20081031

The WIG Index seem to lost its momentum after reaching target from intraday formation (this post). The medium-term buy signal will be generated after crossing the 29700, the sell signal is below 24100:



Intraday chart is still bullish, but note the uptrend line has been broken (short-term sell signal after crossing intraday low of 27530, short-term buy signal after crossing 28450):



EURPLN is heading down for few days and the price has rebounced near the Fibo level of 38.2%.

However EURPLN it's still making the higher lows & higher highs and that is uptrend by definition. Breaking the 3.2674 (weekly low) will generate medium-term sell signal, crossing 3.9819 will give us medium-term buy signal:



The CHFPLN is also in uptrend (higher low & higher highs pattern on weekly chart). Crossing the level of 2.7297 (weekly high) will give us buy signal and crossing the 2.0436 will result in sell signal:



Not much can be said about currencies. Unfortunately, a differences in those high/low signal values are far too big for any forecasting. The Fibo levels allow retracements up to 61.8% of the swing size, therefore we also cannot say trend direction from that.

However, the good sign for polish mortgages is failing LIBOR CHR 6M and 3M. There is quite interesting article from Bloomberg about latest currency volatility and its impact on eastern European economies.

I’m going for three-weeks holidays in November, thus don’t expect daily updates for this time.

Sources:
[http://bloomberg.com/apps/news?pid=20601109&sid=awd1vGnyyBJQ]
[http://www.tradesignalonline.com/Markets/Security.aspx?id=2711&cid=3016] [http://www.tradesignalonline.com/Markets/Security.aspx?id=2714&cid=3016]

20081030

We have another rally today:

I think we meet the target for double bottom (the targets seem to be missed for ca. 10%) on intraday chart:



The higher low & higher high patten gives us short term buy signal. However, please remember the sell signal in medium term is still not negated.

20081029

The WIG Index did another impressive rally today:



On intraday chart we can draw potential target of reversed head-and-shoulders formation:



This week is impressive. Intraday higher lows & higher highs pattern gives us short term buy signal. Negation of a medium-term sell signal is the area above last daily high at 29650.

The Federal Reserve decided to cut interest rates by a half percentage point to 1% (here).

Sources:
[http://www.marketwatch.com/news/story/Bernanke-makes-official-We-Japan/story.aspx?guid={F8AC589F-2F94-478D-9C54-0E4F6BD52F95}]

20081028

The WIG Index rallied today:



On 15min intraday chart we can see potential reversed head-and-shoulders formation with impressive target (ca.28800), formation neck is around 26400:



First of all - I'm not 100% sure we can draw it like that. Crossing the formation neck (also from crossing last intraday high) will give us buy signal in short term. Also remember, intraday formations tend to fail more often and we are still in bear market (regardless this week rally).

The US market rallied (Brian Shannon's video here) and that gives us buy signal on short-term. I think we can also say that pennant formation (from this post) has failed.

Is this the bottom? Unfortunately, we will know that well after the fact, currently there is still long term sell signal.

Volkswagen skyrocket about +81.7% (session's high) today (article here), raising the DAX Index +11.28% (chart thanks to Finanzen.net):



It seems to be result of covering short positions (here) - around 12.9% of Volkswagen shares were lend to for short positions.

Sources:
[http://www.iht.com/articles/2008/10/28/business/28vw.php]
[http://www.moonofalabama.org/2008/10/volkswagen-shor.html]

20081027

The WIG Index has made lower low today:

However, we can spot impressive rally on the intraday chart:

During the session we have managed to cover the open gap, but the lower low gives us sell signal.

US market closed on red with quite big drop, however we still haven't made the lower low in most popular indexes (DJIA, S&P500) and the most wide ones (Russell 3000). The Brian Shannon video is available here.

Warren Buffett has written a letter to New York Times (here), where he's encouraging to invest into equities. This letter is widely commented (here, here, here and here).

As we are talking about big persons - Alan Greenspan, during his speech in Congress, has called present credit crisis as a "once-in-a-century credit tsunami" (here, here or here). Despite of his critics, Alan Greenspan's book - Age of Turbulence is worth reading (note the part about hedge funds as market regulation tools).

Also, a worth reading article on US bond market (here) from Brett Steenbarger. The enclosed image gives us a view into bond markets, however Brett has noticed an interesting thing - the bond insurance has become extremely expensive.

I'm going for three-weeks holidays in November, thus don't expect daily updates for this time.

Sources:
[http://www.nytimes.com/2008/10/17/opinion/17buffett.html]
[http://www.lewrockwell.com/decoster/decoster136.html]
[http://community.nytimes.com/article/comments/2008/10/17/opinion/17buffett.html]
[http://www.marketwatch.com/news/story/if-warren-buffett-feeling-greedy/story.aspx?guid={21A63C14-15FC-4C05-8D5C-ED202E2B44C3}]
[http://www.marketwatch.com/news/story/story.aspx?guid={FEE17EB8-1512-4BFF-8EB2-F948828297AE}]
[http://www.marketwatch.com/news/story/greenspan-says-credit-default-swaps-have/story.aspx?guid={5BE2099F-0D47-4A2D-B19D-57DEB9B41F96}]
[http://www.huffingtonpost.com/2008/09/14/greenspan-this-is-the-wor_n_126274.html]
[http://seekingalpha.com/article/102016-what-the-high-yield-corporate-bond-market-is-telling-us]
[http://dwagrosze.blogspot.com/2008/10/buffet-z-zakupami.html (via Google Language Tools)]

20081024

The WIG Index has made lower low (sell signal):



In intraday chart we can see the market has crossed the psychological level of 25000 quite easily:



We can place a support of 24640 (series of lows in Sep, Oct and Nov, 2004), the 168% Fibo level from last swing (ca.24330), the trendline (highs Oct and Dec 2007 and then lows in April 2008) among others - but those are not a valid reason to open a long position.

There is an interesting discussion on formation in DJIA and S&P500 chart:



Is this a symmetrical triangle (as I assumed in yesterday's post) or rather a pennant? The difference is the time in both formations create themselves. The formation on chart took like two weeks to show up, therefore I assume the pennant will be more accurate here. There is almost no target price difference (ca.7200 for DJIA and ca.770 for S&P500), but the pennant has much higher failure rate (up to 34%, after Encyclopedia of Chart Patterns, Thomas N. Bulkowski). The best is to wait, especially the FED might decide to cut rates again (here).

There is a interesting article about Switzerland economy (here). I have mixed feelings about that, but it's worth reading anyway. Same goes for CNN article (here) about emerging markets.

Sources:
[http://edition.cnn.com/2008/BUSINESS/10/24/emerging.markets.trouble/index.html]
[http://www.kathylien.com/site/swiss-franc/swiss-banks-in-trouble]
[http://www.marketwatch.com/news/story/throwing-caution-wind-fed-keep/story.aspx?guid={F20C947E-8597-44EF-9F0B-45126641CBC3}]

20081023

The WIG Index has made lower low again:



More details on intraday chart:



Lower low is obviously another sell-signal and it's hard to tell when we stop. The WIG20 Index has crossed the long-term support line, but note that WIG20 Index tends to overcross supports for about 50 points:



The US market closed majorly in green, however the charts for DJIA and S&P500 look really confusing:



I don't think the formation has been negated yet, but it's no so obvious anymore (especially on DJIA chart). Let's wait then. Brian Shannon has some inputs in today's video.

20081022

The WIG Index has made lower low today:



More details on intraday chart:



The market has made lower low and that's obviously sell signal. Downtrend seems to be still very strong. However, we are closing to important trendline (but it does not mean there will be bottom):



The EURPLN has broken the monthly high of 3.6370 and that gives the long-term buy signal as for now (note the Fibo levels):



The CHFPLN had a impressive rally today. Price has broken the 38.2% Fibo (ca.2.40) and it's just below Fibo 50%. The CHFPLN has long-term buy signal (crossed monthly high two weeks ago - this post):



The area of Fibo  38.2% - 61.8% (ca. 2.40 - 2.70) can become choppy and according to Fibonacci methodology the correction of CHFPLN should end here (if it's a correction). Areas outside (0%-38.2% and 61.8%-100%) seem to result in parabolic movements. A good introduction can be found here (but remember this is just one of many techniques).

The US market seem to break from triangle again, this time it's confirmed by high volume:



It looks pretty bearish, the confirmation will be DJIA crossing the 8200 and the lowest low of 7900. Brian Shannon says we still should wait for confirmation (video from today; note part on gold and oil). Also, take a look at this article.

Sources:
[http://www.traderslog.com/fibonacci-tricks.htm]
[http://www.marketwatch.com/news/story/us-stocks-hammered-fueled-worries/story.aspx?guid={71705879-427A-4783-ABCF-C7169830AB2E}]

20081021

The WIG Index changed a little bit today:



The market looks more bullish on intraday chart (higher low & higher high pattern):



The US market closed above the triangle upper band:



The breakout makes this formation quite reliable, (after Encyclopedia of Chart Patters by Thomas N. Bulkowski), however Brian Shannon remains sceptical in today's video from AlphaTrends blog. Nevertheless, market does no care what we think an we should wait for at least medium-term signals in WSE before we do anything.

Polish Ministry of Finance didn't sell all the bonds in offer (here via Google Languages). Brett Steenbarger has an interesting article on US bonds (here).

Sources:
[http://seekingalpha.com/article/100719-corporate-bonds-vs-the-yield-curve]
[http://gospodarka.gazeta.pl/gospodarka/1,33181,5830624,MF_wyjasnia__dlaczego_nie_sprzedalo_calej_oferty_bonow.html (via Google Language Tools)]

20081020

The WIG Index closed today above last session's low:



Intraday chart has made lower high:



Not much can be said. Lately, polish stock market is weak comparing to other European markets:



Us markets are on the upper band of triangle (see this post) - I think the direction of breakout from this formation will show us the short-term and medium-term trend (but it has to be also confirmed with weekly peeks). See today's video from Brian Shannon.

Very interesting article (here) from Brett Steenbarger about past market bottoms. From example bear markets 1970, 1974, 1987 and 2002/2003 seems the bottom can occur likewise after panic or long console. Therefore, nothing is guaranteed.

And, the famous letter from Andrew Lahde (here or here).

Sources:
[http://lolfed.com/2008/10/18/andrew-lahde-will-never-again-get-a-table-at-dorsia/]
[http://www.bloomberg.com/apps/news?pid=20601087&sid=aVUE96d.HKyw&refer=home]
[http://seekingalpha.com/article/100479-will-we-know-when-we-ve-made-a-low]

20081018 - EURPLN, CHFPLN

The EURPLN is still below monthly high (3.6730):



The chart is messy and few trend lines were broken in the past, without change in trend, thus I don't rely on them. We are still below monthly high and that still gives us sell in long-term (but buy in medium-term). The intraday chart (1 hour, thanks to ChartStation) shows us quite big volatility in last week:



The CHFPLN is now in uptrend (price has taken monthly high of 2.3009):



However, price did not cross Fibo 38.2% yet. The intraday chart also looks quite choppy:



Overall situation is not clear. Currency market are quite volatile now (what can be seen in intraday charts), but not much really changed since last week (this post).

20081017

Big panic today. The WIG Index has made lower low:



Intraday chart shows us clearly breakout:



Obviously the double bottom formation (this post) has been negated and there is another sell signal (as we made lower low). Today's session was quite unusual, when we take a look at the other European stock markets:



Also, the US markets closed green. However, note potential symmetric triangle formations on S&P500 and DJIA charts:



Their targets are impressive, but remember the direction of breakout is something that really matters. In current situation the best we can do is just to observe them. Thomas N. Bulkowski in his Encyclopedia of Chart Patterns wrote two chapters describing this formation.

Fund managers are generally bearish (here), but Warren Buffett suggest buying (here). Hedge Funds seem to have problems (here).

Sources:
[http://www.cnbc.com/id/27230391]
[http://seekingalpha.com/article/100417-trimtabs-hedge-fund-redemption-cycle-just-beginning]
[http://seekingalpha.com/article/100421-fund-managers-increasingly-pessimistic-on-both-sides-of-the-atlantic]

20081016

The WIG Index hit the bottom once more:



On intraday chart we can notice possible double bottom pattern (but it does not mean there will be actual formation) - I think the chart look too suggestive:



Actually, the WIG Index gone a little bit below last lower, but I think we can tolerate that. That gives us few interesting possibilities. Of course the WIG Index can break the low of 29500 and go lower - which is suggested by WIG20 Index and that's more probable scenario as we are in bear market. Alternatively, the WIG Index can rally up to 33250 (where the double bottom formation is confirmed, also the Fibo level) and that could result in rally up to 37500. Nevertheless, remember we are still in downtrend and the formation has to confirmed before it's reliable enough. Let's wait then.

Switzerland bailouts UBS AG (here).

Update from 2008/10/17:
It seems that intraday Double Bottom formation failed today:



Sources:

[http://online.wsj.com/article/SB122413491899139953.html]

20081015

Huge drop today, but the volume was not so impressive:



Take a look at intraday chart:



The WIG Index covered the smaller gap from yesterday. The breakout of previous intraday low (31240) generated sell signal on short-term. Also, US market seems to confirm sell signal. Medium-term and Long-term still in sell signal, but we have not made lower low yet.

US market had experienced another quick drop today (here or video from CNBC), but we are still above lowest low. Also take a look at bond market short summarization (here).

Just some of my thoughts about the market in general - there are not so many individual investors (also via mutual funds) on the market currently as the downtrend is clear or they obviously don't look at their portfolio. Also, pension funds tend to use buy&hold strategy, so they don't sell positions. That leaves us the most speculative hedge funds, which utilize leveraged future contracts to ride the market. However, current volatility demands very quick trades. And there is a catch - it's easy to reverse position with few contract as there is enough liquidity, but it's not as easy when you are managing a position of few hundreds contracts. Additionally, fund manager has to convince the customers that their funds are performing well, before the nervous customer takes back his money. That creates a pressure to make big gains and therefore to take greater risks. And bigger risk can be a deadly strategy now.

Regardless of finance crisis, the Americans seem to lend even more (here) from banks. We live in really interesting times.
Another interesting news are subpoenas sent to Fannie Mae, Freddie Mac, AIG and Lehman Brothers with demands to hand over documents, electronic records and other data (her).

As for Poland, the salaries are still increasing with two digits, averaging +10.9% annually (here).

Sources:
[http://www.marketwatch.com/news/story/us-stocks-fall-sharply-recession/story.aspx?guid={BB309F33-BE19-42DB-A237-F0D23C9543D5}]
[http://www.forbes.com/home/2008/10/14/legal-shareholder-suits-biz-wall-cx_wp_1015suits.html]
[http://seekingalpha.com/article/99940-total-bank-loans-and-leases-reach-a-new-record]
http://seekingalpha.com/article/99910-bond-markets-volatile-and-weak]
[http://www.money.pl/gielda/komentarze/artykul/pensje;wciaz;rosna;w;dwucyfrowym;tempie,232,0,377064.html?p=md (via Google Language Tools)]

20081014

After high open the WIG Index was undecided:



At intraday chart we can see the gap in the gap:



Higher low & higher high gives us buy signal in short-term. Let's see how Europe reacts tomorrow. Current rally is explained by G7 decisions (here), but I'm still confused - if we can't go much higher (DAX +14% Monday & Tuesday) when Europe and US markets are so bullish, what to expect when they fall? Many traders are wondering if this is a bottom - it's possible, but nothing has negated the bear market as for now and there are no buy signals in medium-term and long-term.

Still, a lot is going on and it's hard to keep up with all those news. The US Treasury will help certain (important to system) firms and institutions (here). Also, make sure you read about Iceland stock market crash (here) and direct purchase of US banks shares (here).

Sources:
[http://seekingalpha.com/article/99728-the-g7-put-vs-the-greenspan-put]
[http://www.marketwatch.com/news/story/treasury-says-developing-separate-approach/story.aspx?guid={C495BA3B-DE9E-4315-AFEA-C5F4CA7B8226}]
[http://www.forbes.com/home_europe/2008/10/14/tarp-paulson-banking-biz-beltway-cx_lm_bw_1014tarp3.html]
[http://www.forbes.com/home_europe/2008/10/14/iceland-trading-update-markets-equity-cx_po_1014markets10.html]

20081013

The WIG Index was very weak comparing it to the rest of the world:



Intraday chart does not show anything new:



We are still below huge gap and nothing changed in long- or medium-term. In short-term I'm really confused - the polish market was one of the weakest in the world today, but US close was very bullish. Brian Shannon does not believe this rally will keep going (video here), but like he says - we need to watch the market. There are many views on this situation and we really need to see what's going on before we make a move.

The euro-zone leaders to agreed on partial nationalization of banks and provision of state-guaranteed loans (here or here). Additionally, EU is relaxing mark-to-market accounting standards.

Update from 2008/10/14:
Some screenshots from US market - worth to keeping for sure. Russell 3000:



DJIA:



Sources:
[http://online.wsj.com/article/SB122381862224826507.html]
[http://www.marketwatch.com/news/story/nations-across-globe-rolling-out/story.aspx?guid={1E9EBC0E-E19D-48A6-A66B-F4C6CB8D0E6C}]