Summary

Global stock exchanges were dominated by bulls last week. Despite the lack of relevant data, national indexes performed well and hence blue chips were in an interesting technical situation. It should be noted, by the way, that we were trading during only a 4-day week on the Warsaw Stock Exchange. Greater amount of data and thus more momentum to higher volatility will be published the next week. FOMC Minutes was quite dovish and had impact on S&P500 index strengthening. Interest rates hike vision in United States is still vague. Good investors' sentiment to equities indicates emphasizing the possibility of further monetary policy tightening. Last week's readings was not very impressive. The ISM services index from US was consistent with market forecasts. Friday's data on the number of applications for unemployment benefits was better than expected. It amounted to only 281 000 with 4000 higher prediction. Despite increased risk aversion connected with Greece situation, the German DAX ended the week positively. 

The WIG20 ended the week with 1.8% increase. Therefore the growth over the past four days was a half higher than the previous week. Medium-sized companies recorded the same result comparing to the pre-Christmas week - 1.5% grow. Small-sized companies decelerate and index has grown only by 0.5% during the week. The German DAX performed much better than the Polish indexes. The increase was as high as 3.4% in this case and was slightly higher than the performance of the French CAC40. Good sentiment overseas brought 1.7% S&P500 upsurge.

The current week will provide a number of important data from Poland and United States. Data on US sales will be published on Tuesday. The total growth was much weaker than forecast and amount to only -0.6% m/m the previous month. The stock market on Wall Street is fighting for another record-high and surely hopes for much better reading. On Wednesday, the investors will look at the news from the Monetary Policy Council, particularly in the context of strong PLN. Blue chip index in Warsaw since the March interest rates cut decision, after initial declines, has started rally toward the upper limit of the months-long horizontal trend. Reading on industrial production, long-term capital inflows and the number of permits for building houses will be important for US indices. At the end of the week we will get to know the result of the leading Conference Board indicators. The indicator remained at a relatively low level of 0.2% last two months.

Technical analysis

Graph 1. WIG20 daily. Source: Stooq

We have witnessed a significant break of the resistance level at 2415 points on Tuesday, to which the index tried to approach the previous week. The next resistance is 2460 points and its defeat the current week would open the way to the vicinity of 2500 points. Broken resistance from the previous week is now considered as a technical support and its defeat from the top would herald the scenario favorable for bears.

Graph 2. Marvipol daily. Source: Stooq

Last week's trading has resulted in an interesting situation on the Marvipol technical chart. The company operating in developer’s sector recorded break from the triangle formation, stopping growth in the vicinity of significant resistance level at 8.20 simultaneously. Thus, retreat to the level of 7.80 is very likely and confirmed by achievement of the level of 70 on the RSI indicator. This signal caused change from the short-term uptrend to downtrend the previous weeks. Monday’s trading above 8.20 would be the condition of further increases from a technical point of view.

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

This material is intended to be for informational purposes only and does not constitute any investment, legal or tax advice or any other type of advice nor constitute an offer according to the Civil Code or a public offer within the meaning of the Act on Public Offering. MM Prime TFI SA has done due diligence to ensure that the information contained in this presentation is accurate and based on reliable sources. MM Prime TFI SA is not responsible for the accuracy and completeness of the information, nor for any damage that may arise from the use of it. Nothing in this document should be construed as an investment advice. The use of this material as the basis or evidence to make an investment decision takes place at the sole risk of the person who takes such a decision. This material is available free of charge