Data Analysis

A Dance at the Stock Market

As part of my New Year resolution, I decided to dive into trading shares at the Nairobi Securities Exchange thanks to Abacus. First I had to decide on what to trade – here they go!

Live Orders
Live Orders

Strategy on picking companies.

  • Last year, all the NSE indices indicated a bears market, which provides an opportunity to buy shares on the cheap. In this, I looked for counters that have shown signs of reversal.
  • For a reversal to have a quick turn around I argued it needed to have a comparatively less number of shares issued.
  • The stock trades below listing price – market markers normally want the price to go above listing price to boost general market confidence.
  • Share price must have hit below Kshs. 10 provide an opportunity for quicker bulls run.

Sameer Group (FIRE)

The technical analysis diagram below shows a reversal of lowest price began last year and a general upward trend has been archived. I utilize two indicators to gauge the strength of the trend, these are the Relative Strength Index (RSI) and Stochastic Relative Strength Index (Stochastic RSI). They both shows if a stock has reached saturation level (oversold) and prices are unlikely to go further down.

Next is to evaluate the opportunity using a risk-reward ratio. Given the price swing of the previous year the only realistic risks-reward ratio achievable in a month is 1:1 – meaning there’s a chance 50% chance I could win the trade and a 50% chance I could lose it. This is indicated in the green shading in the diagram that captures my take-profit level and stop loss level. I put the BUY order for the stock yesterday at

Sameer Group
Sameer Group

Ken Gen
KenGen like Sameer has a positive reversal trend. The listing price in 2006 was Kshs 11.60 and the share yesterday traded at Kshs 7.60 – good room for upward gains. But My take-profit level is at 9.50 which gives me a risk-reward ratio of 1:2 going by previous support and confidence levels. Today’s trade proves the trend (bingo!)

Ken Gen
Ken Gen

Longhorn Publishers (LKL)
Well, I decided to take a look at this counter when I read in the newspaper that book prices have gone up. Given it the begin of the year, book publishers stand to be profitable hence attractive to investors. I dived into the technical analysis to check if the theory is supported.

Longhorn Publishers
Longhorn Publishers

Longhorn shares debuted at Kshs. 20, currently trading at 4.85, the trend is bullish – today trades at 5:00 (good). The risk-reward is quite good. So, my portfolio is not doing quite bad. I’ll revisit these trades at the end of the month.

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