February minor under the pressure of global markets
So, briefly to go back to what was discussed in the previous reviews. Toward the close of last week, we recommend to reduce long positions that allowed to fix a great profit. The prerequisites for such a decision were mainly the following factors: market showed advanced growth, entered the area of resistance and because of the wave nature was close to the transition in the correction phase, which could take place either in terms of consolidation, with a strong market or in the face of declining . At the same time, the beginning of last week did not allow to form an opinion about the future dynamics, because the market has completed a wave of growth is higher than expected for the MICEX index level of 1,750 points. Stop occurred above a mark in 1790 points. From Monday to Wednesday in the last week, the main recommendation was to remain on the sidelines as new purchases at such high levels, did not provide acceptable parameters of risk management, and for speculative play on the slide required retest local maximum. And now, since last Thursday, there are some conditions for a game for a fall, as stated in the daily review of the day. The MICEX index in the first hours of trading last Thursday, managed to rise from the level of 1746 points to 1787 points, that is, again reached the area, from which began the previous decline, risk parameters, timing and general attitude enabled to form an opinion in favor of the recommendation. On Friday, the MICEX index has attempted to test the mark of 1,800 points, but no more. The last previous review was written, that such attempts of growth should not be taken at face value.
In this sense, the start of a new week, finally began to bear fruit, as the dynamics of the index took a top-down in nature. The MICEX Index is currently (as of 13:30 Moscow time) fell by 1.4%, returning to support in 1755 points. In this situation, although it is more common dynamics match the size of the consolidation within the boundaries of 1750-1800 points, the probability of leaving the area below the support quotations considerably higher. Therefore, those who joined our recommendations at the end of last week, it is necessary to continue to hold the position since the downward dynamics of development in the next day or two can put the nature of the auction from the side to the downward, which will provide a greater profit. At the same time, if the mark of 1750 points will stand, and the market is surprisingly able to maintain its strength, it will allow to abandon the idea at minimum cost. The key points of support, where the bulls would provide resistance levels are close to the values of 1750 points, 1725 points and 1700 points. Overall, February, according to the technical picture on the monthly chart of the MICEX index has a tendency to an end on a minor note. And the main reason of such dynamics, to a greater extent, there will be changes in global markets, from the influence of which domestic assets are unlikely to be able to distance themselves.
Alexey Kuzmin, an analyst with IC “Okay Broker“