Here's an updated chart of SOFIX.
The trendline Support that was mentioned last week didn't hold and there is a close lower that puts attention to the downside scenario that is laid out on the present chart.
SOFIX is trading currently in a Downtrend Channel marked with Red.
The most important balance point is roughly in the 380 zone as it is 50% of 515-250 range so far.
The previous Resistance now turned Support at 397-399 is the first level to be tested if the Trendline break is sustained this week. The testimony of Ben Bernanke seemed to please the US stock markets and Crude finished on the high of the day which by all means risk is turning back on the table with the re-affirmation of the low rates to be kept for considerable time.
That actually is puzzling as it must favor all markets. There is however the idea of the divergence trade as the liquidity in the Developed markets pushes all asset class prices and while US entered first in the Global Financial Crisis they are the first to emerge from it with repaired balance sheets and faster deleveraging - a process that lags in the Emerging Markets and especially in peripheral markets like SOFIX.
Tight fiscal and especially the fixed monetary policy slow down the deleveraging process of investors and fresh money doesn't flow in consumption and/or investment but to replenish the consumer balance sheets. Or that is just another convenient explanation.
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