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Stock market review (weekly) after 5th April, 2012.

It will be good to say that markets need corrections, so they are correcting. I think this will be better than to find why markets are getting down.
This week it was Spain which was in centre of attraction, overshadowing different better reports. I don’t want to go into debate about the longevity of past better US reports but Friday’s US job report is clearly showing concern regarding sustainability of US recovery. Now investors will not eat the line that US recovery will off-set global slowdown!

INDEX
5th April, 2012
3/30/2011-4/5/2012 (%)
3/23/2011-3/30/2012 (%)




Dow
13060.14
-1.15
1.01
Ftse
5723.67
-0.78
-1.48
Cac
3319.81
-3.04
-1.51
Dax
6775.26
-2.47
-0.69
Australia S&P
4319.8
-0.36
1.52
Shanghai Com.
2306.55
1.93
-3.77
Hang Seng
20593
0.18
-0.55
Sensex
17486.02
0.47
0.24
Russia :Titans
6326.96
0.98
-2.87
Bovespa
63691.18
-1.27
-1.98
Argentina: Merval
2557.46
-4.71
-1.03
South Africa
33732.2
0.53
-0.05

Big European indexes like FTSE, DAX are correcting for 3 consecutive weeks, though some emerging markets change that trend this week. I am not worried about rate cut of US (by Egan Jones), but these days market are reacting more on bad news than good one.



Stock market forecast for coming week.

In coming week earning result of the companies may indicate a direction for the market. Higher Oil price and Rate cut are still in the agenda. I am not getting any news of improvement in liquidity situation, so I am little worried about that and I think, now liquidity is one of the main ingredients which can take stock indexes in northern side.
Friday’s US jobs report was not satisfactory so we may see adverse effect of that on markets and obviously there is renewed Euro zone debt problem. Let's talk about different stock indexes.

I was expecting DOW to test 13400 level but it did less. Looks like DOW makes a short-term bearish pattern which says that it can drop more in coming days, may be around 12800 level. Since DOW is not too much over-bought position, so I will not be expecting worst case scenario level at 11600. Now if it drops in the early days of the week therefore we can expect a reversal at later stage. Here I must say that last day’s close was better, so if any good news comes (but Friday’s jobs report is not showing any better picture) then it may not react on its short-term bearish pattern, therefore we can expect it to test level above 13150 in early days of the week and then its resistance is at around 13300 level.

I was expecting DAX to test 7050 level in the early days of this week, as such according to my expectation DAX also dropped in the later days below 6800. Now it is in over-sold position, but still picture is not clearly saying that we are going to see a new uptrend. In fact it is making lower highs and lower lows trend. What I think that it may test lower levels in coming days but before that it has a chance to test level around 6950. Here I cannot say for sure (like earlier weeks) that it is going to do that in early days of the coming week, especially considering Friday’s US jobs report. Though it is not clear but looks like it is making a pattern and I will think about that if it bounces back from around 6600 level. Now in case of any big sell off the important level is at 6200.

I was expecting BOVESPA to test 66000 level in the early days of the week but it did less. If it breaks 62000 level then its next good support level is at below 60000. Now it may reverse its position and therefore may test 65000 level and I will think about positive up moves, if it breaks around 66000 range. Here I must stay that technically it is in over-sold position.

I was expecting that Shanghai Composite may test 2300–2350 level. Since it is in over-sold zone we can expect that it may cross 2350 level in coming week. I think if drops in early days, it may reverse its position in later periods of the week. As I said in past weeks that unless it goes below 2130, I am positive about the bullish pattern which it is creating. So, I am bullish about its medium term up move.

I was expecting that Straits TIMES may go above 3020 level, but now it looks like that 3020 is acting as a very good resistance for it. Now it is long that TIMES is moving around 2970 –3020 level, so unless it is coming out from these range it is hard to predict any thing. On the other hand technical indictors are also not directing any specific trend. So if it breaks 3020 on the upside then I may think about a new uptrend, in the downside it can test 2900 level and if it breaks that then it can trigger a bearish pattern which may take TIMES at below 2800 level. But unless world market faces a big sell of Strait TIMES may not see level below 2800 in coming days.



Reports due in coming days (from US)

Tuesday, 10th April, 2012 – NFIB Sm. Bus. Sentiment

Wednesday, 11th April, 2012 – Fed’s Beige Book

Thursday, 12th April, 2012 – Unemployment Claims, US Trade Deficit, Producer Price Index.

Friday, 13th April, 2012 – Consumer Price Index, Consumer Sentiment.


There are many investors who missed the rally since December, are looking for an opportunity if stock indexes drop in April. Many experts are suggesting this as a good opportunity. I think it is really very hard to predict the future. Somewhere I was seeing that later periods of this month are traditionally good for selling, generally I don’t follow these rules but US jobs report and return of Euro zone debt problems may be supporting that.


NOTE:  Please see the disclaimer of this blog.

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