22/11/2007

Futures analysis

The market finally pulled back to 10-day moving average in the daily timeframe, regardless of what I expected yesterday. Global stocks rebounded, which fueled today's reaction in WIG20 futures. Open interest is still rising and supports this recent pattern on higher lows, indicating more aggressive buying. The 20-day moving average has recently crossed below 50-day MA and is about to cross the 100-day average, confirming prior bearish price action. Still, price movement does not show any signs of reversal, except for the short term. The nearest news from America is coming on 27th of November, so until then the global markets will mostly depend on less significant data from other countries and technicals, which would make my forecasts more accurate.

The 3550-75 resistance zone, that I pointed out a couple of days ago has expanded to 3595. The futures stopped there and closed, extending 5-day rally, which confirmed short term bottom near 3450 area. Today, the stock exchange in America is closed, due to Thanksgiving, so tommorrow we are going to find out, if our futures are strong enough to get above 3600. Definitely, this 3550-3600 area has become a turning point in this market and any reaction either way will define future direction for the price, so it will determine whether this latest action is going to become a bottom, or continuation pattern. As for the global markets, the key is now level of consumption and housing market development in the U.S., because these are the only factors that will save this country from getting into recession and stock indices from the bears. As I said earlier - neither action from the Fed is going to turn up the stock markets.