Weekly Market Musings

The market closed down for the week in what I think was some profit taking by investors at the bourse. The past week saw some 11 companies advance, 29 fell and 10 remained unchanged. Frankly I see this as only a “bump in the road”, the trend is still firmly up and in any case, a little selling is expected especially when we have had such an amazing run lately. The top 5 best performing stocks for the week were UNGA (+23.50%), KUKZ (+10.00%), C&G (+7.14%), EVRD (+5.77%) and SGL (+4.44%).

The weekly NSE 20 share index reveals a market that has been repelled by the weekly SMA 50 resistance level. What we have been experiencing is the expected retracement probably back to the EMA 30 weekly support which am convinced will hold for now.

Judging from Friday’s close, it looks like we have broken immediate support. Frankly, am not even remotely worried about this; the more significant support level is around the 200 day moving average level of 3173. if this is broken, then I would seriously begin to worry.

Now what’s in store for the coming week? Well only time will tell. All we need to see is a close on Monday above 3296 (Friday’s close) to signal a resumption of the rally. A close below this closing price would indicate further weakness ahead.

Another point of interest is the fact that daily RSI moved below the 50 level. This may be the very thing to watch now as the indicator tries to find support. An attempt to move above the 50 level could be all the fuel the market needs to push even higher.

All in all, even with a down week at the Nairobi Stock exchange, I still remain optimistic and am a buyer of this market. We may see further weakness ahead and we may very well see prices go as far down as to challenge the 200 day moving average support (an extreme) but even with such a move, as long as support is not broken, then I welcome the opportunity to “back up the truck and reload”.

~ by Ade on July 11, 2009.