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Strength appears in OMXS30

Tradingportalen
23 Oct 2017 | 2 min read
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Last week OMXS30 showed strength when the index broke resistance at 1656-1660. Technical trends continue to look promising, and last market gain happened during a strong momentum and trading activity, which is considered to be positive.

Nasdaq OMX jumped considerably higher last week, stimulated by strong earning reports. OMXS30 closed the week at 1667.51, after a gain of +1.5 percent. This year alone, the index has gained +9.9 percent, +13.4 percent adjusting for dividends.

After considerable sleeping mode in the market, and irregular development up until earning season kicked off, the market finally started moving. Amongst OMXS30 companies, Atlas Copco, Ericsson, Tele2 and Volvo moved the market with positive reports. Instead Assa Abloy, Getinge, Handelsbanken, Investor and Telia flooded the market with negative price reactions after reports.

Earnings report from Volvo was strong, while Atlas Copco was as expected. When it comes to Atlas Copco, new orders surprised on the up side. Cash flow in Ericsson was better than expected, and CEO Börje Ekholm did therefore not see any reason for new issues of shares, which the market was previously anticipating.

When it comes to Assa Abloy the situation in China was causing risk awareness. Handelsbanken moved lower despite better result, and net interest income as expected.

Internationally the sentiment in the market was mainly positive. The U.S market got a bump after the senate approved budget resolution, increasing chances for president Donald Trump to pass tax reforms. These reforms are considered to be essential in order to stimulate growth in the economy, and is a key factor behind the U.S market gain since Trump was elected president.

If Trump is able to pass the previously communicated tax reforms, the market could be looking at extended strength, despite already being included in the last market gain. In case he would fail, the market could be looking at significant negativity however, where sentiment could be passed over even to the Swedish turf, and OMXS30.

OMXS30 did kick off the earning season in a positive state, and the index showed strength when it broke resistance area around 1656-1660 during a time of relatively high trading activity. The market turnover was however, not as high as the summers strong selling days, but despite this significantly higher compared to the last few months.

Preferably the turnover should have been higher during Fridays gain, which would in such a case make it clearer based on a technical analysis. The upcoming week is however treating the market with more earning reports, that might inject further strength.

Weekly chart of the OMXS30                                                source: Infront

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