Summary

In the last week of January most important stock markets liked the green color. It seemed, that the global market sentiment improved and the bulls returned. Investors were focused on the Fed which did not change the interest rate. In addition, the FOMC’s commentary contained some concerns - the council was afraid of economic slowdown. Therefore, investors believed in a further dovish monetary policy. Moreover, Fed’s doubts were confirmed by the annualized GDP’s reading for the fourth quarter of 2015 – it rose by 0.7% y/y vs 0.8% expected. Furthermore, data on durable goods’ orders failed as well. Unlike them, the releases of the Conference Board index and the Chicago PMI index did not. What is more, the oil price increased. Of course, there were not any circumstances, which could cause a trend reversal. Nevertheless, the correction helped mining companies to grow. It was also worth noting, that German Ifo index in January stood at 107.3 pts. vs 108.55 pts. expected. Taking all these points into consideration, stock markets ended the week in the green. The DJI went up by 2.3%, the S&P500 took off by 1.8% and the NASDAQ increased by 0.5%. Moreover, British FTSE250 soared by 2.2%, French CAC40 went up by 1.8% and German DAX rose by 0.3%. However, the increases did not undermine the monthly declines. As a result, American and European stock markets ended the mouth in the red. This time, the January effect failed.

In Poland, the first part of the week was very smooth and the indices were not determined which direction should have taken. On Thursday the situation changed – the WSE started to move towards the north. As a result, in the last week of the January the WIG20 increased by 3.1%, the mWIG40 took off by 3.4% and the sWIG80 rose by 1.5%. Nevertheless, it was the ninth consecutive mouth of downward trend. Last week investors learnt the unemployment rate for December in Poland. It stood at 9.8%. In addition, another rating agencies, Fitch and Mood’s, drew attention to the deteriorating state of Polish public finances. It could lead to the reduction of country’s creditworthiness. On the other hand, it seemed, that the information did not significantly affect market sentiment.

In the current week investors will learn a lot of important economic data. There will be some publications of the PMI indices for the euro zone, Poland and China. The latter seem to be the most important, because they can significantly affect the global market sentiment. In addition, there will be releases of the unemployment rate and the dynamic of retail sales in the euro zone. Investors will pay also attention to the data from the US labor market. In Poland, the MPC will make a decision on interest rates – they will not probably be changed.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

In recent times, it was one of the best weeks for the WIG20. Blue chips defended the support of 1,700 pts. and they moved towards the psychological level of 1,800 pts.. In addition, the index approached to the resistance line, which delineated the accelerated downward trend. The RSI oscillator grew rapidly, whereas it did not indicate any signals. On the other hand, the MACD oscillator pointed out a buy signal. Perhaps there will be more significant correction. Nevertheless, there is one condition – the closest resistance should be break through. It is expected, that the mark will be tested this week. The improving market tone will help the WIG20 as well.

Graph 2: Arctic Paper daily. Source: Stooq.

This time we consider Arctic Paper. The company’s share price was in an upward trend. Nevertheless, the last week was dominated by bears. The RSI oscillator did not indicate any signals, whereas it was worth noting, that the last candle was marubozu. It meant, that the share price will probably go down. Currently, the test of PLN 4.22 support can be expected. Its breakthrough can give signal for further declines towards the level of PLN 3.97. If the share price breaks this support, it will probably end an upward trend.

Authors: MM Prime TFI S.A. Investment Management Team

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