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Weekly Stock & Metal market reviews after 9th September, 2011.

Markets were not in good condition in early days of the week but later after German court’s decision it rebounded. In last day, markets were good in Asia because of better Chinese inflation data but later Europe and US saw some panic selling. Investors are still in fear, actually they are not getting any better news from both side of the Atlantic.

9th-Sep, 2011


As we know that stock markets reacted in the last day due to the news of Greek default and resignation of a key officer from ECB. But I think markets were also expecting something good from Obama and Bernanke’s speech, but they disappointed all. Bank stocks were hammered in the last day in Europe as investors have doubts about their exposure in debt market. I don’t know it’s truth but I read somewhere that Banks of America has $100 billion mortgage liabilities, now what will happen to it if same type of bad news starts to come from US in future.

Forget about the economies now even private organizations are looking to cut massive jobs, then how markets will react positively in this uncertain zone. But as situation is changing in world financial market and there is less options for safe heaven, I will not be astonished if renewed interest comes in Silver in coming days. Declined in export is really a matter of worry for Germany and now many are in questioning about the slowdown in German economy as their factory orders fell for July. I don’t know what happen to these exporting countries, because Japan’s economy also contracted severely in 2nd quarter than initially expected and in the other hand OECD has warned that German economy could contract by 1.4% in Oct-Dec.

Metal Market

Crude market was flat this week, Nymex Crude got resistance at $90. In coming days if it breaks $90, it will get good resistance at $92. Brent Crude has resistance at $116 and if it breaks that then it has resistance at $118. Looking at the chart I have a feeling that it prepares itself for rise in coming weeks. Natural Gas was very flat and it is not giving any indication, but if situation becomes bad it may reduce more.
Gold again tried to test $1900 level and if things go this way it will break this in coming week. It has a good support at $1750 level. As I said in past that this time I am not very bullish about Silver. It is getting resistance at $41.50 level. Copper’s movement was flat with downward bias and it will find support at $3.95 region.

Coming week

Every stock indexes are not like Indonesian stock index, which will decouple from rest of the world, everyone must be wishing that. It is expected that Monday morning opening will be in red for Asian stock indexes but in later period things can improve. As I said rate hikes can be a matter, on the other side traders will strongly watch the development in Europe.
If macro situation becomes worse then I think Dow is ready for another correction, if it breaks 10500 level then it may test 10000 level in the downside. But if situation improves then it may try to test 11800 level.
DAX is not making any big move, looks like it is making lower highs and lower lows. Now it is getting support at 5200 level but it can easily go below that, but since it is trading in small range, I don’t think it will much like what we see few weeks ago. Now if  situation improves it has a resistance at 5800 level.
BOVESPA was flat this week, it even failed to test 58000 level this week. Unless it cross 60000 level I am not very bullish about it. It has a support at 53000 level. If situation remain same it can move around 53000-60000 level.
Shanghai Composite is looking for support around 2450 level. In the upside it has a resistance at 2600 level.
As I said in last week KLSE went to test higher levels in later days of this week but it is finding strong resistance in that level. 1480 is still good resistance for it and in the downside 1440 is the support, if it crosses any of this then it will show another trend.

Reports due in coming days

Tuesday, 13th September, 2011 – Bus Confidence Index

Wednesday, 14th September, 2011 – Producer Price Index, Retail Sales, Business Inventories.
Thursday, 15th September, 2011 – Unemployment Claims, Consumer Price Index,  Empire State Index, Industrial Production, Phila. Fed  Bus. Index.
Friday, 16th September,2011 – Consumer Sentiment

I don’t know whether we are in deep recession or will be, but looks like fear in investor’s mind is going to effect stock markets in coming days. Somewhere I saw that Brazil’s Central Bank warned that this downtrend in global economies will not be as severe as in 2008-09, but will be more prolonged. In last slowdown US used QE-2 to come out from that, here my question is, was QE-2 able to raise the growth rate substantially in US ?
The answer is NO, but it is sure that it hampered the growth of other countries may be through inflation. So if world gradually plunges into severe recession, then it will be very bad for stock markets in coming days. As I am sure if that happens then stock markets may correct more than 20% or may be more, from the level where we are now. As I said in past that during this time it is better to say Cash is King than investing and loosing 20%-30% of capital.

NOTE :  Please see the disclaimer of this blog .


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