omx 30

OMX Stockholm 30 May Fall 16%, Swedbank Says: Technical Analysis
May 31, 2010, 9:24 AM EDT
By Adam Ewing
May 31 (Bloomberg) -- The OMX Stockholm 30 Index may slide 16 percent until it reaches resistance at the 38.2 percent Fibonacci retracement level, according to a technical analyst at Swedbank AB.
“I think there is a lot of negative sentiment out in the market and if the global macro picture doesn’t improve, I expect the OMX Stockholm 30 to reach the 860-880 level,” Stockholm- based Robert Oldstrand said in a phone interview today.
After surging 16 percent from this year’s low on Feb. 15, the benchmark gauge for Swedish equities has slipped 8.2 percent since its high on April 26 amid concern the economy’s recovery from the worst recession in seven decades won’t be sustained. The measure rose 0.2 percent to 980.76 at 3:06 p.m. in Stockholm today, a fourth straight advance.
“We have rebounded during the past few days and are now at a resistance level of 980,” Oldstrand said. “We are working under the scenario that the correction to the downside isn’t finished so I expect we’ll see more consolidation until the news flow turns positive and investors’ risk appetite returns.”
Fibonacci analysis assumes markets retrace earlier patterns in specific stages. A Fibonacci retracement level is created by taking two extreme points on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6 percent, 38.2 percent, 50 percent, 61.8 percent and 100 percent. If a price breaks through one of the levels, it may signal a move toward the next resistance or support point.
The 860-880 support level is based on the 38.2 percent retracement of the advance from the index’s 2008 low to the peak in April 2010.