Column: OMXS30 Analysis week 13

Column: OMXS30 Analysis week 13

28. maaliskuuta 2017 - Tradingportalen

Last week OMXS30 triggered short-term sell signals, followed by triggering buy signals. The volatility increased, followed by a slight increase in volume. From a long-term view, the stock index is still trading in a positive trend.

Only if OMXS30 starts trading below 1560 and around 1551 during high volume, sell signals are triggered. The positive outlook is not challenged, when the market is trading lower during low volume. Should the stock index starts trading above 1582 and around 1589, then new buy signals are triggered. Especially if OMXS30 starts trading above 1603, strong buy signal would be triggered.

An increased volatility appeared on Nasdaq OMX last week, and the market moved a little more than usual, but ended the week with a slight decline. OMXS30 fell -0.3 percent, and closed the week at 1579.70. Since the beginning of the year the stock index has gained +4.1 percent, adjusted for dividends the gain is about 4.9 percent.

Last week primarily Fingerprint caused a big drama amongst the OMXS30 stocks. On Tuesday, the company came out with a profit warning, slashed prognosis of the year and canceled dividend. The stock fell 32 percent during high volume of about 3 billion. The global stock market has since the U.S election been filled by optimism of upcoming investment in infrastructure in the U.S, and economic reforms, which is now threatened.

Daily chart of the OMXS30 between the 9th of November 2016 and the 24th of March 2017                              source: Aktiespararna

After the Swedish market closed on Friday, the health care reform was withdrawn due to low political support by the republicans, but the U.S stock market reacted very quietly despite the news. If the European market would react accordingly quietly during this week, then we could add this as another event which could not interfere with the positive trend in the market.

Last week OMXS30 technically showed weakness. The stock index received short-term sell signals when the market started trading below support levels of 1582, 1576, 1568 and 1560. OMXS30 did not close below the critical support level of 1560, which from a long-term view did not trigger a sell signal. Instead the stock index showed momentum, when it quickly bounced on 1551 and started trading above 1563.

The volume pattern was slightly higher, than we would have wanted to see during one of the days when the market was trading lower. During this day, Fingerprint Cards was the main factor, therefore this could be viewed as an anomaly in the volume pattern we always try to highlight. If the market once again would start trading lower during high volume, this could be an indicator for a big warning sign which comes to light.

 

Hourly chart of the OMXS 30 between the 3rd of March 2017 and the 24 March 2017                               source: Aktiespararna

Short-term we have received buy signals in our hourly chart, especially when we crossed 1564 and 1573. If the market would start trading above resistance levels of 1582 and 1589, more buy signals could be triggered.

The stock index would have to start trading above 1603, for new long-term buy signals to be triggered. If this happens during an increased trading activity, preferably during days with over 20 billion, these signals would be considered strong. In this case, we are looking at the market to trade towards resistance levels of around 1630-1670.

If the market would start trading above this price level, during low trading activity the signal would not be as strong. Maybe one or two percent move is only anticipated if this is the case, and rather a consolidation would occur. From a long-term view, we are still in a positive trend within OMXS30. The stock index is showing a clear pattern of higher highs and lows. OMXS30 is also trading well above the 200-day moving average.

 

Weekly chart of the OMXS 30 between the 5th of Janurary 2012 and the 24th of March 2017                  source: Aktiespararna

In our daily chart, we are keeping a close eye on the support level of 1560 and 1551. Should the index start trading below 1560, a first sell signal is triggered. A second sell signal would be triggered, if the stock index would start trading below the next support level of 1551. If the stock index would close below these supports during high trading volume, these would be considered substantially negative. Upcoming support levels of around 1540 and 1527 are also present, but if the trading volume is significant enough we are keeping a closer eye of the significant support level of 1499.

As long as we have low volume during the days when the market trades lower, we continue to consider these as potential buy opportunities for the long-term investor. Even though the Stochastic indicator is currently in a neutral position, last week it was almost trading at oversold levels before recovering.

For the short-term investor, last week presented short term sell signals when OMXS30 started trading below 1576, which could now be closed for profit taking, or at least taking a stop when the index started trading above 1560 and 1576. For the investor positioned for the market to rise, keep a closer look at resistance levels of 1582 and 1589, and if these are broken then look for 1603. Consider using a stop loss if the market starts trading below support level of 1573. Preferably move the stop if the position is showing further profit.

Should the market start trading below support level of 1573, the short-term investor could act and look for next support levels of 1564 and 1551. In this case consider using a stop loss if OMXS30 should start trading above 1573. Long-term investors could position themselves for the market to trade higher. As long as the long-term view for OMXS30 continues to be positive, and the trading volume pattern is positive. Consider buying more when the market is trading lower during low trading volume. If OMXS30 would start trading lower during high trading volume, start being significantly more careful.

 

 

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Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

 

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

4.10.2022 4:51:50