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Stock market review (weekly) after 22nd June, 2012.

What an eventful week this was but what is the end result, no change we are in the same spot again. We can see that frustration on Spanish bond yield which was more than 7% in early days of this week but things were different in later days.
Market referred Greece elections outcome as more time to Greece to meet its fiscal targets but we must be lucky that the outcome did not go in the other direction. US Fed’s Twist was not enough for market as well as the G-20 meeting. Moody’s delayed downgrades failed to create any type of panic in those banking stocks. I think these rating agencies are gradually becoming a joke.

22nd, June, 2012
6/15/2012-6/22/2012 (%)
6/08/2012-6/15/2012 (%)

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

Liquidity condition was better but most of the markets disappoint this week. Expectation about further policy actions worked quite well in the early days but that hope decreased in later days. Chinese and Euro zone PMIs were not something to cheer and on the other hand German confidence report was not good.

Stock market forecast for coming week. 

Dow Jones I.A. has given near about 67.35% retracement from its May top (May top & early June low), which is quite big. Thursday’s correction makes it more attractive. I don’t know whether lot of short-positions is created in 12800 level but I think we can get a hint of that in coming week.
Last few days movements suggest that there is a possibility of couple of small moves (like last day) in early days of the coming week. Therefore I cannot rule out another big correction (like this Thursday) in later part of the week at near about 12900 range. But this prediction may not be true if DOW struggles to break around 12750 level in early to middle of the coming week.
If DOW drops from this level then its initial support level will be around 12400 and the next one is at 12200. But as DOW is following higher highs and higher lows trend (in long-term chart) from year 2009 so if it still maintains that trend then I don’t think that DOW will test 2011 low levels. Around 11860 is the 50% retracement level (from October, 2011 low & May top) for DOW but if it goes more then 11507 is the 61.8% retracement level.
I am not completely satisfied with DOW’s movement after breaking out from short-term bullish pattern but to certain extent it is quite ok. I am confused about the medium term movement of DOW, still it has the option of both positive pattern and also the lower highs and lower lows trend.

Finally German DAX breaks 6200 level, now if it maintains this level then DAX has the chance to cross 6400 level. Considering May top DAX gives near about 50% retracement (and around 6508 is the 61.8% retracement level) on the other hand technical indicators are not showing too much over-bought condition so more up moves are quite expected. So long it maintains 6200 range; there is more chance to test higher levels in early to middle of the coming week but things can be different in later part of the week.
If DAX again gets resistance at 6400 and if it drops below 6200 in coming week then it has a chance to continue with the lower highs & lower lows trend which it is following during couple of months. But the options of any reversal or some kind of bullish pattern (medium to long-term) will be there if DAX maintains the level above 5900. But if it goes below that then 5800 will be an important support level for DAX and if it breaks that then it has the option to test lower levels may be around 5400.

It was quite expected that FTSE 100 will get resistance around 5600 level. Few weeks ago 5600 level was looking very far but now it may again try to break that level provided FTSE stays above 5500 level in early to middle days of the coming week. Considering its May top FTSE gives near about 66.77% retracment, which is close to Dow. Though technical indicators are in over-bought condition but it has the option to go more in the upside but frankly speaking 5600 level may not be too easy.
But if it breaks 5500 level in the downside then it has a chance to drop (though it is still early days to refer whether it is making a pattern), in the downside important support level is 5400. If it breaks 5400 then next support level is at around 5250.
FTSE is making a long to medium term bearish pattern which can take it near around 4500 level. So considering that I think FTSE has more chance to drop in future and I will think otherwise if it breaks 5600 level in the upside.

Shanghai Composite failed to go higher, as such in spite of being in oversold zone it is threatening to trigger a bearish pattern. As I said in past that by dropping below 2240 it can trigger the bearish pattern. If this bearish pattern works out then it will not act on medium to long term bullish pattern which I mentioned in past weeks. Because if it breaks 2130 level in the downside then it will be technically out of that bullish pattern.
It is good to see that during last two days Shanghai Composite was trying to make a base around 2250 level and if it able to maintain this level then things may change in coming week.

Now it looks like that South Korean KOSPI has acted to some extent on its positive pattern but it is very disappointing that it was unable to break 1900 level. Last week I was talking about a chance of making a reverse symmetrical triangle, if that is true then in the downside expected range will be around 1700–1750 level for now. I will change my opinion about reverse symmetrical triangle if it breaks 1950 level in the upside.
KOSPI is making a medium to long-term bearish pattern and unless it crosses 2050 level in the upside I will not change my stand about this bearish pattern. If it maintains 1850 level in the early days then there is a good chance of breaking 1900 level. Things will be monotonous if KOSPI moves around 1850 level in coming days.

In the upside, around 4150 level (4162 is its 38.2% retracement level) has acted as a good resistance for S&P/ASX 200 and now it has less chance to act on (which was looking like) very short-term bullish pattern which I was talking in last week. In coming days if it again gets the support of 4050 then the chance of breaking crucial 4150 level will be stronger.
On the other side if it drops from 4050 level then it may create a reverse symmetrical triangle and for that it may also test 3985 range and thereby it may be making a bearish trend. In fact in the downside S&P/ASX 200 has many options so I am not getting a clear picture yet.
If S&P/ASX maintains this 4050–4150 level then it has a chance to move in an upside channel. It is difficult to conclude about coming days but I want to give emphasis on breaking of 4150 in the upside and 4050 in the downside.

Reports due in coming days (from US)

Monday, 25th June, 2012 – Chicago Fed Business Index, New Home Sales, Dallas Fed Index.

Tuesday, 26th June, 2012 – Housing Price Index, Consumer Confidence, Richmond Fed Index.

Wednesday, 27th June, 2012 – Durable Goods Order, Pending Home Sales.

Thursday, 28th June, 2012 – Unemployment Claims, Q-1 GDP Revision.

Friday, 29th June, 2012 – Personal Income/Spending, Chicago PMI, Consumer Sentiment.

Still there is not much change in the basic environment but in spite of these problematic conditions stock market performed well in this month. It is quite strange that in spite of being in problems, some of the European & US stock indexes are giving more reversals (comparing to recent low and May top) than other nations.

NOTEPlease see the disclaimer of this blog.


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