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What is 'Technical Analysis'

Technical analysis is a trading tool employed to evaluate securities and attempt to forecast their future movement by analyzing statistics gathered from trading activity, such as price movement and volume. Unlike fundamental analysts who attempt to evaluate a security's intrinsic value, technical analysts focus on charts of price movement and various analytical tools to evaluate a security's strength or weakness and forecast future price changes.

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BREAKING DOWN 'Technical Analysis'

Technical analysts believe past trading activity and price changes of a security are better indicators of the security's likely future price movements than the intrinsic value of the security. Technical analysis was formed out of basic concepts gleaned from Dow Theory, a theory about trading market movements that came from the early writings of Charles Dow. Two basic assumptions of Dow Theory that underlie all of technical analysis are 1) market price discounts every factor that may influence a security's price and 2) market price movements are not purely random but move in identifiable patterns and trends that repeat over time.

The Underlying Assumptions of Technical Analysis

The assumption that price discounts everything essentially means the market price of a security at any given point in time accurately reflects all available information, and therefore represents the true fair value of the security. This assumption is based on the idea the market price always reflects the sum total knowledge of all market participants.

The second basic assumption underlying technical analysis, the notion that price changes are not random, leads to the belief of technical analysts that market trends, both short term and long term, can be identified, enabling market traders to profit from investing according to the existing trend.

[Using price and price changes is just the beginning with technical analysis. If you are interested in learning how technical analysis, chart strategy, and technical indicators are all used to create actionable trading plans, check out Investopedia Academy's Technical Analysis Course.]

How Technical Analysis Is Used

Technical analysis is used to attempt to forecast the price movement of virtually any tradable instrument that is generally subject to forces of supply and demand, including stocks, bonds, futures and currency pairs. In fact, technical analysis can be viewed as simply the study of supply and demand forces as reflected in the market price movements of a security. It is most commonly applied to price changes, but some analysts may additionally track numbers other than just price, such as trading volume or open interest figures.

Over the years, numerous technical indicators have been developed by analysts in attempts to accurately forecast future price movements. Some indicators are focused primarily on identifying the current market trend, including support and resistance areas, while others are focused on determining the strength of a trend and the likelihood of its continuation. Commonly used technical indicators include trendlines, moving averages and momentum indicators such as the moving average convergence divergence (MACD) indicator.

Technical analysts apply technical indicators to charts of various timeframes. Short-term traders may use charts ranging from one-minute timeframes to hourly or four-hour timeframes, while traders analyzing longer-term price movement scrutinize daily, weekly or monthly charts.

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CBN: Import Prohibition Attracts $10b Investment

The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, said the import prohibition policy of the apex bank has attracted investment valued at $10billion into the country.

The CBN chief spoke in Abuja during an interactive seesion with the Joint House Committees on Finance, Appropriation; Aids, Loans & Debt Management and Budget Research on the 2018-2020 Medium Term Expenditure Framework/Fiscal Strategy Paper.

Represented by Deputy Governor, Operations, Adebayo Adelabu,Adebayo Adelabu, the CBN governor said a reduction in inflation rate from 18.9 per cent to a little above 15 per cent has been achieved by key fiscal policies introduced by the administration which were aimed at stabilising the economy.

He said local manufacturing of some of the prohibited items, such as building materials–granite, marble, among others, has started by some companies established across the country. This he said would create jobs for the youths.

Emefiele said the official exchange rate of N305/$ and the parallel market’s N360/$ have been stable over the past few months due to the intervention of the CBN in agriculture, solid minerals, manufacturing sectors and petroleum sector which has been yielding positive results.

The CBN and Federal Account Allocation Committee (FAAC) agreed that proceeds from forex transaction would be remitted into the Federation Account for the three tiers of government to share, and reduce budget deficit.

Members, however took him to task on the bailout given to states and he said CBN does not bailout to states as provided in the CBN Act, 2007.

He added that since they cannot afford the high interest rate from commercial banks, intervention fund were given to critical sectors of the economy at single rate and was channeled through Development Financial Institutions (DFIs).

However, Permanent Secretary of Federal Ministry of Finance, Mahmud Dutse, who respresented Kemi Adeosun, Minister of Finance requested the support of the National Assembly towards boosting the 20 per cent independent revenue from government owned enterprises, saying there were plans to sanction CEOs of agencies who fail to adhere to the policy.

He said Nigeria’s tax regime should be reviewed as it is one of the lowest in the world and less than one-third of Africa’s ratio.

He said in line with the Economic Community of West African States (ECOWAS) tariff policy, the only proposal for tax review applies to excise duties on alcohol and cigarette.

Executive Chairman, Federal Inland Revenue Service (FIRS) Tunde Fowler, in his presentation disclosed that N3.233 trillion was realsied over the past 10 months, an amount that represented 79.35 per cent of its collection target for 2017 fiscal year.

The FIRS justification for 2018-2020 revenue framework, he said, was based on the Federal Government Economic Recovery and Growth Plan (ERGP).

He said its tax assessment between 2013 and 2015 revealed N1 trillion after its tax audit exercise base deployed technology which has aided the tax agency to increase its revenue.

Various measures have been adopted by FIRS to ensure increased collections of Federal Government dues in the corporate and individual taxes.

Fowler added that the new modalities structured for optimal access of accruable due from the Voluntary Assets and Income Declaration Scheme (VAIDS) had yielded over $54 million (N16.73 billion) and N207.41 billion) totalling about N16.40 billion at the federal level only.

“We have stepped up enforcement activities against tax defaulters on different fronts. These include placing non-compliance stickers on business premises of tax payers who have back-logged of taxes owed and have not made any move to liquidate such.

“We have adopted substitution as an enforcement tool by putting a lien on the bank account of errand tax payers. This, in my view, will serve as deterrent to defaulters and consequently increase tax collection.

“FIRS has so far collected over N6 billion and $4.2 million (over N1.4billion) totalling over N7.7 billion. This drive is continuous and will be unrelenting going forward,’’ he said.

Fowler revealed that as from December,31, 2017, 34 companies will no longer enjoy pioneer status.

Bala Wunti, NNPC Corporate Planning & Strategy in his presentation expressed confidence that the 2.3million barrels per day(mbpd) oil production and $45 per barrel are possible and that positive results are being yielded by the negotiation between Federal Government and Niger Delta stakeholders.

Nigeria, he said, recorded 18 per cent over-performance in the 2017 crude oil benchmark based on improved dynamics in supply and demand at the international market, just as he expressed regrets over shutting down of major export infrastructure including Trans-Forcados Pipeline.

, Minister of State for Budget & National Planning, Zainab Ahmed, in her speech earlier said total oil production is pegged at 2.51 mbpd while budget oil production volume net incremental was pegged at 2.3mbpd; $45 oil benchmark; while exchange rate was pegged at N305/$ for fiscal year 2018.

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Nigeria Raises $3bn At International Capital Market

The Minister of Finance, Mrs Kemi Adeosun, says Nigeria has raised $3bn at the international capital market.

She made this known in a statement issued by Mr Oluyinka Akintunde, the Special Adviser, Media and Communications on Wednesday in Abuja.

She said the Notes comprised a $1.5bn 10-year series and a $1.5bn 30-year series.

“The 10-year series will bear interest at a rate of 6.5 per cent, while the 30-year series will bear interest at a rate of 7.625 per cent.

“By raising $1.5bn of 30-year notes, Nigeria has emulated a number of our international contemporaries, including Brazil, South Africa, Argentina and Egypt to issue long-dated debt as the basis for long-term infrastructure financing.

“It will also establish a benchmark for the private sector to extend the tenure of its own financing.

“This is critical to delivering an environment within which both the government and the domestic private sector can rapidly enhance its ability to fund investments in infrastructure projects and broader project financing.

“The full $1.5bn proceeds of the 30-year notes are allocated to 2017 capital projects.’’

According to her, the 30-year notes will benefit Nigeria because it demonstrates strong investor confidence in the Nigerian economy and growth, while providing the long-term funding required to finance infrastructure projects at affordable interest rates.

She said the provision of infrastructure was critical to the long-term sustainability of the nation’s economic growth and would provide a more productive economy for current and future generations of Nigerians.

They also provide a benchmark for long-term private sector funding, she added.

She said the proceeds would be split between the 2017 budget capital projects ($2.bn) and re-financing some of the nation’s short-term domestic debt ($500m).

Capital projects under the 2017 budget include roads, rail, power and housing projects which are crucial to the delivery of the economic recovery and growth plan.

Adeosun said Nigeria raised a further $1.5bn of 10-year notes, and presently had a full ‘basket’ of international debt notes, including five-year, 10-year, 15-year and 30-year issuances trading in the market.

She said this provides international investors with the full range of tradable options in Nigeria’s international debt.

According to her, of the $1.5bn of 10-year notes, $1bn will be allocated to the 2017 capital budget under the $2.5bn approval from the National Assembly.

She said the balance of $500m allocated to the refinancing of domestic debt was in line with the nation’s strategy to re-balance its domestic/international debt profile.

She, however, said the full amount of $5.5bn approved by the National Assembly was not raised because it was approved in two separate resolutions.

“One for $2.5bn to fund capital expenditure in the 2017 budget, and one to re-finance existing domestic debt of $3bn, which is not time bound.

“Our intention for this issuance was to meet our short-term requirement to fund $2.5bn for the 2017 budget.

“Following significant investor interest of over $11bn, we brought forward a further $500m of funding toward the refinancing of existing domestic debt and will assess options for concluding the refinancing process in the New Year.

“Restricting this issuance to $3bn also enabled us to optimise the price of the notes, which at 6.5 per cent (10-year) and 7.625 per cent (30-year) are significant improvements to our existing portfolio.’’

On the issue of re-balancing the nation’s debt portfolio and increasing international borrowing, she said Nigeria had over the last five years, been overly focused on domestic debt, which was short term and high cost.

“This means that we pay too much and have to regularly refinance existing debts rather than having the security of longer term instruments.

“You can see this clearly reflected in our debt service to revenue ratio, which at 45 per cent as of Third Quarter (Q3) 2017, is higher than we would like.

“Having returned the economy to growth in 2017, and secured a stable and liquid exchange rate regime, we are focused on addressing this issue by diversifying our sources of debt to achieve an optimal balance.

“So far, we have moved our domestic/international debt ratio from 18:82 to 23:77 and we expect this to improve to circa 27:73 by year end, with an ultimate target of 40:60.

“This will deliver significant savings in our debt service costs, with provisional estimates demonstrating savings of up to N91 billion in 2018 alone.’’

(NAN)

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Banks may soon publish list of accounts without BVN

As the expiration of the November 3 deadline for all account holders to obtain Bank Verification Numbers (BVN) ended on Friday, compilation of accounts without BVN has started in banks.

Deposit Money Banks, are carrying out the exercise sequel to the order of the Federal High Court in Abuja and may soon publish the list in newspapers in line with the directive of the court.

According to bank executives, the list after compilations will also be sent to the Federal Government through the Central Bank of Nigeria.

Recall that the court presided over by Justice Nnamdi Dimgba, had on October 17, ordered the Central Bank of Nigeria (CBN) and the 19 commercial banks in the country, to reveal all accounts in their custody and the balances in such accounts.

The ruling was as a result of an ex parte motion, the Attorney General of the Federation (AGF) filed on behalf of the Federal Republic of Nigeria.

Justice Dimgba had directed that banks should disclose the details of all such accounts, their owners and their proceeds in their affidavit of compliance deposed to by their Chief Compliance Officers.

He had also given an interim order mandating banks to freeze all BVN-less accounts by denying “all outward payments, operations or transactions,” into such accounts pending the hearing of the substantive application seeking the forfeiture of the balances in the accounts to the Federal Government.

Further on the matter, the court asked banks to also disclose “any investments made with funds from these accounts without BVN in any products.”

The investments include “fixed/term deposits and their liquidation and interest incurred, bank acceptances, commercial papers and any other relevant information related to the transaction made on the accounts.”

The CBN and the Nigeria Inter-Bank Settlement System PLC were as well asked “to validate the information contained in the affidavit of compliance/disclosure filed by the respective 19 banks” within seven days from the date of service of the orders on them.

Defendants in the case are Access Bank PLC, Citibank Nigeria, Diamond Bank PLC, Ecobank Nigeria, Fidelity Bank of Nigeria PLC, First Bank of Nigeria, First City Monument Bank PLC, Guaranty Trust Bank PLC and Heritage Bank PLC.

Others are Keystone Bank, Skye Bank PLC, Stanbic IBTC Bank PLC, Union Bank of Nigeria PLC, United Bank for Africa PLC, Unity Bank PLC, Wema Bank PLC, Zenith Bank PLC and the CBN.

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NSE RoundUp! Nigerian equities net N165bn gains amidst global equities rally

Nigerian equities sustained a largely bullish performance during the immediate past week, leaving investors with net capital gains of N165 billion at the weekend. Benchmark indices at the Nigerian Stock Exchange (NSE) showed widespread positive sentiment as quoted companies rounded off the submission of their third quarter earnings.

The deadline for the submission of the nine-month third quarter earnings for quoted companies elapsed on Tuesday October 31, 2017. Most active companies met the deadline.

The All Share Index-the value-based index that tracks share prices at the NSE, trended upward to 36,939.59 points at the weekend as against its week’s opening index of 36,462.26 points. This represented a week-on-week average return of 1.31 per cent.

Aggregate market value of all quoted companies correspondingly rose from its week’s opening value of N12.619 trillion to close the week at N12.784 trillion, representing net capital gain of N165 billion. The uptrend nudged the average year-to-date return at the Nigerian equities market to 37.45 per cent..

The performance of the Nigerian equities market highlighted the global demand for quoted shares during the week. From the advanced markets of Europe, Britain and America to the emerging markets of the Asia and Africa, global equities showed a largely positive performance.

In Africa, South Africa’s FTSE-JSE All Share Index appreciated by 1.6 per cent. Kenya’s benchmark NSE 20 Index posted a return of 4.2 per cent. Egypt’s EGX 30 Index gained 2.6 per cent while Ghana’s GSE Composite Index posted a modest week-on-week return of 0.6 per cent.

In the developed and global emerging markets, United Kingdom’s FTSE Index rose by 0.8 per cent. In United States of America, while the S & P 500 was unchanged, the US NASDAQ Index rose by 0.6 per cent. Germany’s XETRA Index posted a gain of 1.9 per cent. Japan’s Nikkei 225 Index rose by 2.4 per cent. Hong Kong’s Hang Seng Index inched up by 0.6 per cent. France’s CAC 40 Index posted a modest gain of 0.2 per cent while India’s BSE Sens indicated above-average return of 1.6 per cent. However, Brazil’sIbovespa Index declined by 3.5 per cent. Russia’s RTS Index slipped by 2.2 per cent while China’s Shanghai Composite Index declined by 1.3 per cent.

Total turnover at the Nigerian stock market stood at 1.363 billion shares worth N17.714 billion in 21,891 deals last week in contrast to a total of 1.394 billion shares valued at N16.403 billion that exchanged hands in 19,195 deals two weeks ago. The financial services industry led the activity chart with 1.046 billion shares valued at N9.032 billion traded in 12,847 deals; thus contributing 76.79 per cent and 50.99% to the total equity turnover volume and value respectively. The consumer goods industry followed with 119.907 million shares worth N5.109 billion in 4,827 deals. The third place was occupied by healthcare industry with a turnover of 70.587 million shares worth N77.530 million in 349 deals.

The three most active stocks were FBN Holdings Plc, Diamond Bank Plc and United Bank for Africa Plc, which accounted for 497.016 million shares worth N2.947 billion in 4,205 deals, contributing 36.48 per cent and 16.64 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 1.16 million units of Exchange Traded Products (ETPs) valued at N6.404 million executed in 13 deals compared with a total of 104,544 units valued at N11.506 million traded in seven deals two weeks ago.

In the sovereign debt market, a total of 2,775 units of Federal Government bonds valued at N2.770 million were traded in four deals, compared with a total of 559 units valued at N485,803 traded in five deals penultimate week.

All sectoral indices at the Exchange closed positive with the exception of the NSE Consumer Goods Index, which slipped by 0.07 per cent. The NSE 30 Index-which tracks the 30 most capitalised companies at the Exchange, posted a gain of 0.92 per cent. The NSE Banking Index appreciated by 0.27 per cent. The NSE Insurance Index rose by 1.52 per cent. The NSE Oil and Gas Index posted a gain of 1.44 per cent while the NSE Industrial Goods Index rose by 1.45 per cent.

There were 37 advancers against 29 decliners last week as against 33 advancers and 32 decliners recorded in the previous week. University Press recorded the highest gain of 26.34 per cent to close at N2.59. Learn Africa appreciated by 19.05 per cent to close at N1 while Flour Mills Nigeria rose by 18.23 per cent to close at N35.47 per share.

On the downside, Newrest ASL led the decliners with a drop of 18.3 per cent to close at N6.43. Linkage Assurance dropped by 13.3 per cent to close at 78 kobo while Unilever Nigeria lost 6.5 per cent to close at N40 per share.

“In the coming week, we expect the positive performance to be sustained given the increasingly favourable condition in the oil market – a major anchor of the business cycle. Following a broadly positive performance and investor sentiment this week, we expect the market to sustain momentum as knock-on effect of the oil rally buoys investors’ appetite for Nigerian assets,” analysts at Afrinvest Securities stated.

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NSE LIVE! Equities lose N36b amidst profit-taking

After two positive consecutive trading sessions, Nigerians equities came under sell pressure on Thursday as investors turned round to take profit. With 27 decliners to 19 advancers, the overall market position shifted downward, dropping by N36 billion.

The All Share Index (ASI)-the common value-based index that tracks share prices at the Nigerian Stock Exchange (NSE), declined by 0.29 per cent to close Thursday at 36,517.48 points as against its opening index of 36,622.85 points.

Aggregate market value of all quoted equities at the Exchange dropped from its opening value of N12.675 trillion to close at N12.639 trillion. The decline depressed the average year-to-date return for Nigerian equities to 35.88 per cent.

Most sectoral indices also closed negative. The NSE Insurance Index dropped by 1.2 per cent. The NSE Consumer Goods Index dropped by 1.0 per cent. The NSE Oil & Gas Index dipped by 0.5 per cent while the NSE Banking Index slipped by 0.20 per cent.

The momentum of activities improved with investors staking N4.22 billion on 356.80 million shares in 4,384 deals. United Bank for Africa was the most active stock with a turnover of 90.5 million shares valued at N842.01 million. Fidelity Bank followed with a turnover of 37.07 million shares worth N62.42 million while Custodian and Allied placed third with 35.54 million shares valued at N142.10 million.

Read also: National grid to add 540MW as Mobil Producing Nigeria reaches new deal

Brewers led the decliners. Nigerian Breweries-the second most capitalised quoted company, led the downside with a drop of N6 to close at N155. International Breweries followed with a drop of N2.72 to close at N51.78. Forte Oil dropped by N2.12 to close at N40.30. PZ Cussons Nigeria lost N1 to close at N23. Cement Company of Northern Nigeria dropped by 47 kobo to close at N9.70. Mobil Oil Nigeria declined by 40 kobo to close at N155.60 while Guaranty Trust Bank lost 30 kobo to close at N41.70 per share.

On the upside, Nascon Allied Industries rose by N1.55 to close at N16.77. Presco followed with a gain of N1.50 to close at N66.50. Lafarge Africa added N1.46 to close at N52. Dangote Sugar Refinery rose by N1.28 to close at N15.84. Danfote Flour Mills gathered 76 kobo to close at N8.26 while Guinness Nigeria appreciated by 65 kobo to close at N101 per share.

“Given today (Thursday)’s negative performance, we expect nine-month 2017 releases to continue to dictate market performance in the near term. However, we advise investors stay bullish on stocks with strong fundamentals,” Afrinvest Securities stated.

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5 money moves to make in your 30s

         Some of the basic financial rules stay the same as you get older (i.e., pay off debt and keep saving), but there are some steps that are more important at some some stages than at others.For 30-somethings, it means paying off more debts as your income grows, reevaluating current spending habits, and diving head first into adulthood by updating your insurance coverage.Taking care of these responsibilities is essential to making sure you're on stable financial footing.Below, you'll learn why each one of these steps is important to tackle before you move on to the next stage of life.

• 1. Increase retirement contributions Here's what the median retirement savings amount is for all Americans (hint: it's not great) between 1989 and 2013, which is the latest data available from the Economic Policy Institute (EPI):As you can see, 32- to 37-year-olds had a median savings amount of just $480 in their retirement savings in 2013 (yikes!), and that number was down from $1,123 in 2007. EPI notes that the median savings numbers are so low because nearly half of Americans don't have any retirement account savings at all.These numbers show just how important it is to not just start a retirement savings account, but to keep funding it as well.If you already have a 401(k) at your current job and save a specific percentage of your income then great! But now is the time to slowly raise that percentage. Consider bumping up contributions by 1 percentage point as a first step. If you can handle more that's great, but the point is to start putting more money aside. If you can't swing an increase in contributions right now, then consider doing it the next time your employer gives you a raise.Also, if you're not taking advantage of your employer's matching 401(k) contributions, then start with that first. Make sure you're contributing enough money to your 401(k) to get the full matching amount from your employer. Remember, in 2017 you can max out your retirement contributions at $18,000.If you don't have a 401(k) through your employer, then make sure you've set up an individual retirement account (IRA) for yourself, and that you've automated your contributions.

• 2. If you're not investing, start now Adding to your 401(k) and IRA is one thing, but 30-somethings shouldn't overlook investing their money in other ways as well.Investing in stocks can be a great choice, but if you're not into picking individual stocks then selecting a low-cost (and low maintenance) index fund is also a good choice. A Vanguard 500 Index Fund has an expense ratio of just 0.14%, and the company's overall index fund expense ratios are 71% lower than industry averages.This fund tries to match the returns of the S&P 500, and has historically achieved annual returns of about 10%.In short, you'll be well diversified right from the start, and the low expense ratio means that the vast majority of your gains can go straight back into reinvesting in the fund -- instead of a fund manager's pocket.

   

• 3. Evaluate your insurance needs This one isn't all that exciting, but it's still very important. If you've gotten married, had kids, bought a house, or made any other major changes in your 30s, you should take a good look at your insurance needs and make sure you have the proper coverage.For example, if you don't have any life insurance then buying a good, inexpensive,term life insurance policy is a smart way to ensure that your family receives money for a mortgage, your family's living expenses, etc. if you die. There are lots of different options for these based on what your payout amount would be and how long you want the term to last for. The most important part, however, is just making sure that you have a policy in place.It's also smart to look into other types of insurance you may need as well, such as disability insurance, an umbrella policy to extend your renter's insurance or homeowner's policy, and health insurance. Just remember not to overspend on insurance you don't need.

• 4. Re-evaluate your budget and pay off debt You may still be spending money in the same carefree way you did when you were in college, but your financial responsibilities are likely to grow in your 30s. That's why it's a good time to reevaluate your spending habits.I occasionally go through my own finances to see if there are any services I'm paying for that I don't really use, or places I'm spending too much money and need to cut back on. The idea isn't just to trim the fat, but to also take that money you're spending and apply it to any existing debt, like student loans.According to the latest data (from 2015), 30-somethings account for a larger amount of student loan debt than any other age demographic, with $408 billion owed.If that's you, or if you've racked up credit card debt, then it may be time to take a look at your budget and how you can reallocate some of your spending to paying off debt.

• 5. Add more to your emergency fund and savings account And the last but certainly not the least money move you should make in your 30s is to make sure you're properly funding your savings account. According to a recent Go Banking Rates survey, more than half of Americans have less than $1,000 in savings, and this includes many people in their 30s.A good goal to shoot for if you have little-to-no savings is get your account to $2,000. That's the amount the Federal Reserve Bank of New York says it will take to overcome an average-size financial emergency. That is, of course, just a starting point. Ideally, you want to have enough in savings so that you can cover three to six months of living expenses in case you lose your job. But don't be overwhelmed with getting to that point. The best way to increase your savings without thinking about it is to set up automatic monthly withdrawals from your checking account to your savings account. This will help you jump start the savings process and keep it on autopilot as your build up your account. Some final thoughts Getting older usually comes with more responsibilities, and that includes setting personal financial goals. It's easy to feel overwhelmed about getting your finances in order, but just remember that any steps you can take to save more, spend less, and pay off debt will help you achieve your goals. If reading through all of these money moves make you nervous, then start tackling one of them and focus on that first and then move onto the next step. Any progress is better than none.

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