SMI very close to its all-time high

The Swiss Market Index exceeded the level of 9.500 CHF three times. The first time in June 2007 with a weekly high of 9.548,09 (1); the second time in August 2015 with a weekly high of 9.537,90 (2); the third time at the end of January 2018 with a weekly high at 9.616,38 (3).

The peak of 2007 was a market top from which started a strong bear market (-55,65%). The following two highs coincided with market tops from which started corrections followed by sideways trends. In 2015 we had a fall of about -22,15% followed by a sideways market that was supported by the 38,2% Fibonacci retracement. A new uptrend brought the price to a new high in 2018, followed by a further fall of -12,93% and a sideways market supported by the 23,6% Fibonacci retracement.

In the last period the index is in a short term up trend and last week the price close was at 9.348,93: just under 3% from its all-time high.

The 10-week moving average is near to up cross the 40-week moving average (a) and the Macd is near to up cross the down trend line (b).

If we look at a short-term chart, we can see that prices are in a short-term bullish trend, and recently we had a break-up of a right-angled broading formation (1) whose first target price is located at the level of 10.200 (2).

The oscillator is overbought (3) and prices have been rising a lot in the last weeks. A possible consolidation could take place in the next period. The first support would be on the uptrend line of the broadening formation around 9.150.

In the last two years there have been several examples of upward breaks of broadening formations, but in most cases, prices have not had enough strength to continue the uptrend. It is therefore necessary to follow closely the next few weeks to assess whether the balance between buyers and sellers will remain in favour of the former or whether there will be new changes.

Mario Valentino GUFFANTI CFTe – SAMT Vice President – Swiss Italian Chapter – mario.guffanti@samt-org.ch

Disclaimer: the above article is for general information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.