Stock market review (weekly) after 13th January, 2012.

Yesterday one of my friends said me that we may see a big selling by big institutes in coming days. Let consider that big institutes start violent selling, then my question is where they are going to perk those moneys?  This is one of the important questions that negate any violent selling by big institutes and we also not forget that some of their investments are already in deep trouble.

INDEX	13th Jan, 2012	1/6/2011-1/13/2012 (%)	12/30/2011-1/6/2012 (%)
Dow	12422	0.51	1.15
Ftse	5636.64	-0.23	1.39
Cac	3196.49	1.88	-0.71
Dax	6143.08	1.41	3.58
Australia S&P	4195.9	2.13	0.92
Shanghai Com.	2244.58	3.75	-1.64
Hang Seng	19204.42	3.29	0.86
Sensex	16154.62	1.81	2.67
Russia - Titans	6040.48	2.53	2.76
Bovespa	59146.58	0.93	3.25
Argentina Merval	2753.52	-0.59	12.47
South Africa	32927.36	0.54	2.39

I have a feeling that whatever is happening in Euro zone that ultimately is becoming good for Germany, either it is increase in exports or negative bond yields. So what we are going to see in Germany, we may not see the same thing in Euro area (ex- Germany).

Inflationary position has not changed much, but most of the nations are trying to keep interest rate unchanged and for some nations better economic reports may help them to reduce it in future.

Stock market forecast for coming week.

Most of the stock indexes, especially the Asian indexes are due to show reactions of the S&P downgrade. I think that it is already discounted. But things can be different as I said in past that I have not seen much selling by foreign institutes in year 2011, but as Currency market is gradually changing its pattern so that fear may become true for some of the Emerging countries. On the other hand Greek debt talk can give some intimation about future days.

I was expecting that DOW may test 12600 levels but it has just tested level above 12500. DOW is in overbought position in longer term chart but as we have seen in past that in spite of being in overbought position DOW has not corrected much. So if that continues then we may see a minor correction up to 12100. This opinion will not stand if a large selling comes. Then we may see DOW testing far lower levels. On the upside 12600 levels is the target.

I was pretty sure that DAX is going to test 6200 level but in the last day the rating threat has done some damage. It is good to see that it closed higher from its lowest position. Unless overall euro area’s macro hampers its move, I still have positive opinion about DAX. I am still holding my past week opinion that it can easily go up to 6600 and I will hold that view unless it breaks level around 5600-5700. I don’t think that rating downgrade will affect DAX substantially.

It is good to see that Shanghai Composite tested that 2300 level which I told in past week. Now if due to downgrade news it drops then it has to face support at 2100, obviously if it breaks 2200 level.

BOVESPA has a support at 57000 and if it drops more then it can come up to 54000. If later in the week it goes up then it may find resistance above 61000.

Straits TIME is forming different patterns but it is not reacting on those. Last days closing was good for TIMES, which indicates that it may go up more (may be testing 2850 levels) but S&P downgrade may become an obstacle for that move. It looks to me that it may test lower levels, first it has support at 2700 and then at 2650. Unless a massive selling happens, I am still positive about the bullish pattern of Straits TIMES.

Reports due in coming days (from US)

Wednesday, 18^th January, 2012 – Producer Price Index, Industrial Production, Housing Market Index.

Thursday, 19^th January, 2012 – Unemployment Claims, Consumer Price Index, Housing Starts, Phila Fed Index.

Friday, 20^th January, 2012 – Existing Home Sales

I don’t understand the significance of cheaper loans by ECB to banks, because if those banks ultimately keep those moneys with ECB then how the economic situation is going to change? I don’t know whether they are planning to create a wide scale of panic or waiting for some major event. But it is sure they are making situation worse, if not worst.

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