Column: OMXS 30 week 7

Column: OMXS 30 week 7

den 16 februari 2017

 

OMXS30 continues to trade within a possible consolidation. There are several positive signs that indicates a potential positive breakout, along the long term positive trend. Trading days under high volume, and if OMXS30 finds ground above 1568 triggers a buy signal. If a buy signal is triggered, then firstly 1600 is in the ball park, and secondly 1630-1670 shortly thereafter. Important support levels to keep track on is around 1499 points.

 

Last week Nasdaq OMX traded under shifting volume. OMXS30 gained 0.4 percent, and closed the week at 1562.73 points, which also means that the index has gained 3.0 percent since beginning of 2017.

The positive momentum suddenly got a little resistance from reports when ABB, Kinnevik, Securitas and Svenska Handelsbanken to name a few, came in below estimate. During Friday Boliden delivered a strong report which helped the momentum to recover, and the week ended strong in Japan, as well as the market got further momentum on news from Donald Trumps about near term lower taxes and fewer regulations.

Technically OMXS30 is patiently still consolidating, and has been since the middle of December.

 

 

Hourly perfomance of the OMXS 30 between 30th of January and 13th of February

source: Aktiespararna

However, within the consolidation we see positive signs. The index is trading marginally higher and shows higher highs, which indicates we are moving upwards in a positive trend. We also note that when the market is trading lower, the momentum is not as strong as before. Most importantly the volume is still strong when the market is trading higher. This means that when the market is trading higher, the volume is higher, than when the market is trading lower. This is very positive.

Overall this sends signals that OMXS30 is most likely to show a breakout towards the upside. The breakout would then happen in our long-term positive trend. 200 day moving average is pointing up, and OMXS30 is showing a long-term pattern of higher highs, and higher lows.

Furthermore, we note that wider Swedish stock indexes that covers more than OMXS30 has already triggered a breakout from its previous consolidation. This means that in our main case we are also counting on that OMXS30 sooner or later will trigger a breakout on the upside. Primarily we are looking at 1600 points, and secondly thereafter we are looking at upcoming resistance areas around 1630-1670. If the market is then trading higher under high volume, we can then expect to sooner or later test previous all-time high 1720. Another confirmation to our case would be if OMXS30 under high volume, around 20 billion would find ground over 1568.

  

However, if OMXS30 on the other hand under high volume would close under the support level around 1499, a strong sell signal is triggered. If this happens we would have to re-evaluate, since this would seriously question our long-term positivity. Short-term sell signals that would be triggered if OMXS30 would trade during low volume and below support levels around 1554, 1540 and 1526, should instead be considered as potential buys for the long-term investor.

When looking at the Stochastic-indicator the high trading levels indicate that OMXS30 are overbought, short-term. However, this is not a sell signal on its own, as the index can continue to be trading overbought during a longer period of time in a strong trend. But be prepared that the index can trade lower, within the long term positive trend.

 

 

 Daily values during from 7th of November 2016 to 10th of February 2017
 source: Aktiespararna

 

The short-term investor can already now aim for a test on the next resistance level around 1568. A stop loss can be placed around the positive trending line currently noted at 1559 points. Around 1568 points the investor can either sell or take profit. If the position is kept on books, the stop loss can then instead be moved up along the trading direction. A new buy signal is triggered if OMXS30 finds ground above resistance level 1568. Especially if the trading volume is above 20 billion during the breakout. If this is the case, then we expect the market to trade higher towards 1600. Stop loss is suggested if the index closes below the low of the previous day.

For the long-term investor , we still suggest that the positioning is that the market to trade higher in OMXS30. Possibly increase the position during lower trading days, but only if this happens when the volume is lower. This applies as long as the trading volume is higher when the market trades higher, and when the volume is lower when the market trades lower. Should the market start trading lower during high volume, or if OMXS30 would find ground below its 200-day moving average, this should be considered as a warning side and a sign to be more careful up ahead.

 

 

 

Weekley values of the OMXS30 during the last 5 years

 

 

 

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2023-02-06 01:05:38