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Week ended 27th May, 2011 – Markets this week .

This week Chinese market saw some huge corrections. Experts can give many causes like weakening growth data (as HSBC’s preliminary purchasing manager’s index fell to 10 month low of 51.1 in May), expectation of rise in inflation number e.t.c. Reports from US are not encouraging as well, because their Consumer Purchase rose less than forecast in April, though there was increase in New Home Sales in April but sales of Existing Homes fell in April. 

S&P revised downward Italy’s credit rating, Moody’s said that they may cut the credit ratings of some of the banks in UK due to withdrawal of government support, look like in coming days investors are going to get those banking stocks in cheap value. There is growing concern on Euro-Zone not because of failure of Greek leaders to support Prime minister’s austerity plan or Greek Government’s decision to sell stakes in many domestic corporations to reduce debt but because Factory Orders across Euro-Zone fell for 6 months in March, which shows that industrial growth is easing in Euro-Zone.

Bad news also from Asia as Japan’s exports dropped  by 12.5% in April due to natural disaster. This fall creates a deficit of $5.6 billion last months which is smaller than expectation. Japan’s car production for April fell due to shortfall in parts supply. Now why not Japanese investor  will be worried about their investments in YEN, Japanese government bond and on stock market. There is some good news also as Consumer Confidence in South Korea rose to a 3 month high in May and Thailand economy grew 3% in the first three months of 2011.

Other Markets

Oil is showing side based movements. When dollar drops investors expect more from commodities, but overall environment is too cloudy for investors to take any decisive steps, in spite of the fact that Goldman Sachs advised for buying in Oil, Copper and Zinc.
As I said in my past posting (Where to invest moneys ? Stock Market is the best place now to invest money !) that Natural Gas is one of the cheapest commodity right now and we are going to see some price action on it, may be that is becoming a true prediction now.

Silver rose this week because of weak dollar and we cannot forget that there are much short positions still there on Silver. Investors must be looking to cover their short positions. The pattern is still on for Silver. As I said in last week unless $39 is broken, I do not expect any renewed bull run in Silver right now. India is a big consumer of Silver and it’s Silver demand in summer may be over in coming future then I want to see the movements of Silver.
Gold is still trading in that channel that I mentioned during last few weeks. Gold took the bullish double bottom pattern this week and it broke the resistance level of 1520. This week it is not possible for me to show the charts, may be in next week.

Copper broke its resistance at $415 and it is still rising may be the news of decline in stockpiles of Shanghai helped its movement. But fundamentally I am not so bullish about Copper right now because report said that China’s import decreased in April and slowing industrial demand in May. Though some experts predicted about the slowing demand but things will be problematic if it sustains.

Coming week

In this moment it looks to me DOW is making a pattern. 12271 is the lowest point in the recent days, though its closing point is far above.

Last week I said that unless it breaks 12400 convincingly there is no chance of big correction on it, as such this week it moved around that point. If it breaks 12400, then 12200 can act as a good support for it. But I think DOW will be moving up from here. Last day’s high was 12519 ( close to 38.2% Fibonacci level ), but it can go more, may be around 12599 ( 50%), 12677 ( 61.8%) level. Right now 12677 looks to me the strongest.

Malaysian KLSE is finding some resistance at around 1560 and the better one will be at 1580.
Since it is above its 50 day EMA and it has did not break its lower support of 1480 level, then we may expect some moves from it to break the 1560 level. Its immediate support is at 1520 level.
I was expecting some rise in BOVESPA. Thought it will get some resistance around 65000 but I am expecting for more rise may be around 67000, obviously if it breaks 66000 level and market condition is better around the world. Its lower support level at 62500 and 61000 level is still intact.
Last week I said that Shanghai market is one of the cheapest market right now and may be buying, if it comes at all then it will be the first choice comparing to other leading markets (Where to invest moneys ? Stock Market is the best place now to invest money !). This week it went for more corrections and now it makes a pattern ( Week ended 27th May, 2011 – Shanghai Composite this week .). So in coming days I will be watching how this pattern works. Shanghai composite declined because of concern over inflation as some reports came in media that CPI  may increase this month.

Reports due in coming days

Tuesday,31st May, 2011 – Consumer Confidence

Wednesday,1st June, 2011 – Auto Sales, ADP Job Report, ISM  Mfg. Index, Construction Spending.

Thursday,2nd June, 2011 – Unemployment Claim, Factory Order.

Friday,3rd June,2011- Employment Report, Unemployment Rate, ISM Non-Mfg. Index. .

Total 44 banks failed this year due to loan problem and economic recession in US. Look like home sales rate is falling with the mortgage rate. I do not think that time has come to believe that housing price may be at lowest level as some experts says.  It  looks like to me that people are expecting price to fall more in coming days.

In this moment what will happen if US defaults in its payment even for few days ?

Though these things are matter of concern but I do not know why but some of the chart pattern say me that we may see some positive moves in coming week. Let see whether that can happen or worse economic events become the winner in coming week.

NOTE :  Please see the disclaimer below this blog.

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