Redemption

We are in the summer and it is meant to be quite but the NSE has been simmering in the last couple of trading days. The NSE All share Index has gone up for 8 straight days and is on the brink of a possible gain on day 9.

In the last 18 months i have come to realise that a lot of things are very possible on the NSE. The expectation is that with the common year end, the last qtr will be tight. But then the CBN cut the Monetary Policy Rate. Oil price has stabilized above $55 for some time reducing the federal deficit. In the last 1 week the Naira has fallen in the official market to N150.25 to the $ further reducing the deficit. So despite the collapse of power and security concerns, the economy is looking like it may finally get some life. Furthermore world markets are looking up with the Dow crossing 9,000.

Looking at the NSE Index it has now gone up for 8 trading days. It faltered on 30th July but did not go down and then it went up on 3rd August when it looked like it might be on its way down. The last time this sort of resistance happened was between 16th April and 24th. It had earlier happened between 1st to 7th April. It was thus in April that the Index resisted a fall and then burst up in May. It then went on that remarkable run that saw it come within whiskers of the year opening value.

However, a not very common occurrence is that the value of transactions went up gradually for 6 trading days starting on 24th July and reaching a climax on 31st July. Value fell today. Is that the sign of a reversal? Or are we about to see another remarkable run? Possibly. Will i be happy if the Index continues to go up carrying us towards another remarkable gain? Yes off course! It will offer me another opportunity to quietly take some gains. I have already realigned my portfolio to my satisfaction but i have learnt it pays to graciously accept unreasonable gains.

For those considering buying into the market, i will say exercise due care and do not get caught out in what might be a suckers rally. Ensure you have tight stops for any speculative buy.

Perhaps this is the chance for some smart banks to quietly and slowly get rid of the toxic assets in their books and in the process get much needed liquidity boost and offer beleaguered shareholders some redemption.