Stock market review (weekly) after 20th January, 2012.

Market is neglecting all those negative things (like S&P downgrades) and focusing more on positive sides (like Greek debt talk).

INDEX	20th Jan, 2012	1/13/2011-1/20/2012 (%)	1/6/2011-1/13/2012 (%)
Dow	12720	2.4	0.51
Ftse	5728.55	1.63	-0.23
Cac	3321.5	3.91	1.88
Dax	6404.39	4.25	1.41
Australia S&P	4239.6	1.04	2.13
Shanghai Com.	2319.12	3.32	3.75
Hang Seng	20110.37	4.72	3.29
Sensex	16739.01	3.62	1.81
Russia - Titans	6179	2.29	2.53
Bovespa	62312.13	5.35	0.93
Argentina Merval	2867.59	4.14	-0.59
South Africa	33703.38	2.35	0.54

Many Emerging countries are facing 3 to 4 positive weekly closings, as some are seeing inflows of money from outside.

 Stock market forecast for coming week.

As I said in past, I am still seeing a line of demarcation between stock indexes. Greek debt talk and Fed FOMC meetings are very important for market for future actions. One thing is sure that most of the Stock indexes are heavily overbought so one side is quite open. I don’t think early days of the coming week will be great for buying and holding. And that currency market connection, which I told in last week, is still open.

During last few months I was telling that DOW is making a bullish pattern, so now we are getting that result. Last week I was expecting DOW to test 12600 levels after a little correction but it did not correct at all. Dow is again trying to test higher levels in spite of being in overbought position. Now it has a good resistance at 12800 levels. On the other hand it has good support at around 12400 and then at 12200.

So DAX is trying to break that 6200 level but I want to see some concrete steps from here so that it can prove its bullish pattern which I was saying during last few months. Now its resistance is at 6800 and support is at 5800. DAX has a chance to test even 7200 level but it is quite a big expectation for now and it is also in overbought condition. Germany is in better condition than US, therefore I do not know whether DAX is going to follow DOW and will test higher levels in spite of over-bought condition.  

So Shanghai Composite got the support at 2200, which I told last week. But still it is short-term overbought condition. So that 2200 and 2100 support level is still intact. But considering the long-term chart, I think it can still go for more, but may be after a little correction.

During couple of month BOEVESPA is following a trend. It has a good resistance at 64000 but I do not think it will go up to that level, considering the trend. It is too much overbought and it can correct at any moment. But as it is making higher highs and higher lows, so if it respect that trend then it may get support above 56000. But if it breaks that then it can drop more.

In spite of S&P downgrade I suspected that Straits TIME may test 2850 level and it just did that. So now the crucial level is 2900, which I was telling during last few weeks. I do not know whether it is going to achieve that in coming days, but it is sure that if it goes for it then it has a chance to test much higher levels, may be up to 3200. In the downside it has immediate support at 2750, which it may test again in coming week if any bad days come. Its next support is at 2720, but if major selling happens then it can drop more.

Reports due in coming days (from US)

Monday, 23^rd January, 2011 – US T-bill Auction

Tuesday, 24^th January, 2011 – Fed’s FOMC Meeting

Wednesday, 25^th January, 2012 – Pending Home Sales, FOMC Announcement.

Thursday, 26^th January, 2012 – Unemployment Claims, Durable Good Orders, New Home Sales, Leading Economic Indicators.

Friday, 27^th January, 2012 – 4 Quarter GDP Growth, Consumer Sentiment.

Some positives in this moment are drop in cost of dollar funding in money market, outcomes of Greek debt talk and some better reports from US. Where as negatives are slowing Chinese economy, cut in growth expectation figure of Germany for 2012. On the other hand many Emerging countries are unable to control inflation rate due fear of drop in growth figures.  If I am not wrong, World Bank also warned developing countries about slowing growth. 

I do not know whether Fed is going to announce a surprise package (QE-3) in its meeting of coming week, but as I said in past that Emerging nation may not gain much from that considering the past. But if something comes we may see some great days for indexes like DOW.

NOTE:  Please see the disclaimer of this blog.