The Thailand SET closed at 1603.45, down 0.77% for the week after headline news triggered a roller coaster ride for the markets. The put-call option ratio, calculated using open interest volume for the SET50 index, consisting mostly of large-cap companies, spiked to 2.02 at the close on Friday. 

In the derivative markets, a put-call ratio over 1.0 means investor sentiment is bearish. A put-call ratio of 2.02 would be considered as “extremely bearish”. One of the reasons could be the high price to earnings (P/E) multiple of 20.71 for the SET.

The National Economic and Social Development Board (NESDB) said on Monday that the fourth quarter Thailand GDP rose 2.3% year on year. The Thailand GDP grew at an annualized rate of 0.7% in 2014, below the forecast of 1% growth. The NESDB blamed the lackluster growth on private consumption and contracting investments.

Some analysts at financial service firms, such as KGI Securities and Credit Suisse, are expecting the Bank of Thailand (BOT) to cut its main policy interest rate by 25 basis points to 1.75% in the coming months. The bond market seems to think otherwise, as the 10-year Thailand Government bond yield has been on the rise, from 2.67% in mid-January to 2.97% at the close on Friday. The bond market is saying that the rate stays where it is or goes higher.

The Thailand Social Security Office (SSO), which manages 1.2 trillion baht in pension contributions from local workers, could have been selling bonds to backstop the SET from a major pull-back. The SSO, which holds about 77% of its assets in local government bonds as of September 30, said in January that they are planning to reduce their domestic bond holdings and shift their investment allocation towards equity and alternative assets.

The Greek debt drama is on the back burner until Monday as European creditors agreed to a four month loan extension plan under the condition that the Greek government submits a preliminary list of proposed economic reforms by Monday night. The proposed reform list will be used as the basis for negotiations until the end of April on a new financial settlement for the country. If the EU was to reject the Greek proposals on Monday, all bets would be off.

A near-term headline risk for the markets, is still, the EBC’s massive quantitative easing (QE) program set to launch next month. Mr. Dragi’s QE continues to face some legal and political hurdles, largely from Germany. In theory, it is still possible that the German Federal Constitutional Court in Karlsruhe could instruct the German Bundesbank not to cooperate with the ECB bond-purchasing program.

In the SET chart pattern, a short-term double top around the 1619 level and bearish rising wedge emerged. The Moving Average Convergence/Divergence (MACD), which now crossed below the signal line and formed a bearish crossover, is a sell signal for active traders. 

In the case that the SET continues to pull back next week, the next support levels are 1591 and 1586. The double top is confirmed if the SET breaks below the 1580 level. In that case, the near-term technical projection is 1548. 

If the EU accepts the Greek proposals on Monday, the SET could break out of the trend line resistances and move higher. There are technical resistances at the 1615, 1619 and 1625 levels.