Technical analysis indicates negative signals

Even if the analysis, whether it’s technical or fundamental, is no longer the prime tool in forecasting market trends now for most investors, analysts are still watching certain indicators.
Thus, Iulian Panait, chairman of KTD Invest stated for Wall-Street that at this point he still calls upon trend indicators.

“I am not interested in analysis such as Elliot Wave, Gann or Fibonnacci. And the trend indicators I was referring to earlier are signaling bearish short and medium term stock evolutions. However, these signals can shift one day to another, and a signal to buy may appear anytime. At this moment, there is no signal to buy on indices,” said Panait.

Gabriel Aldea, manager of Front Office department of Intercapital Invest explained that although fundamentally speaking, many companies are attractive if we take into consideration the prices they are traded at, technically speaking there are no signals for a reversed market trend.

“The massive declines in the past few weeks indicate an over-sale on most local stocks, being forecasted a rebound in the next period, adding that in early November, almost all issuers listed at BSE will make public their earning reports,” Aldea added.

Iulian Panait thinks that many investors who trade on derivative market usually use the technical analysis.

“As for spot market, the transactions are lower and lower, and the share of technical analysis in making decisions to invest is probably lower”, the analyst said.

Florin Turcas, consultant at IFB Finwest said that on the equity market in United States, players make moves based on technical signals. “As for Romanian market, there are only investors that sell…”, said Turcas.

Many players in the market are focused on short or very short term investments. “Many of them do take into account the outcomes of the technical analysis. This does not mean that all signals received by investors who use technical analysis are correct, especially in this period when quotations’ volatility is extreme and emotional side influences investors’ decisions”, Gabriel Alade added.

At this point, both the signals coming from real economy and from capital market are negative. “There is a temporary situation, because the market’s reversion will take place in the context of negative news coming from the real economy, including macroeconomic indicators. Then, the signals indicated by the technical analysis will be positive”, Aldea pointed out.