The old saying advises investors to buy when blood is pouring out and sell the sound of fanfare. It is from this first situation we have now to deal in the stock market from the banking sector, technical analysis suggests. WIG Banks dived this week by 4.1 per cent., In reaction to the news of the election victory of Andrzej Duda. Law and Justice candidate announced additional taxation of banks and to allow conversion of loans in francs at the rate of borrowing. This, however, may already be a hard bottom stock exchange trading industry, according to a technical analysis chart WIG Banks.
On Tuesday the value of the index reached 7720 points and was exactly at the lower limit the channel, which describes his standing since its inception in December 1998. Over 16.5 years of existence index grew at a rate of 11.6 percent. per year. A similar amount of returns on investments in banks can be expected in future years because the slope of the channel is 12 percent. per year. In fact, profits from shares of banks can be in the coming quarters even higher.
That’s because after reaching the lower limit of the channel is to be expected march towards its upper limit. Assuming the most optimistic scenario, which assumes that the boom will last two years, and its peak will fall on the upper limitation of the channel, it is expected that WIG Banks will reach 14.6 thousand. points. This would mean an increase of 89 percent. compared with quotations from Tuesday.
The long-term bullish channel, shown in the chart WIG Banks index. Source: “Pb.pl”, Bloomberg.
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