09/11/2007

Futures analysis

The futures sold off again today. Long shadow on the daily chart indicates a possible short term bottom forming, but monday action will strictly depend on the close in America, which is again highly negative (-200 points in Dow Jones). Also, have in mind, that the slowing american economy might finally cause crude oil price to decline, as lower consumer income will decrease overall demand for gas. Nearest downside target in weekly timeframe for crude oil is around 80$ a barrel, which might push the stock markets up. Now we have to wait and see whether WIG20 futures are yet strong enough to even pullback and reach this broken 100-day moving average, because then we will be able to determine the condition of this market (how bearish it actually may become).

Intraday data shows how hard is to pick a bottom in this market. Though late in the day, bulls came back for a while and drove the price above 3600 on the close. The futures bounced off of the 76,4% retracement of initial extended rally, which eventually drove them to reach new historical highs. Yesterday I thought, that the price was exhausted and that we already have a chance to see actual pullback or at least short term bottom, but nothing of that happened and in the wake of still growing credit concerns, the futures might find more room to decline further.