Swiss stocks may surge 17 percent by the end of the year if a key resistance level is breached, according to a technical analyst at ING Groep NV.
The benchmark Swiss Market Index (SMI) may climb as high as 9,548.09, a level last reached almost six years ago, if it crosses above 8,294.19, said Roelof-Jan van den Akker. The resistance represents the 76.4 percent Fibonacci retracement of the decline from June 2007 through March 2009 in the aftermath of the financial crisis. The 9,548.09 level is a gain of 17 percent from yesterday’s closing price.
“It has been a fantastic bull run,” Van den Akker said. “We’re entering a stronger resistance area in the short term. Looking at the longer term, there is still no reason to be bearish. Markets should only take a breather before they continue the trend.”
The SMI rose 1 percent to 8,266.62 at 2:44 p.m. in Zurich as the Swiss franc weakened and Bank of England Governor Mervyn King said a U.K. economic recovery is “in sight.” The gauge has surged 21 percent so far this year, the best start to a year since 1997, as companies reported better-than-estimated earnings and central banks continued to stimulate the global economy.
Van den Akker said the 8,600 level is the next short-term resistance the index has to breach. Stocks may drop towards the 8,150 support level before resuming the rally, he said.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
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