Norway’s Stock Market About To Play Catch-Up?


2015 has been a banner year for European equities thus far, with many markets netting near-record returns in the 1st quarter. Especially impressive have been the Scandinavian and Northern European bourses, which we flagged in a post back on December 11. The response from those markets has been flat-out spectacular. Conspicuously absent from the party, however, has been Norway. The reason for that? Oil. A large percentage of Norway’s economy and stock market is driven by oil prices. So given the commodity’s recent shellacking, it’s no surprise that the country has not participated in the continent’s stock market resurgence. That could be about to change.

After breaking out in early 2014 above its triple top highs set in 2007-2008, the Oslo Stock Exchange Index hit a wall in June as oil prices topped. Since then, it has experienced volatile swings up and down. However, in the process, the Index did manage to test the breakout area from early 2014 on a couple occasions. Thus, despite the wild oil-driven fluctuations in the market, the past 9 months could be viewed as a simple test of the breakout area/previous highs. And if the test proves successful (i.e., the previous highs serve as support), this process could just be a temporary pause before the upward trajectory that started with the breakout reignites. That scenario could be initiating now.


The chart shows the breakout in 2014 (#1), followed by the test of that level in October and December (#2). In addition to the 2007-2008 highs marking the breakout area, a few other levels conspired there to lend support, including:

  • the 23.6% Fibonacci Retracement of 2008-2014 Rally
  • the 38.2% Fibonacci Retracement of 2011-2014 Rally
  • the post-2008 UP trendline

All that was missing to begin a new up-leg was a breakout of the post-June consolidation phase. That may have began yesterday as the Oslo Index rallied some 3.5% (#3) and broke above recent resistance levels near the 61.8% Fibonacci Retracement of the June-December decline. This breakout looks like the real deal and could provide the springboard for a sizable new advance.

So while the stock markets across Europe (especially in the North) have gone bonkers to the upside, Norway has not been able to make much headway due to depressed oil prices. However, with the seemingly successful test of the former highs and now the breakout of key short-term resistance, Norway’s prospects may be getting brighter. Add in the fact that we have preliminary signs from the oil market that the commodity may have bottomed, and what was a headwind could turn into a tailwind. If these factors hold up, Norway’s stock market which has badly lagged behind its peers could begin to make up ground in a hurry.


“Oslo” photo by Nathan Wind.

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The commentary included in this blog is provided for informational purposes only. It does not constitute a recommendation to invest in any specific investment product or service. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.