Summary

In comparison to major European markets the WSE was not bad at all in the past week. The main Polish indices were still making up for previous weeks’ losses. The banking sector performed very well. This was in response to the information that there is no chance the lower house of the Polish parliament will pass the foreign currency mortgage loans law. As a consequence, the market went up considerably during Thursday's trading session. A good start of the week was made by the energy sector. This, in turn, was in response to the news that the risk of direct or indirect investment in the Polish mining industry has been reduced. Alongside the empty macroeconomic calendar and the above-mentioned positive impulses in the week ended 11^th September the WIG index gained 1.4%, the WIG20 rose by 1.8%, while the index of medium sized companies was up 1.4% and the index of small enterprises was down 0.2%. All these indices have stuck in the short-term consolidations.

Last week markets lacked of impulses in the form of important macroeconomic publications. On Monday Americans were absent from the markets, since they celebrated the Labour Day. Hence the real trading did not begin until Tuesday. The major European stock exchanges experienced small increases in the week ended 11^th September. The DAX rose by 0.9%, London's FTSE250 gained 1% and the French CAC40 ended the week 0.6% above the closing line. All three indices were moving in the slightly upward short-term consolidation. Markets across the Atlantic experienced larger increases. Both the S&P500 and the DJIA climbed 2.1% in the week to 11^th September. The NASDAQ went up 3%. The triangle formations emerged on the daily charts of these indices.

This week there will be plenty of opportunities to escape from aforementioned consolidations. A potential escape will be crucial for the future direction of the indices. A two-day FOMC meeting will obviously be crucial. The meeting will be followed by Thursday’s decision about interest rates in the United States. However, according to a Bloomberg survey, most analysts expect that the Federal Reserve will again postpone the interest rates hike. In addition, this week the data on inflation and August retail sales and industrial production in Poland and the United States will be published. It is worth to mention that the minutes of the last MPC meeting will be released. U.S. housing starts and building permits can be worthwhile as well. Instead, last weekend’s Chinese data can give direction to the markets at the beginning of this week. Retail sales turned out to be slightly above the consensus. On the other hand industrial production disappointed, despite the reading was slightly better than the previous month data.

Technical Analysis

Graph 1. WIG20 daily. Source: Stooq

Technically we have a very interesting situation when it comes to Warsaw's blue-chip index. A buy signal appeared on the daily chart last week. Thursday’s 2 percent growth led to breaking the upper limit of the downward channel initiated in May, and also filled the gap from 24^th August, or so called “China's Black Monday”. By the same token the resistance around 2,165 points was broken, which became the nearest support. The nearest resistance is found at a psychological limit of 2,200 points.

Graph 2. Groclin daily. Source: Stooq

Last week was very successful for Groclin’s shareholders. Only within last 5 sessions the price increased by 11.8%. At the beginning of September on the daily chart a double bottom formation emerged. The level around PLN 14.40 is the minimum range of growth. The shares closed Friday with the price at PLN 14.21 and PLN 14.30 is the current upward wave maximum. Therefore the minimal range of growth has been almost entirely realized. Since 23^rd December last year the price has been moving in a growth channel. The nearest resistance is found at around PLN 15, nevertheless the course has had a problem with breaking it for a long time. The 9-session RSI oscillator still gives some space for growth.

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.