20080905

The WSE main indexes are telling us different stories. A user Trade from Money.pl forum pointed possible triangle formation on the WIG Index. I'm not sure of proper way of drawing it, but it looks good enough for me now:



We can also draw similar formation on the WIG20 Index chart:



The problem is that those formations are telling us different stories. The WIG Index looks pretty bullish and seems to be testing the support now (downtrend line), but the WIG20 Index is still locked in formation (with small break I have to say).

To be clear - I'm not confident enough for short-term trading and I'm still waiting for making higher-high or lower-low, but this formation shall be considered by more aggressive traders, Also note the the gap which will act as resistance now).

Lately US were hit by Hanna and Gustav hurricanes (Gustav can be tracked here) and soon probably there will be coming another one: Ike. Nevertheless, those disasters are not even comparable (ca.20 billion USD damages from Gustav as of 3rd Sep) with another very real one - ARM Resets Tsunami.

Subprime and ARM became less problematic issues as the interest rates were driven very low. However, even without reset difficulties, subprime and Alt-A loans have high rates of default. If the Fed decides to raise the rates ARM will become the problem again as they are scheduled to reset in the next few years:



This is a very delicate situation and there will be some damage for sure.

Sources:
[http://www.cnbc.com/id/26529207/site/14081545?__source=yahoo|headline|quote|text|&par=yahoo]
[http://www.guardian.co.uk/world/2008/aug/29/naturaldisasters.usa]
[http://bubbleinfo.squarespace.com/statistics-2007/2007/3/15/arm-reset-schedule.html]