The beginning of the 2010 brought slight increases on the stock markets. The situation has changed rapidly in the second part of January, as major world indices began to decline.

The deterioration in the global investment sentiment has also negatively influenced the Warsaw Stock Exchange.

Since August 2009, the WIG20 has followed an upward fluctuation range with a steadily narrowing amplitude. This kind of movement has created a wedge formation on the daily chart. In previous weeks the WIG20 systematically approached support levels, set by an upward trend line.

WSE is still mainly under the influence of the global investment sentiment, which was substantially deteriorated by US President Obama's idea of implementing the new, stricter rules and regulations for the banking sector. In Europe, this has still not solved problems with the budget deficit in Greece, which has put pressure on the European stock markets.

These reasons explain why even positive news from the domestic economy are not able to change the whole outlook on the Warsaw Bourse.

On Thursday, January 28, the Central Statistical Office published the dynamics of the Polish GDP. The economic growth for the whole of 2009 amounted to 1.7 percent, and beat market expectations. Prime Minister Donald Tusk also announced that he will not run for president.

Despite all this news the WIG20 continued to fall, breaking the upward trend line, which is a strong signal suggesting the possibility of heavier declines.

Michał Fronc, Analysis Department from TMS Brokers