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OMXS30 – new potential strength in an upwards moving trend

Tradingportalen
7 nov 2017 | 2 Minimiera
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New positive strength was noticeable last week as the resistance around 1671 was breached on the OMXS30 index. The trend seems to be pointing upwards and sights are set at the all time high around 1720.

The Nasdaq OMX rose last week with but with a lower activity than observed during previous weeks. OMX large cap index ended the week on 1677,65 points for an advance of 0,8%. The OMX-index is up 10,6% for the year, 14,3% when taking dividends into account.

Coming off an intensive period of quarterly earnings reports, the OMX saw volume slightly lower last week. This could also be affected by the half-day trading on Friday, and the schools leaving for fall break.

Lundin Petroleum, SCA and SKF were among the reports that were received in a positive light by the market.

As expected the American central bank, the Federal Reserve, decided to keep interest rates unchanged. President Donald Trump nominated the Federal Reserve governor Jerome Powell as the successor to Janet Yellen.

Yellens term as FED chair ends in Febuary of 2018, and Powell has been first in line as her successor. An uncontroversial choice and pundits seem to agree that the choice of Powell as FED-chair won’t lead to any big changes in fiscal policy.

Republicans also laid out a plan for tax reform with lower corporate taxes and lower taxes for middle-income families. It is proposed that the corporate tax will decrease from 35 to 20 percent. This might also make it easier for American companies to gain profits abroad, which could be positive for the dollar. A strong dollar is usually good for most companies listed on the OMX exchange. Getting this tax plan passed could be important in order for the positive climate in the stock market to persist.

The OMX-weekly chart below shows an upwards moving trend above the 40-week moving average. If the OMX-index establishes itself over the resistance levels of 1600-1660, it could be an indication of a high move to come.

The stochastic indicator is not as positive, and shows an overbought tendency. This is not in itself an indication of a coming downturn, but it could be seen as a sign for caution.

Weekly chart of the OMXS30                                                source: Infront

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