Respite

The last two months were a nightmare for investors on the Nigerian Stock Exchange (NSE). The NSE All Share Index (ASI) went down for 42 consecutive trading days loosing 32.4% in the process. Value of transactions also plummeted and stocks became almost illiquid as there were no buyers in sight. On November 5th the ASI closed at 33,754 down 41.8% for the year and a new 52 week low.

It was therefore a huge relief when on 6th November the ASI went up by 0.35%. A small but giant leap! The collective sigh of relief by investors was almost audible in the papers the next day.

The uptrend lasted 8 days with the ASI gaining 12.6% closing at 38,018. Another downward trend started on 18th November with the ASI loosing 8.8% in 4 days. This was expected as the ASI this year tend to move up or down for a maximum of 8 trading days (except during the 1% downward rule).

Despite the current negative trend I believe most investors were very happy to have had 8 days of respite. The question now on everybody’s lips is will the previous low of 33,754 be breached? A breach will not bode well for the market in general. The next two to three trading days will provide an answer.

In the meantime, it is best to sit out this trend until it is clearer where we are heading. The only clear thing so far is that barring a miracle, the Index will close down for the year. That will be for the first time since 1999. Ouch…..