Summary

Last week brought high volatility in the financial markets again. Initially, the main indices grew, which was probably caused by slightly worse than expected data from the Chinese economy. Subsequently, the stocks started to move towards the south. However, the second part of the week was dominated by bulls. As a result, most important stock markets managed to end the week in the green. The NASDAQ rose by 2.3%, the S&P500 increased by 1.4% and the DJI went up by 0.7%. European markets took a leaf from Wall Street – French CAC40 grew by 3.0% and German DAX took off by 2.3%. Unlike them, British FTSE250 went down by 0.2%. Nevertheless, economic data from China was not a key factor which improved the market’s sentiment. There was a public appearance of Mario Draghi. As we expected, the ECB did not change the interest rate. In addition, the ECB’s president said that the next meeting of council (the 10th of March) may bring a dovish correction of monetary policy. Moreover, the crude oil price increased what helped stock markets to grow, especially in the US. If we compare the black gold’s prices with the main stock indices, we will see a very similar movements. However, the oil price will not probably end the downward trend. The latest data showed, that there was a significant oversupply.

The companies of the WSE again moved in their own and independent environment ending the week in the red. The WIG20 fell by 0.4%, whereas small and medium - sized companies moved rapidly towards the south – the mWIG40 decreased by 4.0% and the sWIG80 went down by 2.8%. The speculation on dividend policy of energy companies and increases in a sold – out banking sector improved a market tone. Moreover, polish economic data did not fail in December: the industrial production rose by 6.5% y/y and the retail sales increased by 4.9% y/y. It was also worth noting that the average wages in December rose by 3.1% y/y. Nevertheless, these factors were not enough to end the downward trend.

The coming week will bring a lot of crucial economic data readings. There will be a release of German Ifo index and the publication of consumer confident indices in the euro zone. In Poland investors will learn the unemployment rate for December. Nevertheless, investors’ attention will be focused primarily on the US – the Fed will make a decision on interest rate. It is believed that the rate will not be changed. In addition, the US will publish the Conference Board index and the Chicago PMI.

Technical analysis

Graph 1: WIG20 daily. Source: Stooq.

The index of the largest companies stood at 1,657 pts. which was the lowest level since 2009. Subsequently, the WIG20 recovered and tested the psychological level of 1,700 pts.. There were also high volumes. It probably meant that the bulls returned. On the other hand, the RSI oscillator started to grow. In a current week the WIG20 will probably defend the 1,700 pts. mark. If the attempt fails, it will be a signal for the continuation of declines.

Graph 2: Orbis daily. Source: Stooq.

Lately, the company that was outstanding on a red background of the WSE was Orbis. The share price of the company, which manages the hotels chain, was in a long – term upward trend. In addition, the share price broke the resistance of PLN 63. It may be a signal for further growths. Therefore, we can expect that the share price will top out. However, the RSI oscillator approached the 70 pts. mark and it may indicate a sell signal. On the other hand, the MACD and the ATR oscillators pointed out buy signals. If they bring a breakthrough of PLN 65 mark, the share price will continue an upward trend. Otherwise, we can expect a correction.

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

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