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Correction Accelerates Stock Trader’s Diary


β€’ As expected, after the inauguration of the new US president, a correction began in global markets. US broad market indices are falling even as good housing data came out on Thursday, where building permits rose to levels last seen in 2006 in December and manufacturing activity accelerated in January.
β€’ In Russia, the fall in indices has acquired an exaggerated form. The correction began a day earlier than in the US, and the rate of decline of the indices is four times higher today. The reason for this is the expectation of geopolitical and economic pressure on Russia from the new Russophobic US administration.
β€’ Additional risks are posed by mass protests in Moscow and the regions in connection with the arrest of Navalny, panned by the opposition on Saturday 23 January. Provocations are possible, and in any event negative external reaction. This is another reason for investors to go out into money, especially foreign ones.
β€’ Meanwhile, the above factors are not fundamental economic factors, and do not create a negative economic effect in the short and medium term. And the share of foreign investors in Russian securities is now relatively low, about 25-30 %%, depending on the asset class and the type of securities. And the dumping of some of these remaining positions by non-residents will not have large-scale consequences. Moreover, sales will be bought out by local investors, whose funds continue to flow to the Moscow Exchange both directly and indirectly through collective investment institutions (mutual investment funds, private pension funds, etc.). And the group of new Russian investors themselves, who arrived on the Russian stock market in during 2020 will have a passive strategy: Bought and be patient.
β€’ The horizon of the correction that began in the second half of January on the Russian stock market is estimated at two weeks, and its scale is about -10% … -15% of the January maximum. It is recommended to use this correction for long-term investment purchases.
β€’ The technical target of the correction is seen as MA200, which corresponds to the level of 3000 points on the RTS index, and 1250 points on the IMOEX index.

Recommendations

β€’ Day traders / speculators: no positions.
β€’ Positionally: close medium-term positions.
β€’ For long-term investment purposes, purchase
Bonds: OFZ-IN of issues 52001, 52002, 52003.
Shares: Polymetal, Severstal, MMK, NLMK, RusAl, Acron, PhosAgro, VSMPO Avisma, Moscow Exchange, Yandex, Mail.ru, AFK Sistema, Surgutneftegaz, Surgutneftegaz prev., NOVATEK, Magnit, Lenta, Gazpromneft, Petropavlovsk (POGR) Mosenergo, RusGiro, Unipro, InterRAO.

RTS and MICEX indices.
Dow Jones Index.

The technical analysis was prepared in the XTick Professional system.



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