GMT+1.

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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a positive note but was unable to hold the gains and settled at 3940.03 with a loss of ~0.88 percent for the week ending July 01, 2022. The recent week started on a marginal positive tone and prices are trading around the 4000 level. On the technical front, prices are trading around a rising trendline support level. On the weekly chart, the leading indicator RSI (14-period) is sustaining below the mid-point and is showing a reading of 42.92. Prices are trading below the trend-following indicators 50-Period SMA and 21-period SMA which may act as the resistance levels for the stock.

As per the data released by Office for National Statistics, the UK’s current account deficit in Q1 2022 widened to 7.1% of GDP which acted as a catalyst for a downside direction.

Global Markets Wrap-Up

Wall Street traded lower last week and the two benchmark indices ended in the red. The S&P 500 settled at 3825.33 with a loss of ~2.21 percent, while NASDAQ Composite Index settled at 11127.845 with a loss of ~4.13 percent for the week ending July 01, 2022. The market sentiments turned bearish due to the release of negative economic data during the week such as the Richmond Manufacturing Index, Consumer Confidence, and Final GDP.  

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 let us have a look at the two LSE listed stock picks from the technical standpoint. Noted below are recommendations based on generic insights, entry price, target prices, and stop-loss for Standard Chartered PLC (LON: STAN) and Warpaint London PLC (LON: W7L) for the next 2-4 weeks duration:

Standard Chartered PLC

Standard Chartered PLC (LON: STAN) is an international bank engaged in Retail, Commercial, Private and Corporate & Institutional Banking. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

STAN's prices are sustaining above a downward sloping trend line breakout for the past one month, indicating the possibility of further upside movement. The recent upside movement in the stock is backed by increasing volumes as well, further supporting a positive bias. Now the next important resistance level for the stock appears at GBX 710.00 and prices may test this level in the short-term (2-4 weeks). A further movement above GBX 710.00 may extend buying in the stock. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the momentum oscillator RSI (14-period) is moving in a positive zone and currently showing a reading of ~65.84. The volumes also seem supportive of an upside movement. The CMP is above the trend-following indicators 21-period SMA and 50-period SMA, which may support the prices in the near term.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, Standard Chartered PLC is looking technically well-placed on the chart, and a ‘Buy’ recommendation has been given 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 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.

Warpaint London PLC 

Warpaint London PLC (LON: W7L) is a UK-based cosmetics business that operates through two divisions: largest and other. Noted below are the key price indicators for the stock: 

Price Action Analysis (on the Daily Chart)

W7L’s prices broke a falling trendline by the upside on June 27, 2022, and since then trading above the breakout level, indicating the possibility of further upside direction. The recent upside movement in the stock is backed by increasing volumes as well, further supporting a positive bias. Now the next important resistance level for the stock appears at GBX 155.00 and prices may test this level in the short-term (2-4 weeks).  A further movement above GBX 155.00 may extend buying in the stock.  

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, RSI (14-period) is showing a reading of 61.76, 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, Warpaint London PLC is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given 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 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 at which 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 at which 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: 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. Investors can 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 July 04, 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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