20080731

The WIG Index is touching the trendline from May, however I won't even try to forecast what will happen tomorrow. I have to admit I'm still bear, but very confused one right now:



If this is major trend reversal there will be many occasions and lot of time to join the uptrend, after it's truly confirmed. I like my money and I also remember the term: Bear Trap. Therefore I wait at least for Fibo 61.8% (which is not so far away anyway). Another strategy is Dow Jones approach, when we wait for correction and see if the next wave can take its high. Let's also take a look a monthly candlestick chart:



The WIG20 Index is looking even more impressive, however it's touching long-term (since the highest top in 2007) resistance. If this line is crossed and holds for at least couple of sessions, it will be very strong buy signal:



As for interesting stuff:
Federal Reserve is extending the emergency loans and also enables commercial banks to bid for cash loans that lasts 84 days (instead of standard 28 days). For more information please read here.
I don't have idea how to interpret that - nevertheless, nobody can tell, that FED is out of ammunition.

Sources:
[http://www.iht.com/articles/2008/07/30/business/30extend.php]
[http://online.wsj.com/article/SB121742140378196767.html?mod=djemITPE]
[http://www.investopedia.com/terms/b/beartrap.asp]

20080730

The WIG Index rallied and finished just below January low. Technically speaking this should be very strong resistance. Looking at the US high close, we maybe we will be able to cross this line. Also the volume was very high today.

This move is surprisingly strong, but I'm still out of stock market. Many investors are wondering if the primary downtrend is finally over, but I'm confused. Like Brian Shannon from AlphaTrends said in one of his analysys - now the market is guilty unless proven innocent. I'm personally waiting for crossing the Fibo 61.8%.



The WIG20 Index looks even more bullish, we have already crossed the January low. The WIG20 Index is climbing to Fibo 61.8% (ca. 2805), nevertheless this index can be slightly 'adjusted' by big players, so I'm considering WIG Index as main target of analysis.



As for interesting stuff - investing in Russia can be still dangerous. Few worlds from Vladimir Putin crashed Mechel (rus. Мечел), one of Russia’s leading mining and metallurgical companies. Please check the sources section for full article in FinancialTimes.

Sources:
[http://www.ft.com/cms/s/0/88f6033e-5d94-11dd-8129-000077b07658.html]

20080729

The WIG Index tried for third time to cross the 41k support and it failed, but we are still in uptrend and above resistance line, therefore nothing new can be said right now. Nevertheless, please note quickly dropping volume, which is not a good sign:



Similar situation can be observed on WIG20, therefore we will have to wait for situation to clarify:



Please also note PKNORLEN will have dividend cut-off; this should total to about -15 points in WIG20 Index.

SeekingAlpha published quite interesting article with various assets (i.a.: S&P500, Oil, Gold) correlation matrix. What surprised me is almost co correlation between SP&500 and Oil, Gold. The matrix can be seen here.

Sources:

[http://seekingalpha.com/article/86118-asset-class-correlations]

20080728

WIG continued its rally, but it's now hovering near the 50% Fibo (beginning in May, 2005; end in Jul, 2007). Market forecasting is hard now. Potential resistance at ca.41.5k, support at ca. 40150:



WIG20 under important support (2669, low from Jan) and also under the Fibo 38.2% of this move. USA on red, therefore we will probably stay under this resistance, but we should also expect a drop tomorrow:



In Jun, the investment funds' total stock value has dropped about 13,5% (ca. 11400k PLN) and the WIG index has dropped ca. 11,75%. That gives us average 2% total stock portfolio reduction across the funds. That is an anomaly in their investment approach - so far the investment funds were aggressively buying during the biggest market fails (Nov 2007, Jan 2008). Please check Holder news for more information.

About two weeks ago, Secretary Paulson, Chairman Bernanke and SEC Chairman Cox banned short-selling of 19 financially related stocks and this number could be possibly extended. Personally, I don't like this kind of intervention into the free (?) market system, however it can have an stabilizing effect on US indexes.

Sources:
[http://www.holder.com.pl/fm.shtml?id=4136&fm=11154&c=41250000010]
[http://seekingalpha.com/article/87599-on-short-selling-covering-and-respecting-the-trend?source=d_email]

20080723

Obviously it's not longer lower-highs, lower-lows pattern. The index opened with a nice gap just over the high from 10th of Jul. That gives us the reason to be bullish or at least hold with short positions.
We should trade what we see, but personally I just don't trust this rally - with the worsening economy forecasts, failing banks and government tricks - it's hard to believe the downtrend is over.

Nevertheless, the medium term trend is obviously not so easy to forecast now.


Please also note I've also changed the Fibonacci retracement level to the top of May for both indexes. I think that's a proper way of drawing it. The next strong resistance will be low from January. The tomorrow's gap will act as a resistance.


USA closed green, therefore rally should continue.

Please note - for the rest of the week I'm out and the charts be updated.

20080722

The charts are getting more and more messy, but this shows that I'm not sure what's going on. Inwestors are also hesitating as the small volume shows. The next resistance is the high from 10 Jul - ca. 40200:


Strangely - the wolumen on WIG is going higher, but the wolumen on WIG20 is going lower. The next resistance is ca. 2609, also from 10 Jul:


In situation like this I won't play long positions as they are against the main trend. I will also consider the possibility of future reversed head-and-shoulders pattern.

The USA closed in green today, therefore we can expected the same on WSE.

20080721

The market continued to rally, breaking trend lines on both indexes.
WIG:


and also WIG20:


The size of move is quite big, nevertheless the volumes are small.

There are some figures suggesting medium-term trend reversal (i.a. weekly candles, divergences). However I'm still very bearish - until situation proves differently. Both indexes have Fibonacci levels shown from the last high - retracemnets should not reach the 61.8%.

USA closed little on red, Oil stayed above 130. Therefore I think the rally will pause or slow down tomorrow.

20080718

This week, WIG index has bounced from lower trend line and on Friday went through second trend line.
Obviously, it is still lower lows, lower highs pattern, however if we won't retract below trend line, we have a chance for short term rally. I will stay out of market though.


WIG20 has broken the important support of 2006 low (2449) and almost immediately retraced back above this level. We are still below trend line, so we have to wait for few sessions to see if the rally continues.


Unfortunately, selling mutual funds certificates still continues, therefore I expect any rally will be used to get rid of stocks. Please also note oil, which dropped more than 10% this week.
It's too early to say that it will help stock market, however the important uptrend line has been broken. I'm also thinking of shorting the oil.

20080717

WIG rallied and managed to cover the Monday's gap. USA closed in green today, therefore the rally should continue. The next resistance will be those two bold green lines.
If the index will break those lines the long positions could be considered. However, the primary downtrend has not been negated, therefore opening long positions are against the trend and not recommended.


WIG20 jumped above the 2449 and rallied almost to 2500. The bold green lines will act now as support/resistance. Long positions should not be considered before WIG20 breaks higher line.
We can also see possibility of failing wedges formation (Encyclopedia of Chart Patterns, T.N.Bulkowski, chapter 44), however we need to wait until further clarification.

On intraday basics, one could notice reversed Head-And-Shoulders pattern with potential rise to 2550.

20080716

The WIG index could not cover yesterday's opening gap, additionally the MACD generated sell signal.

The level ca. 37250 could act as a weak support, also the long term trend line (red dotted) could provide some resistance, maybe even enough to slowdown the market. The WIG index is probably heading  to 2006 low (34768), however it's better not to enter any trades now.


The WIG20 has broken very important level of 2449 (2006 low). I expected this level to generate more resistance, however it seems that downtrend is still very strong.

As for tomorrow - both Dow Jones indexes, S&P500, NASDAQ are rallying now - therefore I think we can expect high open tomorrow.

20080715

WIG-index has reached the level of 37460, which was tested several times (January-February) in 2006. However it is not a strong level and there is high possibility market will reach the low of 2006 on the level of 35165.

Index has created open hole. I'm not sure if index will be able to cover this gap soon. The trends' lines are visible on the picture, please note the red dotted line as it is long term resistance/support.



WIG20 index stopped on low from year 2006 (level 2449). It's very important level, therefore we could expect a short-term up-move. Nevertheless the sentiment of the market is very negative - I believe opening long positions is too risky.

Please also note, that KGHM stock price will be lowered by 9 PLN (as per divident pay). That will result in about -25pts in WIG20 index.

20080714

The potential drop from symetric traingle formation has been already realized; unfortunatelly, WIG index bounced from the red trend line. That still leaves us in the bear market.

Also, the index is near the 50% Fibonacci level - that makes the situation interesting.

Best approach will be now to wait and see where market goes next.

WIG20 does look quite interesting. After breaking the downtrend line (red), the WIG20 could continue bouncing from this level. Also, there is Fibonacci level 50%, which could help keeping the current index level. We can observe also positive divergence on CCI and break in RSI trend.

However, I will stay sceptical, until the bigger WIG index remains under the red line trend. Please also note, the 2500 is psychological level.

20080714 - First entry

Welcome everybody,

this blog is supposed to be continuation of a "Analiza WIG20" thread from polish Money.pl forum, originally started by "gega" user.
All the previous charts and analysis (since September, 2007) can be found there (I hope Money.pl will backup them somehow).

Kindly thanks to Money.pl allowing us to use their platform and great portal!