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Week ended 3rd June, 2011 – Market this week .

This week reports from US is not good, especially that unemployment rate which rose 9.1% in May from 9% April. In this moment the bigger problem is how to raise the debt limit, because republicans have rejected the bill in US House. I do not know that whether Moody’s threat to downgrade US debt rating may help to melt that ice !

Talking about the downgrade this week Moody’s  cut the credit rating of Greece, which means that Greece has now 50% chance of default or restructuring. Don’t think Moody’s is alone in this field, a new comer, Chinese official rating agency also cut Greece’s rating on possibility of default risk. I think it will be better for Greece to give some moneys to these rating agencies (for better ratings)  rather than using it for economic reforms. In spite of drop in inflation rate for Euro-Zone to 2.7% in May, it is still above the comfort zone of ECB. Growth in Euro-Zone manufacturing sector and service sector slowed in May and their PMI is at 7 month low at 54.6 in May.

In Asia though Japanese factory output rose but Chinese government policy to control inflation is hurting their economy as their PMI is at 52 in may than 53.9 in April, which is weakest since 2009. Economic growth in Philippines also slowed in first quarter of 2011 due to slow global trade and less Government spending. Australian economy contracted by 1.2% in first quarter of this year, which is the biggest fall in recent years, their government is blaming natural causes for this.

Other Markets

Oil is showing no price action , though Brent crude is little better. But as I predicted in my early post Natural Gas is showing some better performance (Where to invest moneys ? Stock Market is the best place now to invest money !). Now for Natural Gas level to watch at $4.50, if in coming days it can hold on this support level then we may expect some more price action in it.
Last day I told about the $39 support level for Silver, as such it turned back just before that level. Some experts are claiming that we may see renewed bull run in Silver but I am not too confident about that simply because the bearish pattern is still on for Silver. What I think that Silver can go either way. If coming days become good for markets and obviously if Silver breaks this $39 level then we may see some price action.
If the uncertain economical and political events go on then Gold may test the higher previous levels. Situation is not comfortable, but in this moment if I have to choose between Gold and Silver I will always go with Gold. This week’s Jobs report may have created more demand for Gold.
Copper has not shown any solid closings above $415 level, in fact it comes down from that level. It looks to me that it is going to test the lower levels, and obviously things will be clear in this month. In this moment reports and other information are not supporting economical growth of countries especially Emerging countries so renewed move in Copper is unexpected.

Coming week

Last week I told that DOW may test higher levels and I specifically told about Fibonacci level 12677 (61.8%) level.This week DOW has tried to go for that level, as it’s highest point was 12611.  But bad news made its fall and it just broke the crucial support levels of 12400 and then 12200. Last day’s close was better.

So in coming week if DOW breaks 12000 level convincingly then we may see more drops. In this moment I cannot see any better news which can make DOW to move in the upside. Until Thursday there is not any important reports that are due in coming week so if it gets any better news from other areas then it can again go to test this week’s higher levels.
DAX’s movement was not like what I was expecting  few weeks ago. It is forming a bearish pattern and if it is true then next support level will be around 6700 range (Week ended 3rd June, 2011 – DAX this week .). But last day’s close was better and looking at that I can say that we may have little more time in our hand. DAX is making higher highs and higher lows during last few months, so it will break that pattern if it falls more than 6500.  
Shanghai Composite is not showing any movement, but it’s bearish pattern is still on or I may say if it falls little more from here then it may trigger that pattern. If drops happen or 2600 level breaks then next support level to watch is 2300. But as I said in one of my past topic (Where to invest moneys ? Stock Market is the best place now to invest money !) that shanghai composite is one of the cheapest index right now.

I was expecting more rise in BOVESPA but it did not. It is finding resistance at 65000 and it is moving around 64000 level. If I see BOVESPA during couple of months then it is clearly building lower highs and lower lows, which is not good for market. If in coming days it cannot break at least 65200 level then we may see more drops in it. In the low side 61000 is a good support for it. Now if it able to break that 65200 level then next level will be nearly 66100.

Reports due in coming days

Thursday, 9th June, 2011 – Unemployment Claims, US Trade Deficit

Friday, 10th June, 2011 – Import / Export Price

Somewhere I saw that 5 of the largest banks of UK, have eliminated more than 103000 jobs since 2008 and some are expecting more to come. Forget about UK, situation in US is worse. First they need to settle this QE-2 and what is after that. As everyone of us know what can be the effect if they fail to do that. Different reports especially job and consumer based reports are not showing what everyone wants to see. On the other side though there is some good news are coming from Greece but unless that episodes are settled little bit, it will be a cause of worry.
I was looking at different index charts and I feel that most of them are in a position that it may rise for very short-term (May be !)  but for other terms they are very bearish. Now I do not know whether QE-3 is coming or not, but it is sure that Emerging markets are gradually making itself ready for another big run. Because if QE-3 comes then a some portion of that liquidity will be coming in these Emerging markets and if  there is not any QE-3, then what ever investing money left, which are assigned for risky assets, will find its route into these markets. Moneys will always avoid those  trouble places.

NOTE :  Please see the disclaimer below this blog.

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