OMXS30 still in a positive trend

OMXS30 still in a positive trend

16 May 2017 from Tradingportalen

OMXS30 looks to be still trading within the short-term and long-term positive trends. The volume pattern is still positive, which increases the probability for the market to trade higher within the upcoming months. Further positive momentum could be triggered, if OMXS30 starts trading above resistance around 1655, around 1669 and at 1720. Days when the market is trading lower during relatively low volume, could be considered as potential opportunities for the long-term investor.

Last week Nasdaq OMX had an irregular movement. The Swedish OMXS30 index gained +0.3 percent, and ended the week at 1646.45. So far, the index has gained +8.5 percent since the beginning of the year. Including dividends, last week the index gained +0.5 percent, and +11.9 percent since the beginning of the year.

Compared to previous weeks, last week was considerably non-event driven. Because most earnings reports have already been presented, and since Macrons win in the French presidential election was already considered to be included in the previous market gain. Among the OMXS30-stocks, Swedish Match delivered an earnings report, which cause the stock to move higher. Astra Zeneca stood out last week, with a gain of nearly 8 percent due to positive research report.

The last few weeks OMXS30 shows potential signs of a continued move higher in the market, both short-term and long-term along the current positive trend.

Looking at the weekly chart below, the index has a significant resistance level at around 1669, but most importantly at previous all-time-high at 1720. As long as we are experiencing positive volume patterns, meaning when the turnover is considerably larger when the market is moving higher, OMXS30 could potentially be trading higher towards 1720 in the upcoming months.

Weekly chart of the OMXS30 between the 19th of December 2014 and the 12th of May 2017                              source: Aktiespararna

Should OMXS30 start trading below support levels during high trading activity, potential warning signs could appear, causing this probability to be considerably lower.

In this case, we keep a closer look at support levels around 1603, and around 1540 if the turnover would be well above 20 billion per day, during days when the market trades lower. If the turnover is relatively low when the market moves lower, the importance of this move could be considered less of importance.

In the hourly chart below, OMXS30 could potentially move lower if it were to start trading below support level at around 1638. Though from a long-term view support levels at around 1603, and around 1540 could be considered more significant.

Daily chart of the OMXS 30 between the 17th of January 2017 and the 12th of May 2017                               source: Aktiespararna

Stochastic-indicator could continue to show OMXS30 is overbought. This in itself should not be considered as an indication for the market to start moving lower, since the index can continue to be overbought for a longer period of time, especially within a strong trend. In combination with any other signal indicating the market could move lower, this would however increase the importance of the signal itself.

In our main scenario, it looks like OMXS30 could continue to trade higher within its positive trend. This could also mean that OMXS30 would eventually find ground above 1655, around 1669 as well as 1720.

 

 
Hourly chart of the OMXS 30 between the 21th of April 2017 and the 12th of May 2017                  source: Aktiespararna

Looking at the hourly chart above, we can see that OMXS30 from a short-term perspective could have resistance levels at around 1650 and 1655, as well as support levels at around 1641 and 1638. There is a probability that the positive trend could continue, meaning resistance levels are more likely to be broken, and the market to potentially move higher. For the short-term trader, one could consider keeping a closer look at the support levels, should the market move below these technical price levels.

Even though we are currently trading in a positive trend, we continue to keep an extra eye of the support levels at around 1638-1641, 1622 and at 1603, especially if the positive volume patterns were to be broken.

For the long-term investor, this means as long as we continue to have a higher turnover during days when the market moves higher, there is a higher probability that the market could continue to have a positive momentum. If the market would start moving lower, with considerably high volume, we are keeping a closer look at our support levels, since the market could potentially be moving lower if these were to be broken.

 

 
Weekly chart of the OMXS 30 between the 11th of May 2012 and the 12th of May 2017                  source: Aktiespararna

 

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.

25/01/2020 06:00:53