Last week stocks on Wall Street were struggling around very important resistance levels. From the beginning of the week the NYSE indices had been fluctuating in narrow ranges, without showing any signs of potential extraction.
The S&P 500 is still just under 50 percent of the Fibonacci retracement, struggling with a long-term downward trend line. The Eurodollar was also moving in the range of 1.4800-1.5000, without showing any determination to increase permanently above the level of 1.5050. Taking into consideration the latest statement Fed in which the bank said that interest rates would be kept at the current low level “for an extended period of time,” investors can be sure that the dollar is still going to be borrowed in carry-trade transactions.
Last week on the Warsaw Stock Exchange began with a strong intra-day increase of the WIG20, which set a new year-to-date high at the level of 2,429 points. The more than three percent growth of the Polish blue-chip index on Monday was lead mainly by banks. Better-than-expected quarterly results from PKO BP (+4.7 percent) have supported investment sentiment and led the rally.
We can still observe that investors are focused mainly on large and liquid companies in order to sell them easily in a case of a downturn. In the following days the WIG20 returned to the upward trend line, which was crossed for the third time this week. From the technical point of view, the WSE is facing a threat of a double peak, but everything depends on the situation on foreign markets.
Anxiety among investors is increasing along with the divergences between some markets. US stocks and gold set new highs, while oil and the Eurodollar are moving in a narrow range. This situation seems to cause a lot of uncertainty, but market participants should be patient and wait for the final outcome.
Thursday, February 9th, 2012
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