The stock market is ready for a downward correction


Yesterday the Russian stock market opened with growth, and in the first hours again crossed the 3500 point mark. But again it was not possible to gain a foothold above it, despite the fact that the external background was good. As a result, by the end of the day, the Moscow Exchange Index lost 0.3%.

Norilsk Nickel dropped significantly (-1.35%), despite the growth in prices for its main products. But GMK shares have become one of the fastest growing since the beginning of this year and are now technically overbought. Nickel is up again today, adding over a percent. Probably, the shares of GMK will win back this with a slight rise at the opening, but the overbought condition has not been removed yet, it is too early to buy Norilsk Nickel.

Lukoil shares soared by 2.2%. It is also worth looking for opportunities to open shorts here. But at least not this morning: oil is quoted at multi-month highs.

In general, the external background before our opening looks good: US futures added about 0.2%, oil soared by 1.3%, trading at about $ 57.3 per barrel. Therefore, yesterday’s scenario – growth in the first hours of trading and subsequent gradual decline – may repeat itself.

Of the highly liquid securities, it is worth keeping an eye on the shares of the Moscow Exchange itself, they very often rise against the market as a whole. In the “second tier” we are closely watching the dividend power industry – securities in this sector lagged behind the market.

Better than the market in the coming days may look and Gazprom, whose quotes are pushing up not only soaring gas prices in Europe and Asia due to severe cold weather, but also the expectation of completion of Nord Stream 2.

The current growth in oil is largely speculative. In part, investors continue to win back the voluntary decrease in production by Saudi Arabia by 1 million barrels per day and are beginning to view oil as anti-devaluation protection. But until the traffic flows begin to recover, and this will happen only after the decline in the incidence of coronavirus, primarily in Europe, oil is unlikely to go above $ 60 per barrel.

However, in the coming days, oil and other commodity assets may be helped by the resumption of the weakening of the dollar in the world market. The euro-dollar pair made a powerful rollback from the level of 1.235, but did not even try to test the support of 1.21. Therefore, it cannot be ruled out that the main currency pair will again go to the 1.24 region, but not at a very fast pace.

The weakening of the dollar and the growth of oil will support the ruble today, which strengthened against the dollar by one and a half percent yesterday. However, this growth is largely due to the fact that exporters have begun a delayed sale of foreign exchange earnings accumulated over the long weekend. Consequently, the strengthening of the ruble is of a temporary nature, since we have repeatedly seen how the Russian currency ignored both the rising oil prices and the falling dollar.

It is possible that today the dollar-ruble pair will try for strength the strong support 73, and even try to “pierce” it. However, ruble optimists should be reminded not only of the weakness of the Russian economy, but also of the sanctions risks – Joe Biden is likely to carry out a series of sanctions attacks on Russia.

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