Column: OMXS 30 week 6

Column: OMXS 30 week 6

den 10 februari 2017

OMXS30 seems currently consolidating before a possible upcoming breakout. Long term our view is still positive, and the volume is also showing underlying strength. In the near term the OMXS30 could find ground above 1564 points, which also would signal a potential buy. If the OMXS30 finds ground over this price level under a relatively high trading volume, this would also signal even stronger gains. Psychologically 1600 points is relatively close, and major upcoming resistance could show itself around 1630-1670 points. But if OMXS30 on the other hand would fall below support of 1499, this will trigger a sell signal.
  

Nasdaq OMX continued last week to trade higher under relatively high trading volume. The Swedish stock index OMXS30 gained 1.2 percent, and ended the week at 1557 points. Since the beginning of 2017, the index has gained a total of 2.6 percent.

In Company earnings were flooding the market last week. Especially is the “top line” numbers, the actual sales numbers are coming in strong. Earlier quarters profits were primarily from rationalization and other cost cuts, and if investors are now seeing growth and increasing sales numbers, the positive momentum might pick up.

Stocks included in the heavyweight OMXS30, last week showed strong numbers from Alfa Laval, Hennes & Mauritz, Lundin Petroleum, Nokia, SEB, Skanska, Swedbank and Volvo. For Sandvik the report came in relatively unnoticed, but for Assa Abloy, Electrolux, Fingerprint Cards, Investor and SKF the reports came in negatively.

 

 

 Weekley values of the OMXS30 during the last 5 years

source: Aktiespararna

Even the White House continued to be in focus last week. US president Donald Trump’s travel restriction from seven countries in the middle east and Africa created a rumble, and a big level of confusion amongst travelers. Investors will probably have to get used to similar outbursts in different areas under the coming four years in his office.

During last week OMXS30 triggered new short term buy signals. These appeared when a short term negative trendline and a resistance level of 1533 points were broken, and then also when the next resistance level 1554 points were broken.

  

 

hourly perfomance of the OMXS 30 between 13th of January and 3rd of February

source: Aktiespararna

 

 When the market is trading higher, we are usually experiencing higher trading volume than days when the market is trading lower. This shows momentum and strength for our buy signals, and is also usually linked to positive long term.

The long-term trend is also positive, and OMXS30 is trading well above its 200-day moving average, which is also pointing upwards. We are also noticing higher highs, and higher lows which is usually linked to positive long term.

 

 

 Daily values during from 7th of November 2016 to 3rd of February 2017
 source: Aktiespararna

 

On the other hand  , OMXS30 is on a medium-term view consolidating, between support area 1499 and resistance level 1564 points.

Our Stochastic indicator is currently also trading on a new high, and at an overbought level. This in itself is not an obvious sell signal, but it indicates that OMXS30 could be trading lower short term, before a breakout of 1564 comes to light.

Our main case is also that OMXS30 sooner or later will find momentum for a breakout, and find ground above 1564. If this happens during trading days with a relatively high trading volume, market is trading higher, above 20 billion, we will look at next resistance levels of 1630-1670. If this happens, the long-term view for trading close to its all-time-high around 1720 increases its probability tremendously.

The only main risk that we see that could change our view, is if the market will start trading lower under high volume, and break support levels such as 1499 and 1462 points. But if short term breakouts of these levels are triggered, during low volume we consider these instead as an attractive buy, rather than sell for the long-term investor.

 

On the other   hand, if OMXS30 would find ground below its long term 200 day moving average, which is currently around 1424, and if the important support level around 1392 is broken, this will indicate a solid sell. In this case, we would also recommend the long-term investor to be more careful. But currently we do not see this scenario as very likely. The probability that the market will continue to trade higher in the coming months are more likely.

For the short term trader we are still recommending to positioning themselves for the market to trade higher, on the short term buy levels. First and foremost, aim at resistance levels of around 1564 points for OMXS30. But the investor should keep in mind the support level of around 1554 points, because if the market finds ground below this price level, short term sell signals are triggered. In this case, we are looking at the market to trade lower towards 1544 points.

If OMXS30 finds ground above 1564 points, prepare yourselves for stronger gains. 1600 points will be a psychological important price level to keep in mind, but even gains to 1630-1670 is in the ball park.

would in that case be relevant, if a buy signal is first triggered and if OMXS30 closes below support level around 1564, or 1554 points. A trader could also use a trailing stop loss, below the daily low of the previous trading day, depending on the risk management of the investor.

For the long-term investor, we recommend that during the coming months, to position itself for the market to trade higher. If it is possible, try to increase your portfolio positioning for the market to trade higher on possible downtrading days, under low volume.

This is valid as long as OMXS30 continues to trade above the 200-day moving average, the trading volume is still positive, and that the long-term trends are pointing higher.

 


The staff at Tradingportalen consists of professional investors. We analyze, research, and trade the financial markets on a daily basis. Our analysts have a deep understanding and long-term experience of both technical as well as fundamental analysis. We have an in-depth knowledge regarding real-time trading, quantitative and statistical analysis as well as automated trading.


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2023-02-06 01:26:16