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Stock market reviews (weekly) after 9th December, 2011.


S&P downgrade US and many Euro-zone countries for their Fiat currency system !  

No that is not true, but who knows in future it can be. It looks like rating agencies can work on leverage in these days. In early days of the week their threat created a panic in the financial world. This week, Moody’s downgraded 3 French banks due to their difficulties in borrowing money. I think they are showing late reaction. Because in last week that joint central bank action and this week rate cut have created better environment for Euro-area banks, then why now !

INDEX
9-Dec,2011
12/2/2011-12/9/2011 (%)
11/25/2011-12/2/2011 (%)




DOW
12184.26
1.37
7.01
FTSE
5529.21
-0.41
7.5
CAC
3172.35
0.23
10.77
DAX
5986.71
-1.54
10.7
NIKKEI
8536.46
-1.24
5.92
HANG SENG
18586.23
-2.38
7.63
AUS
4203
-1.98
7.62
SHANGHAI
2315.27
-1.92
-0.82
SENSEX
16213.46
-3.75
7.33
BOVESPA
58236.46
0.6
5.44
RUSSIA
5785.89
-8.7
9.54
KOSPI
1874.75
-2.15
7.86
STRAITS
2694.6
-2.83
4.89
ARGENTINA
2558.11
-2.71
8.39

Most of the stock indexes were in red, things were worse for some of the emerging markets. Shanghai composite is performing differently from others; it gives negative weekly closing for 5 strait weeks.
As I said in past that I think, problem in Greece is bigger than Italy or Spain. People are withdrawing their deposits from banks in Greece, fearing an exit from Euro-zone. Look like everyone is preparing for something. 

Chinese inflation has fallen but their challenges in export market are a concern for them. Australian GDP grew more than expected in 3rd quarter and now they cut the interest rate but Chinese difficulties are not making a happy journey for them as mining activity contribute a big portion of their GDP. There were better industrial production data from Germany and better unemployment report from US but Euro-are service sector shrank in November as well as the German export.



Stock market (Index) forecast for Coming week

European and US market reacted positively after that EU summit but I think in Monday markets may not show same type of gestures, because still there is confusion about those outcomes. I think matters like isolation of UK, no specific measure to reduce the bond yields, etc. are going to affect future trading environment. I am expecting rating downgrades for countries, obviously that may be after couple of good days in coming future. In this matter the preference will be Euro-area countries, may be France. So it may be better to adjust exposures according to that event.

DOW was very flat this week, look like it is getting good resistance in this 12200 level. Last day it reacted positively in the outcomes of EU summit, if that momentum continues then it may test 12400-12500 levels. During last few weeks I was talking about the bullish patter which DOW is forming, now if it breaks that 12200-12300 range then it can test level above 12600. But if someone expects that in coming days then it will be too much of expectation, especially when market is not much satisfied with the outcomes of EU summit. So in the downside if it breaks 11600 then it has support at 11200.

Last day I was expecting that DAX may drop, but it is far above its crucial support level of 5200. What looks interesting is that DAX is forming a pattern within a pattern, now if it crosses around 6200 then it can react for first pattern (6400) which I talked during last few weeks. In the downside if DAX crosses 5400 level then it will trigger the negative pattern which it is forming. So 5400 and 6200 is the range for DAX.
BOVESPA was trying 59000 level but it couldn’t stays above that for long. BOVESPA is taking too much time to cross 59000-60000 level, and I think time has come for it to react. If it does not react then I have to think about the other alternatives for it. If it drops below 59000 then it will negate the pattern.
Shanghai Composite is still testing 2300 level, technical indicators are saying that it is in very oversold position. Chart trend says that it can drop more. Now if it recovers, then it will find resistance at 2450 level.
STRAITS TIMES was trying to test higher levels but in last two days it faced lot of selling. Last few weeks I told about the bullish pattern it has formed but if this type of selling continues it will be very hard for it to test 2900 level. Now in the downside it has good support at around 2650 level, if it breaks that then it can trigger a bearish pattern. If it drops below 2500-2530 then it can drop more. But as things are not worse after that EU meeting, so we can expect more positive than negative.


Reports due in coming days (from US)

Tuesday, 13th December, 2011 –  Sm. Business Sentiment Index, Retail Sales, FOMC Meeting Announcement.
Wednesday, 14th December, 2011 – 30-Year Bond Auction

Thursday, 15th December, 2011 – Unemployment Claims, Producer Price Index, NY State Mfg. Index, Industrial Production, Phila. Fed Bus. Index.

Friday, 16th December, 2011 – Consumer Price Index.


I am not sure about the reliability but somewhere I saw China is going to announce one type of QE-3(name Hua Mei Fund) for US (instead of Fed) and one QE (name Hua Ou) for Europe. The purpose of these QE is buying company shares and real assets instead of government Bonds. I think China is paying protection fees.
It looks to me most of the people are looking to see the 2008-2009 valuation but I think it will be wrong to expect Xerox copy of that. If someone thinks about the problems in both side of Atlantic, then he is not going to invest even in that level. What really need is the removal of structural problems. US is providing lot of liquidity after that Lehman brother episode but is there any major change ? No.  Liquidity is there into the locker of few organizations. General investors and consumers are far from it, then how the economy will recover suddenly !  As a stock trader I want liquidity in the stock market, irrespective of the matter what Fed does or what type of QE any other country provides.



NOTE :  Please see the disclaimer of this blog.



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