MarketWatch

[zainabusman]

=Michael;21536]

Your analysis is impeccable all I can do is ask questions.
1. Can this year be considered to be a bull year or a bear year

2. With the amount of funds raised by companies and the capitalization of our companies on the exchange, will the amount of money pulled out for school fees and Holidays still be significant.

3. Considering the December year end for banks, would investors still be willing to wait till February before they start positioning themselves in their favorite banks. Now we will be expecting all the results to be out within 3 months of year end, to wait till february seems a bit risky to me.

4. Will you advise i exit all my stocks at the end of August to the money market and re-enter at the begining of October

If i know the answers to these questions i will be so rich. On a serious note, timing the market is extremely difficult. Let me try and respond one by one.

1) No one can tell u for certainty whether this is going to be bull or bear year. If u had asked me a month ago, i would have said a bear year. We have had 8 consecutive bull years. So a bear one is overdue. However, given that Madam NSE does not like the bears, we might end up with a bull. This is especially true since banks will now have Dec year ends. I expect a rally in November and December to make us close the year positive. One thing i know is the kind of gains we saw last year cant be repeated.

2) The September effect happened last year, it has been happening for some time. It is more about disposable income by ordinary investors. Remember i aslo said the vacation and school fees thing is anecdotal. Meaning it is something that has not been verified by serious reasearch.

I dont see the capital raising by banks stopping it from continuing. Remember, individual investors also play a big role. Its not just the institutional investors. Also this happens even the US where the market is even bigger than ours.

3) I did not say anything about buying in February. What i said was u are better off buying in September compared to December.

4) I will not advice u exit ur stocks in August. And even if u want to reenter, that should be in Sept not Oct. Timing the market is extremely difficult and u have to think of transaction charges. Furthermore, this analysis is for the market index. B4 u make a decision to sell, it also pays to examine each individual stock in ur portfolio and ask urself whether it is over valued and ready 4 a fall. So please dont sell ur stocks in August on the basis of my analysis!

Remember, this is all historical stuff. There is no guarantee it will be repeated in the future.

If u are very serious about timing the market, then u should consider technical analysis. I hear it works 4 some people although i dont use it.

[Michael]

Originally Posted by zainabusman

If i know the answers to these questions i will be so rich. On a serious note, timing the market is extremely difficult. Let me try and respond one by one.

1) No one can tell u for certainty whether this is going to be bull or bear year. If u had asked me a month ago, i would have said a bear year. We have had 8 consecutive bull years. So a bear one is overdue. However, given that Madam NSE does not like the bears, we might end up with a bull. This is especially true since banks will now have Dec year ends. I expect a rally in November and December to make us close the year positive. One thing i know is the kind of gains we saw last year cant be repeated.

2) The September effect happened last year, it has been happening for some time. It is more about disposable income by ordinary investors. Remember i aslo said the vacation and school fees thing is anecdotal. Meaning it is something that has not been verified by serious reasearch.

I dont see the capital raising by banks stopping it from continuing. Remember, individual investors also play a big role. Its not just the institutional investors. Also this happens even the US where the market is even bigger than ours.

3) I did not say anything about buying in February. What i said was u are better off buying in September compared to December.

4) I will not advice u exit ur stocks in August. And even if u want to reenter, that should be in Sept not Oct. Timing the market is extremely difficult and u have to think of transaction charges. Furthermore, this analysis is for the market index. B4 u make a decision to sell, it also pays to examine each individual stock in ur portfolio and ask urself whether it is over valued and ready 4 a fall. So please dont sell ur stocks in August on the basis of my analysis!

Remember, this is all historical stuff. There is no guarantee it will be repeated in the future.

If u are very serious about timing the market, then u should consider technical analysis. I hear it works 4 some people although i dont use it.

Thanks for your Insight. I have never been any good at technical analysis either.

[samu43]

@Zainab, Haba... you no dey sleep?

Thanks for your outstanding analysis- young stars like us can only hope to become like you (abi na HUMMER? ) as we arm ourselves with your pool of knowledge...

Information is power... and knowledge is strength!

[billions]

Originally Posted by Michael

Where do you stand at the moment

...over 14% North at d end of d "freeze"

[billions]

Originally Posted by Michael

Thanks for your Insight. I have never been any good at technical analysis either.

I base my decisions on fundamental analysis but i realized about 3 days ago that technical analysis is much more important than i tot,as a result,i spend more time to think about it.

The result of this meditation has been wonderful...

[zainabusman]

Originally Posted by billions

I base my decisions on fundamental analysis but i realized about 3 days ago that technical analysis is much more important than i tot,as a result,i spend more time to think about it.

The result of this meditation has been wonderful...

Technical analysis definetely has its place. But Ndidi's freeze does not help the technician because it distorts the trend.

[bwalaman]

Everything has changed in 08. So thinking of going portfolio concentration. Imagine placing 1 million on First Bank, Dangote Sugar, Mutual Benefit, UBA, Oceanic, Zenith, NAHCO and a lot others (or all if you can afford it)? These are all “sound” coys ya!?

If it goes up by 2 naira- for sure most will at some point in 4-6 weeks, guess what? From now till Sept - Oct, the name of the game… is trading. If you place larger than 1 mil, the gain is even higher.

Of course the potential of a downside is there- don’t need to remind anyone after last few months, but stated for the record.

Like most of you, Zainab et al, I think the rally will be at end of 3rd Q and in 4th Q. But in the interim I think it will be about very short time trading- Imagining buying 1 mil naira of First Bank, Nahco, Mutual on Monday…? And selling on Friday. Check it yourself… I know there is some Monday morning quarterbacking here, but the point is valid.

Its more voodoo analysis than Tech or Fundamental these days. I am not saying put 1 mil in WEMA or Spring Bank for example- ya!!!!!

[kenebobo]

Technical analysis and fundamental analysis each have their application. Fundamental is used to spot good companies while technical is used to get a good entry and exit. Most Popular indicators used in technical are RSI, Moving average, MACD and stockastics.

[Jeks]

All,
Please click on the link for full details.

This one is from independent newspapers:
Jeks.
===============================
::: Welcome to Independent Newspapers Limited -- A VOICE OF YOUR OWN

New Price Movement Rule In The Stock Market
The new rule recently introduced by the authorities of the Nigerian Stock Exchange (NSE)against illegal adjustments and manipulation of shares of companies in the capital market appears to be taking its toll on the market. Senior Correspondent, Kingsley Ighomwenghian, who has been following the development since it took effect, reports

For three successive sessions between last Monday and Wednesday, it was all gainers and no laggards on the Nigerian Stock Exchange (NSE), a situation that is largely considered novel in the annals of the nation's equities' market. The only difference was on Tuesday, when the price of Guaranty Trust Bank (GTB)suffered a 306 kobo decline as a result of the adjustment of the company's shares for a dividend of 70 kobo and bonus of one new share for every 11 held by shareholders.

NSE Reacts

When contacted, principal manager and spokesman of the NSE, Sola Oni, explained that the non-movement of share price downward last week is not unconnected with "the fact that investors are gradually coming to terms with the minimum quantity as a basis for price movements upward or downward".

According to him, every market in the world experiences a cycle, as no market will permanently be bearish, bullish or stagnant.

In the case of Nigeria's stock market, he added, investors have no reason for fear, "considering the fact that the fundamentals remain very strong, because most blue-chip companies that have experienced bearish trend in recent times have stable boards and managements, apart from doing well enough to declare robust bonus and generous dividend.

"In fact, many of them are moving steadily in their business direction. This means that there is nothing really wrong with these companies, just that investors are realising their profit, while some are selling down to participate in private placements. These are some of the reasons the market has remained bearish in recent weeks.

"Under this circumstance, discernible investors are supposed to move in (take position), because very soon the market will experience a rebound," Oni enthused.


Official Explanations

Reacting, stockbrokers at CSL Stockbrokers Limited, in their summary of the trading last week, explained that: "This may not be unconnected with the circuit breakers introduced into the market to stem panic selling."

For analysts at UBA Global Markets Limited in their report during the week, by the latest move, "the Management of the NSE succeeded in ensuring stock prices did not trade below their previous close prices.

The alleged artificial control of share prices was, according to sources, due to a need to revamp some recent technical challenges with market data, while recent decline in overall market activity is looked into vis-a-vis recent policy measures.

For Yemi Otiniyi, a stockbroker with CVL Securities Limited, the rule is aimed at ensuring that small investors with maybe about 15,000 units of a company with shares outstanding of way past a billion units "cannot determine the fortune of another with, let's say, one million units".

Analysts also point to the broader implications of the new rule, such as the fact that companies with fewer shares in their register, as is the situation in the petroleum products marketing sub-sector, will not move for a very long while. One fall-out of the rule was the failure of Julius Berger Nigeria Plc's price to react to its recently released audited result for the year ended December 31, 2007.

The share price stagnated at N114.60 each, despite the director's proposal to distribute a total 500 kobo per share by way of a special dividend of 125 kobo and normal dividend of 375 kobo.

Responding, prices of stocks in the petroleum sub-sector, Otiniyi believes, will ensure price stability, even as he argues that a share split will not do much good for those companies since the core investors will continue to hold the bulk of the shares that are never traded upon.

Aside this, for this reason, investors with 100,000 shares must be ready to trade the entire volume to move price, just as there must be one buyer willing to take up everything on offer.

Explaining the new rule further, Otiniyi noted that for price movements to be effected, there must be an offer and bid for 100,000 shares. This simply means that where there is one million shares on offer from one client, there must be a bid for equal number crossed in multiples of 100,000; meaning that if the one million is sold in smaller fractions of less than the minimum number, the price remains unchanged.

Analysing the scenario further, the stockbrokers told Sunday Independent. "You have one million shares of a company and somebody with 5,000 shares at N10 each will just come and drop the price by about five per cent to about N9.50. He has just succeeded in making you poorer by about N500,000, which is much more than his stake in the company."


Stretching The Implications

Further

There are many stocks which price may remain stagnant for a long while, because their number of shares in issue is small, just as the core-investors hold the lion's share that are never available for trading on the floor.

For example, Guinness Nigeria has about 1.474 billion shares, of which 53.8 per cent is held by its core investors Guinness Overseas Limited and Atalantaf Limited; 49.87 per cent of Julius Berger's 300 million is held by Bilfinger Berger AG, while another 20.26 per cent is held by investment arms of four state governments.

Also, 72.24 per cent of 7up's 512.472 million units are also in the hands of Affelka S.A, while Excelsior Shipping Company holds 51.59 per cent of Flour Mills Nigeria. For Northern Nigerian Flour Mills, 68.3 per cent of its shares are held by five investors, while 66.21 per cent of Nigerian Bottling Company (NBC)is controlled by Molino Soft Drink S.A. (Luxembourg), CCBC Services Limited.

There is also the issue of companies that are currently priced high on the Exchange, which means, for example, that for the share price of Chevron Oil Nigeria to change from current level, there must be investors willing to stake up to N29.25 million; just as Oando's price may remain fixed until investors have as much as N21.5 million, and N25.092 million to effect change in the price of Total Nigeria.

Others in this category are Guinness Nigeria (N13.385 million); Cappa & D'Alberto, (N10.737 million); Nestle Nigeria (N22.5 million).

But Otiniyi does not agree that the rule is an indication that big-capped stocks will remain stagnant for ever because of the new rule. He believes that whenever it is time to move price, the big players would always show up in the market.

While there is so much uncertainty in the market, one thing everyone is sure of is that the situation would become clearer in the coming weeks. Until then, many are waiting to see where the pendulum would swing next.

[Gengen]

Does anyone have the full AUTHENTIC details of the new NSE rule? Is it

1. A stock must trade a minimum of 100,000 units before its price could move up or down.

OR

2. A stock must trade a minimum of 100,000 units before its price could move up with no downward movement allowed for now.

As highlighted by some earlier posts, some stocks gained on Friday (13/06/08) without trading 100,000 minimum units (E.g Mobil, CAP, Afprint, CAPALBETO, Longman, JBerger)

One thing I think the NSE needs to do give it better CREDIBILITY is to state rules CLEARLY and apply them without bias. Not doing this gives room for suspicion of shady deals going on.

However, from my own careful deduction from recent trading, the new laws for now may be:

1. No bids below the last trading day is allowed for now. This means no price drop due to bidding.
2. Price may drop due to dividend or split issues.
3. Price may increase above last trading day if higher bids are made IRRESPECTIVE of volume of shares traded. (This has happened for many stocks on Thursday/Fruday e.g JBerger gaining with only 1000 units traded)
4. The rule - A stock must trade a minimum of 100,000 units before its price could move up or down maybe implemented when stability returns???

Are these deductions right? Maybe yes or maybe no. However, this SHOULD not be case if rules are CLEARLY STATED AND EXECUTED.

[Babs_O]

Originally Posted by zainabusman

Statistically, the market is most likely to fall in September compared to August. Between 1998 and 2007, September has closed 7 out of 10 times lower than August.

Anecdotally, the reason is attributed to school fees and holidays. Most parents need to pay school fees in September and so have less disposable income. Some have taken a holiday as well, so are a bit short in liquidity. Furthermore, no good news comes in September. Most companies would have released their annual result even those with April year ends. In addition, quarterly results of most companies would also have been released in July or August. Whatever the reason, this phenomenon applies to other markets. The DOW has been down in September more often than up.

As for annual result, I think most companies with Dec to April year end would have released their result by end of August. I don’t expect any major announcement in September except perhaps PZ due to their May year end. I know GTB was late this year but frankly I don’t expect any company with Dec or March year end to be so late as to announce in September.

I think it is safe to assume September will be lower than August, or flat. Even if it goes up, in my view it will be very marginal. Generally, September is not a good time to sell. Here is an interesting information. From 1994 to 2007, September has always been lower than December except on 2 occasions. That was In 1997 and 1998 (bear years). For the last 9 consecutive years, September was lower then December. One can therefore say, statistically, September is a good time to buy. Also given that Madam NSE does not want a bear year, the trend is likely to continue. That is December will be better than September.

Remember that all the above info is about the past. There is no guarantee it will be repeated in the future.

Thank you for this prized research info.

[Michael]

Originally Posted by Gengen

Does anyone have the full AUTHENTIC details of the new NSE rule? Is it

1. A stock must trade a minimum of 100,000 units before its price could move up or down.

OR

2. A stock must trade a minimum of 100,000 units before its price could move up with no downward movement allowed for now.

As highlighted by some earlier posts, some stocks gained on Friday (13/06/08) without trading 100,000 minimum units (E.g Mobil, CAP, Afprint, CAPALBETO, Longman, JBerger)

One thing I think the NSE needs to do give it better CREDIBILITY is to state rules CLEARLY and apply them without bias. Not doing this gives room for suspicion of shady deals going on.

However, from my own careful deduction from recent trading, the new laws for now may be:

1. No bids below the last trading day is allowed for now. This means no price drop due to bidding.
2. Price may drop due to dividend or split issues.
3. Price may increase above last trading day if higher bids are made IRRESPECTIVE of volume of shares traded. (This has happened for many stocks on Thursday/Fruday e.g JBerger gaining with only 1000 units traded)
4. The rule - A stock must trade a minimum of 100,000 units before its price could move up or down maybe implemented when stability returns???

Are these deductions right? Maybe yes or maybe no. However, this SHOULD not be case if rules are CLEARLY STATED AND EXECUTED.

To be frank this is Rigging.

[Michael]

Originally Posted by billions

I base my decisions on fundamental analysis but i realized about 3 days ago that technical analysis is much more important than i tot,as a result,i spend more time to think about it.

The result of this meditation has been wonderful...

I'd really like to know what you've learnt, I am barely exceeding the market from a 5% above market when it was at 15. Explanation - too much GTB and Ikeja Hotel

[billions]

Originally Posted by Michael

I'd really like to know what you've learnt, I am barely exceeding the market from a 5% above market when it was at 15. Explanation - too much GTB and Ikeja Hotel

u can click on "stock price movement" in the cashcraft website ....i try to explain d trends represented in d graphs.

It is difficult explaining what i hv learnt bk i still hv many qns unanswered...i need to read a good book to support my tot.

.