OMXS30 stuck between 1600 and 1657…

OMXS30 stuck between 1600 and 1657…

7. kesäkuuta 2017 Autor Tradingportalen

Last week OMXS30 tested resistance area at around 1657. If OMXS30 starts to find ground above this price level, during a stronger momentum, this could indicate a higher move up ahead. This could also potentially mean a move towards all time high from 2015 at around 1720. The long-term trend is still showing strength, but from a short-term perspective, OMXS30 could be stuck between support level at 1600, and resistance level at around 1657. The volume patterns, together with the negative move in the dollar and the long interest rates, has currently increased the probability that OMXS30 will continue to move sideways. Within this current consolidation, a move below support levels at 1645, 1636 and at 1626 could send signal of a potential lower move up ahead…

Last week Nasdaq OMX gained slight ground during a relatively irregular trading. The stock index OMXS30 gained +0.7 percent, and closed the week at 1646.67. The stock index has gained +8.5 percent so far this year, +11.9 percent when adjusting for dividends. The long time development of the index OMXS30 is as follows:

Weekly chart of the OMXS30 between the 1st of June 2012 and the 2nd of June 2017                              source: Aktiespararna

Especially Ericsson stood out last week among the companies listed within OMXS30. The stock received positive momentum when it was confirmed that Cevian Capital has bought significant stock posts in the company. Securitas also gained some ground, on news that the stock will be included in Carnegies small cap index. Several funds follow this index.

According to our opinion, the long-term positive trend for OMXS30 is likely to continue. In our weekly chart below, technical support levels could be located at 1600 and around 1550 based on a long-term view. If the stock index would find ground above technical resistance levels at 1657, and around 1720, an even higher move could be in the ballpark. However, the future development needs to be seen.

Weekly chart of the OMXS30 between the 16th of January 2015 and the 2nd of June 2017                              source: Aktiespararna

Moving on to a more short-term view in our daily chart below, the current situation could approximately be more complicated. Even if the trends are showing strength overall, the index may be stuck consolidating between 1600 and around 1657.

Daily chart of the OMXS30 between the 17th of January 2017 and the 2nd of June 2017                              source: Aktiespararna

OMXS30 traded well above the short-term resistance levels at around 1636 and 1642. This could potentially indicate we are about to move higher.

However, the index closed right above the daily low on Friday, after the index broke resistance 1642, and tested resistance at around 1657. This could be a sign of weakness. This may increase the probability that OMXS30, based on a short-term view will have trouble finding ground above 1657.

A potential negative indication could appear, if the index would start to trade below 1636-1642, around 1626 but specifically the area at 1600-1604. If such a move would occur in a situation where there is an increased trading activity, this could be considered to be more of a significant signal.

The Stochastic-indicator is still within a neutral area. Hence there are no signs of where OMXS30 will end up next.

Signs of continued strength may be seen in the long-term 200-day moving average, which is currently located at 1522. The index is also showing a clear pattern of higher highs and lows.

According to our opinion, potential warning signs have appeared. We note that the momentum is dropping pace, and that the volume has been relatively high during some of the days when the market moves lower. This could be a sign of sellers being more alert and aggressive, and that the buyers are not as dominant as before.

Other warning signs could be seen in the weakness in the U.S Dollar, and the lower move in long-term rates both in the U.S and in Europe. Both USD and long-term rates have shown signs of potential weakness. An important question is if Trump will be able to deliver stimulus reforms… Or will he be more politically disabled when tax reform and others are not passed…?

Hourly chart of the OMXS30 between the 16th of May 2017 and the 2nd of June 2017                              source: Aktiespararna

As long as we continue to be located above the technical support levels around 1645, and around 1636 depending on risk management, there is a higher probability that the index could make a higher move towards 1657.

Should the index start to move lower, especially below support levels of around 1636, 1626 and around 1604, this could be a signal of a possible lower move up ahead.

The volume patterns have started to diverge on some days, and the dollar together with long-term rates are showing warning signs of a slower momentum.

 

Important legal information

 

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.

1.3.2021 17:53:51