Equities: Going Neutral Short-Term

Kenya's Nairobi Stock Exchange-20 (NSE-20) equity index has put in a disappointing performance recently. Despite making a bullish break out of a six-month trend channel in late April, the market has made only slow gains towards the 3,100 area we have been eyeing since April 1. It has risen by just 2.0% (since April 1) to close at 2,871 on May 26. Given the lacklustre performance amid a sharp uptick in international risk appetite, and the fact that the market has fallen slightly in recent days, we are now turning neutral on the NSE-20. From a technical perspective, a fall through short-term support around 2,600 would augur for further losses, potentially taking the market back into the trend channel shown on the chart.

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