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The situation on the stock exchange and a bit of technical analysis
Happy National Unity Day, friends! I'm back from a short vacation and decided to take today off to wander around the market and see what you've been up to while I was gone.
Accordingly, the Moscow Exchange index fell by 2.4% over the week, reaching 2594 points, almost completely above the second extreme support line. On August 30, we talked about a possible “double bottom” model and that this is a reversal formation that can fully convince us that the bulls have gained the upper hand.
But there are two nuances
Firstly, the pattern is considered formed only after the lower part of the picture (drawn on the chart) is broken, so it is premature to draw any conclusions. Secondly, the macroeconomic situation does not allow us to count on the growth of basic assets. This is the complete opposite of the anti-war calls of analysts.
The willingness of central banks to tighten monetary policy has raised questions about the sustainability of this transmission mechanism in the future. The M2 money supply, accelerated by interest rates, has a direct impact on the rise in inflation, which in turn leads to an increase in the height. I doubt that we will be able to return to “normal” any time soon, despite some fears.
I don't want to build a stress scenario on the chart and move to the 2200 point level, but I wouldn't completely rule out such an option. We plan to increase our positions in stocks, despite the negative external environment. Currently, their share does not exceed 55% in my main portfolio. We regularly discuss potentially interesting ideas and which ones are best to stay away from.
If the benchmark interest rate is maintained above 20% for a long period of time, the profitability of debt-laden companies will be significantly reduced, even if it does not lead to bankruptcy. Do not buy such assets. But do not "deposit" it completely. The reversal of interest rates and the market is likely to be as rapid as current trends.
❗️Not an investment recommendation.