13/09/2008

Futures analysis

I have been busy lately and I could not update my blog regularly. As it appears, there has been little of unexpected activity in WIG20 futures. In one of my last posts I stated, that we are probably going to see a retest of May 2006 low, which is about to happen anytime now. The market was not strong enough to break above January low level and found resistance at declining short term moving averages. Now, the most awaited thing is the actual retest, especially in the wake of current market situation. Yield curve for Dollar is normal, which means, that currencies and money markets have already discounted a slowdown in american economy, which does not have to go into recession anymore (it will not change anything). The last thing we are waiting for are stock markets. That is why retesting 2405-50 is so important, because it will serve as a major timing factor. Rules are very simple. Bouncing off May 2006 low will indicate a potential double bottom pattern forming in daily timeframe. And if that occurs, then it will mean, that shares have finally put an end to the subprime crisis. Then we would probably see some sidetrend, because yields in money market need time to inverse. But if price falls below 2405, then it will take more time for WIG20 to recover and the nearest downside target would appear to be around 2230 zone.

Intraday chart shows, that the futures have become range-bound again and will trend sideways between 2480-95 resistance and 2440, which is the main intraday pivotal area now. Sentiment from the States is negative, judging by the daily timeframe. The stock market has retested the most recent swing lows, bounced off, but did not actually change the main trend yet. Intraday sentiment after Friday's close would be rather neutral, because the makret was able to form in a pattern of consecutive higher lows, but ended up finding resistance at previous day's close. Such price action does not forecast much, except that there is some heavy selling coming in just above key intraday levels. Combining situations in America and here in WIG20 futures, Monday is probably going to be just as neutral, as it has been lately, unless we hear unexpected news from Lehman again for example. Upcoming week is going to bring us some important news covering industrial production, CPI, housing market data and of course FOMC policy statement. All of these combined would serve as a perfect catalyst, to determine further movement in the stock market. As for interest rates, options on CBOE have discounted over 80% probability, that the Fed will leave benchmark at 2,00%.