Medium term
Trade view / 02 August 2016 at 7:06 GMT

Swedish investment firm Investor poised for downside

Instrument: INVEb:xome
Price target:
Market price:
The stock of Swedish Investor (INVEb:xome) has along with many other stocks on the Swedish equity markets and the main index OMXS30.I put in a low in February earlier this year. From this low we have seen a spike higher into a peak in April, a sluggish move lower into a low in the aftermath of the Brexit vote in June and another thrust higher from there. 

The time cycles are telling us that we could have seen an end to the correction off the February 11 lows from around this week-end. This possibility gain in confidence as this stock took a dive yesterday. To reset the negative signals given by INVEb:xome it now has to establish itself above the SEK 298 level, if so the signals are for higher prices into around August 28 when the next alignment can occur.

As we can see in the chart below Investor managed to reverse off a Gann pivot at SEK 298 which has withstood several attempts to break higher, support is now found at SEK 291, 281 and SEK 273.

INVEb:xome daily chart (click to enlarge)
INVEb:xome daily chart

Source: Saxo Bank. Create your own charts with Saxo Trader click here to learn more

Counting Elliott waves we suspect that the low in February marked the first wave lower of a new bear market and it is possible we have experienced a complete three wave bounce before the next leg lower. The interpretation of a negative trend in place is supported by the downward sloping 200 day moving average and the fact that this stock is, in large, is building lower highs. We might just have experienced another lower high! The higher low in relation to the February 11 low is a bit worrisome for bears but obviously a normal behaviour in three wave bounces.

We are given the wave structure, time cycles and the hit of price pivots and the fact that oscillators are rolling over expecting at least a tradeable pullback to the down side awaiting further confirmation of more downside price action to come.

Management and risk description
The plan is to short INVEb:xome below SEK 298 with a stop upon a close above SEK 300 with targets of SEK 281 and SEK 273.

The risk to this setup is a break above the key SEK 298 level which would be indicative of more upside to come into SEK 307 and possibly even SEK 325 during late summer.


Sell below SEK 298

Stop: Close above SEK 300

Target: SEK 281 and SEK 273

Time horizon: 1 - 2 weeks

INVEb:xome longterm daily development chart (click to enlarge)
INVEb:xome daily development chart
Source: Saxo 

— Edited by Clemens Bomsdorf

Non-independent investment research disclaimer applies. Read more


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