Monday, June 15, 2009

CC Raiffeisen Capital: Correction of the domestic stock indexes - the most likely scenario for this week

Correction of domestic stock indexes - the most likely scenario for the current week.

As we anticipated, the Russian stock market, supported by favorable conditions in the oil market, over the last week, continued consolidation in the upward trend - says analyst CC «Raiffeisen Capital» Sergey Tyukanko. MICEX index showed a slight decrease of 0.5%, to close on the basis of the week at around 1,138.52 points. It should be noted that most of the major overseas areas during the past week remained in two minds about the future direction of motion, demonstrating the lateral dynamics of near zero (DJIA +0,41%; S & P500 +0,65%; DAX -0,15%; FTSE 100 +0,08%; Hang Seng +1,13%; SSE Comp. -0,39%). Such mistaken dynamics of major stock indexes is a reflection of a very controversial macroeconomic statistics, leaving during the period and characterizes the current situation as highly volatile. Perhaps the essence of the whole macro-published statistics for the previous week was a review of U.S. Fed «beige book», in which the economic situation in the United States described as a still weak, despite the appearance of some signs of slowing down the pace of decline in economic activity in the United States and revive the financial markets.

Thus, the Russian stock market, demonstrated an impressive growth since the beginning of the year (MICEX Index 83.77%), with no apparent reason for such a drastic change of investor sentiment, with the fundamental point of view resides in a state in which much increases the likelihood of correction. In addition to the lack of obvious fundamental reasons for the growth, the technical picture suggests that the MICEX index throughout the last week consolidated at the lower border of the ascending channel at the level of 1090-1100 points. From a technical point of view, the data rates are the closest level of support for the index. However, of Perforation them down would mean a formal withdrawal of Russian key indicator within the specified channel, and perhaps a deeper correction index. It is also useful to recall that the MICEX index since the end of April this year, traded over the 200-day moving average. And, therefore, any correction of motion in this case can be regarded as a normal market reaction to the lack of obvious investment ideas and investors, partly as a desire to record the accumulated paper gains on the first half. Given that the world's stock markets accumulating uncertainties, as well as taking into account the fact that on Monday this week on the Russian stock market was officially ban on the «short» sales, we believe: a correction of domestic stock index this week is the most likely scenario developments.

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