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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a marginally positive note and maintained the movement. The index broke a major psychological resistance level of 4100 and traded above the breakout level. It settled at 4144.47 with a decent gain of ~1.36 percent for the week ending Aug 13, 2021. The recent week started on a bearish tone; however, prices are still sustaining above the 4100 mark. On the technical front, prices are moving towards the upper band of an ascending channel pattern, indicating an upward direction. The leading indicator RSI (14-period) is trading at ~62.98 levels and seems supportive of an upside movement. Prices are well placed above the trend-following indicators 21-period SMA and 50-period SMA, further indicating an upward movement.

As per the UK’s Office for National Statistics, the 2^nd quarter (Apr to June) 2021 GDP is estimated to have increased by 4.8% compared to -1.6% in the previous quarter (Jan to Mar) 2021 which supported the index. The monthly GDP for June 2021 is also estimated to record a 1.0% growth but remained below the pre-covid level.

Global Markets Wrap-Up

Wall Street witnessed mixed movement last week as the two benchmark indices traded in opposite directions. S&P 500 settled at 4468.00 with a gain of ~0.71 percent, while NASDAQ Composite Index settled at 14822.90 with a loss of ~0.09 percent for the week ending Aug 13, 2021. An ease in the inflation data and decline in weekly unemployment claims supported the indices to retain at higher levels. As per the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) in July increased 0.5 percent compared to 0.9 percent in June. The US weekly unemployment claims further declined to 375,000 from 387,000 (revised level) in the prior week and supported the indices.

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 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 Moonpig Group PLC (LON: MOON) and DWF Group PLC (LON: DWF) for the next 2-4 weeks duration:

Moonpig Group PLC 

Moonpig Group PLC (LON: MOON) is an online gifting and greeting card platform. It offers a range of cards and gifts such as chocolates, flowers, beauty products, books, soft toys, etc. with personalization features. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart) 

On the daily chart, MOON's prices formed a Bullish Marubozu candlestick at the lower levels on Aug 13, 2021, indicating the possibility of an upside reversal. Prices are also forming a positive divergence with the RSI (14-period) and further supporting a positive stance. Now an immediate resistance level for the stock appears at GBX 440 and prices may test the level in the short-term (2-4 weeks). A further breakout above GBX 440 may extend buying in the stock to GBX 460 level.

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, RSI is trading at ~41.99 levels and recovering from lower levels, indicating a positive trend for the stock. The daily volumes also seem supportive of an upside movement. However, the trend-following indicators 50-period and 21-period SMA are above the CMP, acts as resistance levels for the stock.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for that Moonpig Group PLC is as follows:

General Recommendation:

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

DWF Group PLC

DWF Group PLC (LON: DWF) is a UK-based law services company. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

DWF's prices broke a major resistance level of GBX 110.00 on an upside on Aug 05, 2021, and since then trading above the breakout level, indicating an upward direction for the stock. The breakout is supported by an increase in the volumes, thereby higher market participation further supporting an upside movement. Now the next major resistance level for the stock appears at GBX 136, and prices may test the level in the short-term (2-4 weeks). A further movement above GBX 136 backed by volumes may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~72.77 levels and indicating a positive trend for the stock. The weekly volumes also seem supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for DWF Group PLC is as follows: 

General Recommendation:

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

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 in the ‘Entry Price’ can be considered depending upon the upside potential expected and taking into consideration the Target 1 and trailing stop-loss levels indicated. For example: - An Investor can consider entering the stock at or above a certain range (3%-5%) from the Entry Levels recommended depending upon the potential upside expected and difference from the Target 1 and Trailing-Stop Loss Levels indicated for the stock.

Note 1: 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 August 16, 2021. 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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