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Stock market review (weekly) after 10th February, 2012.

Recent liquidity flows are the main reason of this type of sudden rise in stock indexes. There were big inflows and those are still coming for some Emerging nations. I read somewhere that even Bank of England is extending its QE program. What I think that lot of moneys are still due to enter into the stock market beside these. There are many investors out there who missed this short-term up move in stock markets; they are just waiting for another opportunity. I have feeling that stock indexes are following the same type of movements which we saw in the beginning of 2009, may be!

10th Feb, 2012
2/03/2011-2/10/2012 (%)
1/27/2011-2/03/2012 (%)

Australia S&P
Shanghai Com.
Hang Seng
Russia :Titans
Argentina: Merval
South Africa

Some of the Emerging nations are seeing 5 to 6 positive weeks in a row. I was expecting a reversal due to currency factor but that liquidity inflows are negating all those things.
Trade deficit in US has widened, where it fell in UK but Indian growth and IIP number were not good as well as the inflation figure of China.

Stock market forecast for coming week.

Outcomes from the vote for austerity measures in Greece may decide the market in coming days. On the other hand Emerging market currencies are again showing weakness, so that can be a deciding factor for those inflows which Emerging nations are getting.
As I was expecting DOW has tested higher levels, right now it has a good support at 12600 and then at 12400. I think worst level can be 11800. If situation in Greece improves, I will be looking DOW to test 13000 level from that support level (10 day SMA) which it is getting now.
DAX was following same trend as DOW. Now it is getting support at 10 day SMA, but if any bad news comes from Greece then it may break that. Initial support level for it is around 6450 and then at 6100. But for any good situation DAX is due to test 7000 level.
BOVESPA is getting resistance at 66000; during last few days move suggest that it is looking for some support at around 63000, now if it breaks that then it can get support at 60000. In the upside it can go to test its solid resistance at 68000. In past I said that pattern suggests its move up to 68000, so in spite of being in overbought condition any good news can take it there.
Straits TIME is trying to test higher levels but Greece problem is becoming an obstacle for it. It can get initial support at 2880-2900 and the worse case for now is below 2800. But as I said in past that it is still eligible for more moves in the upside and its pattern also supports that.
Shanghai Composite just followed my words, though it tested level below 2300 but it again went up to test higher levels. So now it has the chance to test level above 2400 but for any bad news it can test level around 2200.

Reports due in coming days (from US)

Tuesday, 14th February, 2012 – NFIB Sm Bus Cnfdnc, Retail Sales.

Wednesday, 15th February, 2012 – NY State Mfg Index, Industrial Production, FOMC Minutes.

Thursday, 16th February, 2012 – Unemployment Claims, Housing Starts, Producer Price Index, Fed’s Phila Bus index.

Friday, 17th February, 2012 – Consumer Price Index, Leading Economic Indic.

I don’t think market is waiting to differentiate between orderly and disorderly defaults of Greece. Market needs some strong steps not only for Greece but also for other problematic countries. As there are better news coming from US and there are lot of expectations about cut in rates for different Emerging countries, so time is coming when market may overlook these PIIGsssss. But one thing is sure that most of the markets are in overbought zone. I do not know when market is going to correct or this Greece problem is going to trigger that but one thing I know that market can remain in overbought zone for long. So ………….

NOTE:  Please see the disclaimer of this blog.


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