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Weekly Stock market reviews after 18th November, 2011.

At past I was suspecting that debt problem can cross the Atlantic, no it is not yet !  But little infection does? US financial stocks were under pressure during some time, now gradually we are getting some news about their attachment with problematic countries. Though they have not cleared it to shareholders but it is true that they (JPMorgan & Goldman Sachs ?) have sold protection on debts, now it will be very interesting to see how much of them belongs to the problematic Euro countries. Here we can refresh our memory by 2008 Lehman Brothers collapse. I am not saying they are going to collapse like Lehman, but I will be looking in future to see how they tackle the situation. We should not forget that in case of CDs many parties are related with each other, so if anyone suffers the pain then others also will be due for that.

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Most of the markets were in red this week. Many major Emerging markets are down for 3rd week in a row. Last week I was expecting that market may see an up move in early days of the week but situation was so nervous that it was in red from the beginning. 

It is good to see that EU authorities are really worried about these credit rating agencies. Some are saying that they are triggering the financial crisis. Many are demanding discipline about their time of announcement.
During last few weeks we got some news about decreasing inflation in China but situation is not same in all emerging countries. In UK, there were better inflation and retail sale news but there unemployment number is rising. Euro block expanded in 3rd quarter but German investor confidence fell to 3-year low.

Stock market (Index) forecast for Coming week

As I said in last week that now market is completely news driven, so it is getting very hard to predict the market. After all of these corrections, general trend will a bounce in the north but the problem is, investors are not finding any ground for it.

DOW got the support around 11600, on the upside that level 12200 is still exist.  Now it is couple of week that DOW is unable to break that level. What I think that if a little bullish sentiment comes DOW can easily break this 12200 level. Now if DOW drops from here, it will get support at 11400. In case of worst level DOW can be around at 10800. In the last day of the week sentiment changed to some extent but I have a feeling, as some indicators are saying DOW can drop little more from here. Looks like it is making a bearish pattern.
Last week I was telling that DAX is facing hard times to cross 6200 level, since no better news came from Euro-zone, it was quite expected that DAX will drop from that range. Now it got good support at 5200 but if things become ugly it may test 5200 level. If it gets some good news then it will try to go past 6200 and may test 6400 level. I think if it crosses 6400 level it may enact on a bullish pattern which it is making.
Looks like Shanghai Composite is trying to break its support of 2450, if it breaks that then it will try to get support at 2300 level. What I think first it may again try to test 2490 level again.
If  BOVESPA crosses 60000 level then it may move more in the upside. Last two days were bad, it is still holding around 56000-57000 level. BOVESPA made a bullish pattern but it did not show its action, in coming days I will be looking in it. In the downside it has support at 53000, if it breaks that 56000 level.
Last week I told that STRAITS TIME is moving around 2700-2900 range, it still stays there. I was talking about a bullish pattern, though it was dropping but until it breaks 2530 range I am bullish about that pattern. But if things go this way I am sure that it will break 2700 level.

Reports due in coming days
Monday, 21st November, 2011 –  Fed Nat Bus Index, Existing Home Sales.
Tuesday, 22nd November, 2011 – 3rd Quarter GDP Review, FOMC Minutes.
Wednesday, 23rd November, 2011 – Durable Goods Orders, Consumer Income & Spending, Unemployment Claim, Consumer Sentiment.

Moody downgraded 12 German banks and Fitch’s warning about US banks are not good indication for financial market. I am getting some information that a bank from UK is selling their stakes in Emerging countries, actually to protect there financial health institutions may need money.
Better economic news from US is providing some support to the market but unless the situation in Euro-zone improves, I don’t think that this market volatility will end. When I was trading I saw many stocks which were corrected 10% to 15% in last few days, in spite of that there were not much enthusiasm in the market. Investors are ready to invest in safer options like bond market instead of becoming a victim in stock market volatility.

NOTE :  Please see the disclaimer of this blog .


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