Summary

Once again, investors at Ksiazeca did not have an easy week. The WIG20 index dropped by 2% closing at 2015 points (a week before declined by 2.2%). Psychological support at 2000 points is quite close. In the same period, the German DAX grew by 1.3% and this was fifth consecutive week of growth. In comparison - the WIG20 fell fourth week in a row and did not benefit from better investment sentiment supported by potential expansion of QE program in Europe. The increases were also present on Wall Street, where the S&P 500 grew by 1% despite the fact that interest rate hike is very likely in December. Strong economy which was confirmed by last week's data, stand for FED’s expected decision. Market was positively surprised by recent jobs data, but if you look at previous readings there are also other reasons to be pleased. The industrial ISM index was indeed in line with forecasts (Chicago PMI was very strong), while the services sector number were very solid. Therefore it is not certain that a rate hike in the nearest future will bring the economy down.

European readings were in line with expectations. As PMI forecasts were not particularly demanding, these numbers did not change investors’ expectations on the ECB actions. If you look at the Warsaw Stock Exchange the beneficiary may probably be at most small and medium companies, which once again showed a considerable resistance to what was happening on blue chips. mWIG40 fell only 0.2%, and sWIG80 grew by 0.3%. It is clear that politics does not matter that much for those companies. Current concerns are related to banking and energy sector. Unfortunately it is not guaranteed that they will not affect the entire market. Recently some statements were released questioning the sense of capital pillar of pension funds. Investors might be worried this could be and introduction to liquidation of open pension funds over the next four years under Law and Justice government. Constitutional Court's judgment on the constitutionality of changes made by the Civic Platform might be considered as an invitation for politicians to further "tinkering" with the means of future pensioners.

This week there will be less macro data releases that during last week. Market in the early stages of the week will be digesting Friday's payroll. It is worth a while to pay attention to China, where in the next few days we will know the readings of CPI, retail sales and industrial production. More important readings will arrive from United States and Europe on Friday - retail sales and the preliminary GDP for many European countries, including Polish.

Technical Analysis

 
Graph 1. WIG20 daily. Source: Stooq

Last week was not successful for the WIG20, frankly speaking it was a very weak period for large companies. The index lost 2%. Similar to what it lost a week before. Overall, this is already four consecutive declining week on blue chips. We have around 2,000 points, which is not only a psychological support. Starting from August this year it was a third test of these neighborhoods. So far the two previous attempts generated an upward move, each time weaker that previous. Thus we can only see an upward correction as high as the trend line (2100 points).

Graph 2. Asbis daily. Source: Stooq

We chose Asbis as company of the week. Shares of IT distributor ended last week with a growth of nearly 34%, accompanied by a very large turnover. Thus, the puncture of resistance level at 1.36 PLN was confirmed with turnover. Price struck out of the consolidation and is currently creating a second wave of growth, which may have a range of up to 70 gr. This could mean roughly the test of 2 PLN surroundings, where a next serious resistance is located. Next one is a maximum of February at 2.48 PLN. RSI oscillator is already bought out so a downward correction is not excluded but a buy signal will be valid as long as price is above 1.36 PLN.

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

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