WEEKLY COMMENT MM PRIME TFI S.A. - March 23, 2015
The considerable bulls’ dominance with a break from awkward consolidation ended last week on the Warsaw Stock Exchange. Green color was noticeable on every trading day past week. The demand side was strengthened by Triple Witching on Friday. The US index also performed well. The FED statement has been acknowledged by the markets as dovish. Information about the removal of the phrase about patience in increasing interest rates was balanced with ensuring that it does not mean impatience. Thus, the prospect of postponing interest rate hike has turned investors on to the stock market and the S&P500 index returned to fight for the historical highs. The German DAX made up for losses from earlier in the week on Friday. The reports about situation in Greece had positive impact in this case. The list of specific reforms will be announced soon and the Eurogroup will provide the next tranche of bailout to Greece.
Finally, the German index ended the week with a minimum growth. The increase of 1.2% was slightly lower than recorded by the CAC40. The Euronext benchmark grew by 1.5% last week. Much better was the S&P500. The index has grown by as much as 2.7% last week and is near the historical peak at 2119 points now. Great results of overseas exchange was much weaker than the Warsaw Stock Exchange quotations. The blue-chip index was performing better than indexes in developed countries for the first time in a long time. It gained as much as 4.5% during week and leave behind SMEs indexes. Only the Turkish XU100 was performing better than the undervalued WSE with 7.7% growth last week.
The relevant data for the markets will be provided from the United States current week. Monday will bring us information on the rate of secondary market home sales in United States. Expectations connected with it, as well as with Tuesday’s data on new home sales, are high. The secondary market sales was growing previous year and both readings surprised the markets negatively current year. The next days will bring a number of further important data – CPI inflation, GDP deflator and annualized GDP. The consumer inflation has declined for five months and caused the descent to the lowest level (-0.7% m/m) in many years. At the end of the week we will return to the accents associated with the FED decisions. The market will be particularly interested in public appearances of Stanley Fischer and Janet Yellen on monetary policy in the United States on Friday.
Graph 1. WIG20 daily. Source: Stooq
After a few weeks of consolidation, blue chips received a positive signal for the bulls. It is the breakout of downtrend line in the vicinity of 2350 points and opening the way to the resistance at 2460 points. Despite average volume, the signal is very positive. The index previously tried to break the downtrend line twice, in December and March. Each time the attempt was unsuccessful. The white marubozu candle on Thursday was supported by Friday’s increase and by overcoming several smaller resistances at the same time. The support is at the level of 2376 points and test of bulls’ strength would be the fight for defense of the growth gap between 2348-2352 points.
Graph 2. Enea daily. Source: Stooq
Interesting technical situation was noticeable on the Enea chart last week. Significant increases formed the relatively rare V formation with similar inclination angle of arms, which may be the forecast of trend change. The positive scenario would require overcoming the first downtrend line visible on the chart and breaking resistance at 16.65 PLN. The bulls dominance may herald a quick return to support levels near 15.50 PLN test.
Authors: MM Prime TFI S.A. Investment Management Team
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