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Week ended 13th May, 2011 – Markets this week .

Markets were effected by higher growth figure in EU area, inflation figure in US and Chinese trade surplus e.t.c.

5/6/2011- 5/13/2011
4/29/2011- 5/6/2011


In Australia, a report showed that 22100 jobs decreased in April, which is more than expectation and effects both stocks & Australian Dollar. In US consumer price rose 0.4% in April which is less than march figure. US authorities are trying hard to raise the inflation rate so that economy does not go into recession but they are not much successful so far.

I want to make some comparison here, few months ago when US dollar is plunging into lower figures then Dow was rising fast on the upside, not only Dow Jones but many other commodities were also rising in the upside. But during last few days when USD is rising then not only commodities but also Dow is falling. I am very anxious to see how Dow reacts in future days as USD is still rising and there is no sign that it is going to decrease.

EU countries grew by 0.8% in first 3 months of 2011, not only Germany but also Greece gave a strong 0.8% growth rate in this period, though things are different for Portugal.
German export for march surge 7.3% higher than February, this is one of the highest increase for German economy. Consumer prices in Germany rose  2.4% annually, this type of high last seen in 2008. Greek’s bond fell and Euro strengthened on speculation of ECB will raise interest rate in spite of regional debt crisis, in Monday. Greece’s credit rating was cut by S&P by two levels  in Monday as a result of this European stock indexes were down. Spain does not plan any more budget cuts as deficit is narrowing as according to the line of the government’s plan.
China’s trade surplus was $11.4 billion in April which is nearly 4 time bigger than expected by experts, this report must put pressure on China to appreciate their currency faster. Chinese inflation fell in April to 5.3% but China needs tighter control so they raised bank reserve ratio, and increase in trade surplus gives them many other opportunities to control inflation.

Other Markets

Except Silver most of the commodities rose this week. A big drop in Oil triggered stop in trading in some Oil futures contracts.

5/6/2011- 5/13/2011
4/29/2011- 5/6/2011

Nymex  (June)
Brent Crude (June)
Natural Gas  (June)
Gold (June)
Silver (June)
Copper (June)

Past week I was talking that Oil (Nymex)  is making a pattern, this week if it able to cross $106 level then that can give an indication.

 Though last two days were positive but I still have doubt about its up move. What I think it may go to test its support level of $97. On the upside unless it cross $104 level. I am not expecting any rise. The moves in Brent crude is not clear to me.
Last week I wrote that if Silver gives closing above $39 then we can expect some positive from it but it did not, in fact it is again trying to break $34 support level. Right now though it is not clear but it is in a bearish pattern, and we cannot forget that Silver is trading above its 200 DMA, so there is still lot of scopes.

Many experts have already started talking about the next big thing in Gold after Silver, as they are seeing that Gold is going to jump much like Silver from here. But I am not fully confident like them, though it is sure that Gold is in better position than Silver.
Gold looks to me is making some pattern. In Silver the pattern was prominent but in case of Gold it is still forming and in coming days it will be clear.
During last few weeks I was talking that Gold is trading on a channel, and it is still in that channel. Right now I find the strongest support at $1440 level and in the upside immediate resistance at around $1510 level. So if it goes down from here it has to break the channel.

In case of Copper the pattern has completed and it already showed the action.
Interesting thing is Copper broke the channel in which it was trading, last week I was talking about support $400, it even crossed that level in the downside. Copper gained in Friday, the increase growth rate in EU area especially in Germany, which is the 3rd largest  user of the metal may be the cause. But it is finding resistance at $403 level. Figures up to Wednesday said that Copper has more downside but last two days were different.

Coming week

Past week I said that DOW is going to move side based from here, as such it did the same thing this week. I think it will take some more time to go for any directional move. But we cannot forget that sentiment is negative. 12800 is a very good level for DOW, so unless it is coming out from that level, it is hard to say anything.

I was expecting some rise in Bovespa, though it rose but it couldn’t go for 66000 level. In the lower side it closed above the support range 63000 level, which I told last day. Bovespa right now is making lower top and lower bottom. Its next support is around 61000 level, on the upside unless it breaks 66000 level convincingly it is hard to expect any renewed positive moves. It is interesting that Bovespa’s chart pattern is quite similar to many Emerging countries. If correction phase starts, it may go below 60000 level.
DAX  again failed to pass 7600 level, now it is trading with support of 7400. I am not very satisfied with DAX’s move as in spite of better economic growth report it performed less.
Shanghai Composite is still trading with support of 2850 level, it is also making some lower tops and lower bottom, as I told in last day if it past this level then it can go near to 2700 level. On the upside if it able to cross 2950 then it can go for higher levels.
Malaysia’s  kLSE Composite is finding resistance at 1540 level, it had tried to test that level many times in past. If overall world’s sentiment improves then it may rise to test 1560 level. It is creating a pattern and it may take some time to prove it.

Reports due in coming week

Monday, 16th may, 2011 –  housing market index

Tuesday, 17th may, 2011 – housing starts, industrial production.

Thursday, 19th may, 2011 – unemployment claim, existing home sales .

Most of the stock indexes of Emerging markets are in pressure, it is better to say that all the markets are in pressure. Few days ago I saw a dream that some big event happens and all the markets, including Stock, Commodity, Debt markets have crashed. Certainly financial markets are based on believe  and trust, when these things become weak, then anything can happen!

NOTE :  Please see the disclaimer below this blog.

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