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}]