20081129 - EURPLN, CHFPLN

The EURPLN is still in uptrend (long-term buy), however it could not break the high of 3.9819 as for now:

The CHFPLN has similar situation (uptrend, long-term buy):

We can also observe the possible symmetrical triangle formation on daily chart, which is a continuation pattern. However, this formation becomes reliable only after breakout:

Unfortunately for polish mortgage owners, nothing negated the long-term uptrend yet.

High demand on US Treasury Notes pushed their yields below 3% (here), the lowest rate since 1958 (for historical data look here). This could mean growing investor's aversion to risk.

Sources:
[http://federalreserve.gov/releases/h15/data.htm]
[http://seekingalpha.com/article/108441-chart-of-the-week-yields-on-u-s-10-year-treasury-notes-below-3]

20081128

The WIG Index has lost some of its momentum:



There is a potential symmetrical triangle formation, with potential swing ca.6100 points (see update to yesterday's post). We will observe it daily, but note, the triangle formation is valid only after breakout (preferable with volume confirmation). Intraday chart shows it in more clearly:

There is sell signal in short-term as the intraday low of 26995 has been broken. Additionally, the ascending broadening wedge formation can be also noted on intraday chart, which suggest short-term reversal. However, this formation is not a reliable one.

Steven J.Williams has presented an interesting DJIA analysis (here). It does not look very optimistic:



In this post we have written about WSE manipulation from 12th Nov. Here (via Google Language Tools) are some news about WSE reaction.

Sources:
[http://www.geocities.com/WallStreet/Exchange/9807/Charts/SP500/Outlook.htm]
[http://biznes.gazetaprawna.pl/artykuly/97030,gpw_nie_mozna_stwierdzic_ze_12_listopada_doszlo_do_manipulacji.html (via Google Language Tools)]

20081127

The WIG Index climbed a little higher today:



The RSI and CCI are showing positive divergence, what could be the clue for the coming rally. Alternatively, the WIG Index can be drawing the symmetric triangle now. The overall situation is not clear and we need to wait for clarification (crossing weekly high or weekly low).

The Bankier.pl portal has published an interesting newsletter about polish mortgage market (here, polish). Forecasts are kind of pessimistic, but it's definitely worth reading.

Update from 2008/11/28:
The WIG Index 1-hour chart shows us potential symmetrical triangle formation:



This is a continuation pattern, with target swing ca.6100 points. The volume is trending upwards and that's unusual for this formation (as per Encyclopedia of Chart Patterns, T.N.Bulkowski). However, those formation become reliable only after breakout (preferably with confirmation in volume).

Sources:
[http://www.bankier.pl/goto2.html?nazwa=PRZEGLAD_SPEC&url=http%3A%2F%2Fwww.bankier.pl%2Fi%2Fprzeglad%2Fpdf%2Fprzeglads_20081124.pdf]
[http://www.investopedia.com/terms/s/symmetricaltriangle.asp]

20081126

The WIG Index continues its rally:



The intraday chart shows breaking daily high (27580) from 14th Nov:



The daily high (27580) has been taken and that gives buy system signal on medium- and short-term. Nevertheless, the weekly high (29600) has not been crossed, thus there is sell signal in long-term.

Warren E. Buffett (Oracle of Omaha) is know as the best value investor. Warren's Berkshire Hathaway fund averaged an annual return in excess of 21% to its shareholders for the last 42 years. However, in this year, Berkshire Hathaway has dropped ca. 50% (from its top 151.6k to 71.4k):



It seems no one is protected against strong trends in the market.

The Polish Monetary Policy Council has cut interest rates 0.25% (here via Google Language Tools) to 5.75%. This decision might result in polish bond rally, especially if interest rates are to be cut more.

Sources:
[http://en.wikipedia.org/wiki/Warren_Buffett]
[http://en.wikipedia.org/wiki/Berkshire_Hathaway]
[http://stockcharts.com/h-sc/ui?s=BRK/A&p=W&b=1&g=0&id=p84053406615]
[http://biznes.onet.pl/0,1869628,wiadomosci.html (via Google Language Tools)]

20081125

The WIG Index had a quite big volume today:



The intraday chart look quite good (possible triangle?):



The medium- and long- term are still in sell, but intraday chart shows us small rally and gives us some hope. Considering high close in US that gives us short-term buy signal.

Let's take a look at weekly chart:



It's possible the WSE bottomed at 24125; however, the overall situation suggest rather continuation of downtrend and the cash is still the king.

Right now there are two important levels in weekly timeframe: 24125 (low from 27th Oct) and 29600 (high from 4th Nov). Other indicators like oscillators, trendlines or Fibo levels can be drawn in few ways, thus they tend to be more subjective.

At the end something interesting - more scientific approach to Technical Analysis (here).

Sources:
[http://web.mit.edu/alo/www/Papers/1705-1765.pdf]

20081124

Thw WIG Index had a impressive rally today (+6.21%), but it's too soon to say what's going on:



I would also point to interesting approach by Wojciech Bialek from his blog (here via Google Language Tools). It seems the DJIA Index has broken 50% drop just once in history during the Great Depression. That suggest we are near the 50-60% area where the bear market should end.

Sources:
[http://wojciechbialek.blox.pl/2008/11/80.html (via Google Language Tools)]

20081122

Holidays were too short (as always), but it's time to get in touch with the market again.

WIG index has realized the intraday head-and-shoulders formation from this post and definitely lost its momentum, generating sell signal and medium-term (daily):



Ith WIG Index is currently near the yearly low (24125) - crossing it will generate clear sell signal. However, note the positive divergences in RSI and CCI charts. All alternatives are always possible (double bottom for example), thus don't stick to any forecast - price will tell us eventually. Crossing 29600 (weekly high from 4th Nov) will generate long-term buy signal.

Situation in EURPLN didn't change to much in weekly timeframe since last entry. We are still in uptrend with extreme volatility:



CHFPLN has similar situation, but the two week's peaks has been formed:



Crossing 2.5659 will give us medium-term (weekly) buy signal and crossing 2.3084 will give us sell signal (and potential reversal in medium-term uptrend). Nevertheless, we shall be considering monthly peeks here to have a clear trend reversals.

The LIBOR CHF has drastically dropped after interest rate cut (here), which is good news for polish mortgages:



The S&P500 shows us very disturbing picture:



Technically speaking, double tops formation has just 17% failure rate after breakout (Encyclopedia of Chart Patterns, T.N.Bulkowski) and that's scary. However, I don't think we can say there is clear breakout now (3% margin rule). Crossing the low (768) from 2002 is strong sell signal. I would rather wait for stronger breakout - there is no rush, this formation has over 10 years and huge potential move, we can wait for clear confirmation before shorting this index. See video from Brian Shannon (here).

JP Morgan has been catched on manipulating the polish market (here via Google Language Tools). It seems that 108000000 PLN is enough to alter the WIG20 Index by 4.17%. Let's take a look at future contracts then:



I just wonder how this issue will progress..

Sources:
[http://www.bankier.pl/wiadomosc/KNF-zawiadomila-prokurature-przestepstwo-na-fixingu-Za-zleceniem-stalo-JP-Morgan-Securities-1867125.html (via Goolge Language Tools)]
[http://www.knf.gov.pl/Images/KNF fixing 21.11.2008_tcm20-9403.pdf (polish)]
[http://www.fxstreet.com/fundamental/market-view/daily-market-report/2008-11-20.html]

20081101 - Holidays

(picture shamelessly stolen from jroswonderland.blogspot.com blog)

As I'm going for holidays, there probably will be no updates for first three weeks in November.

The polish market actually gives us some hope, it might even be the bear market is over. However, remember the price is paying, not the emotions. The WIG Index is still in sell signal for medium- (daily) and long- (weekly) term.

Currency market has recorded tremendous volatility and there is still no technical reason to buy PLN again. Although, I think the polish economy will still do much better in those times than more developed countries.

Watch videos from AlphaTrends blog, Brian Shannon is doing a great job with his daily analyses.

Also, Brett Steenbarger is giving lots of useful information in his TraderFeed blog.

Source:
[http://jroswonderland.blogspot.com/2007_06_01_archive.html]