Summary

Holiday atmosphere on the WSE was traditionally reflected by lower volatility and public trading. Investors’ resignation from trading was noticeable, with a few exceptions defined as shares from the banking sector. Waiting for Friday's data from the US labor market, which will affect trading next Tuesday was also evident. Change in non-agricultural sector employment amounted to only 126 000, with the forecast almost twice higher. Hourly wage was increasing slightly faster than the forecast and the unemployment rate was in line with market consensus. Change in private sector employment fell weakly with increase of only 129 000 comparing to 235 000 forecast. Last week on Wall Street was dominated by bulls, although statistically two sessions ended week with increases and decreases. The rise at the beginning of the week is a result of, among others, good data on home buying. Growth rate increased by 3.1% comparing to the forecast of 0.5% on a monthly basis. The Chicago PMI index was weak and is still located far away from the barrier of 50 points. The next day’s falls was connected with ADP report and ISM index for the US industry, which were below expectations. The latter turned out much better in the euro area and in Germany. Thus, the DAX recovered Tuesday’s falls on Wednesday, with the slight increase during whole week.

The German index gained 0.9% and performed better than the French CAC40 with a fall of 0.3%. Warsaw's blue-chips index increased symbolically (0.2%). Thw mediocres from the mWIG40 performed weaker with 0.7% discount, and smaller companies from the sWIG80 were slightly better. The worst performing was the S&P500 with 1.2% decline. We should remember that the market will take Friday's labor market data into account, which may result in deeper reductions.

Wednesday’s publication of the March FOMC meeting minutes will be the most important event of the current week. Then the market will look at the reasons for, among others, changes in GDP and inflation estimates. In addition, the attention should be paid to the Monday’s ISM index for services in the US. The data was higher than expected two previous months, and we have witnessed the growth trend in this sector since three months. Analogical indices for the UK and the euro area will be published just after holiday break. Good data may contribute to the further growth of for example the German DAX. On the other hand, it is worth to investigate the issue of Greek debt. Possible problems with the repayment of the loan may result in market sentiment deterioration.

Technical analysis

Graph 1. WIG20 daily. Source: Stooq

Shorter trading week on the WSE, along with the lack of significant events, have contributed to the minimal blue chips volatility. Support near 2375 points has been defended, but the index has not been significantly closer to the resistance level at 2415 points. Therefore the fight to break this level is possible. In case of the negative scenario, the support at 2373 points and in the coming weeks the downward trend line too can be re-tested. There is no doubt, however, that until we will get the relevant data, the WIG20 will move in the range of 2373 - 2415 points.

Graph 2. Bytom daily. Source: Stooq

The Bytom was one of the best companies the past week. The scale of growth reached 14.6% only in four trading days and thanks to this we are witnessing an interesting technical situation on the weekly chart. Breaking the June 2010 resistance at 1.78 with a fairly large volume took place. Thus, the route to the vicinity of at least 2.14 is opened, which would make possible the achievement of about 10-percent rate of return. In case of negative signals, the nearest supports are about 1.50.

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

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