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

This week it is a brief review.

Market sentiment has not changed much, many nations like South Korea, Brazil are taking many steps like rate cuts but there activities are limited because problem is not domestic. Spain’s borrowing cost was again in the critical zone.

INDEX
13th July, 2012
7/6/2012-7/13/2012 (%)
6/29/2012-7/6/2012 (%)




Dow
12777
0.04
-0.84
Ftse
5666.13
0.06
1.64
Cac
3180.81
0.38
-0.87
Dax
6557.1
2.29
-0.09
Australia S&P
4082.2
-1.82
1.54
Shanghai Com.
2185.89
-1.74
-0.04
Hang Seng
19092.63
-3.56
1.85
Sensex
17213.7
-1.75
0.52
Russia :Titans
5974.55
-0.65
2.19
Bovespa
54330.51
-1.92
1.91
Argentina: Merval
2381.38
-0.09
1.58
South Africa
33792.75
-1.27
1.54

As I was expecting USD did not support the stock indexes this week but last day was better.


Stock market forecast for coming week.

Last week I was talking about bad macros which are not supporting any upward moves in stock indexes, as such this week slower Chinese growth rate is just strengthening that view. Now market is seriously expecting some type of stimulus from China too. I am not sure about stimulus but some kind of steps may again come from their central bank after this week’s better inflation figure. Market is waiting to see Italian bond yields after this week downgrade from Moody’s.

This week stock indexes have not shown much of an action as most of them were maintaining there respective initial support levels. So in coming week we may expect some kind of direction.

Let talk about different stock indexes.


Last week I was suspecting that Dow Jones I.A. has a chance of making bearish pattern if it touches around 12400 level and looks like it is keeping that option open. It may take more time to trigger that pattern and during this time another up move is quite expected but that may be below 12990 level. If it goes more than that then it will negate the bearish pattern and may trigger the bullish pattern which I mentioned in past week.
So in brief DOW needs to make good moves above 12750 levels for better days otherwise there is a chance of drop which can take it below 12000 level.
Here I must mentioned it again that in my past postings I was telling about medium term bullish pattern of DOW which it may trigger by breaking around13300 level and if DOW crosses 12900 level and triggers its short-term bullish pattern then the chance of making that medium term bullish pattern will be stronger.


This week German DAX has not showing much of an action; it is good to see that it is still maintaining 6400 level. There is not much change in DAX from last week, except the fact that it has created some kind of base here.
So in this moment I can say that if it breaks 6500 level convincingly then DAX may try to break its previous high of around 6600 level. Last week DAX has acted to some extent on its bullish pattern now if it crosses 6600 level convincingly then it has a chance of going beyond 7000 level because this week DAX is showing chance of building a new bullish pattern. Since DAX is following higher highs and higher lows trend and if we consider that 6400 was the near-term low even then also more up moves are due from it.
On the other side if it fails to continue its move and drops below 6400 level then 6300 will be its initial support area. Here I must say that in the downside if it tests around 6150 level then it may create a bearish pattern but still this is a very early call as it has not shown many movements this week.


FTSE 100 was flat this week as such it is getting good support at 5600 level. Since there is not much change in FTSE so most of my predictions in last week are still applicable on it. As I said in last week that FTSE has created a bullish pattern and if that pattern works out then it can go around 5900 level. Here I must mentioned that if FTSE breaks 6000 level then in technical term it will not act on its medium to long-term bearish pattern which I talked in past. It is very important for FTSE to stay above 5600 level in early days of the coming week so that it can trigger the bullish pattern.
Though I am talking about 5600 but considering its recent reversals, 5580 (50% retracement from 25th June low) can be a good support for it. But if FTSE breaks these and re-test around 5450 level then it has a chance of creating a bearish pattern, though it is in initial stage. I have a feeling that we may see little correction but not at 5450 level because from last few weeks it is creating higher highs and higher lows and if it continues that trend then ultimately it has more chance to test higher levels.


It looks like 2150 level has acted as a good support for Shanghai Composite. But unless it is breaking 2200 or better to say 2250 level I am not expecting better days. During last few weeks it is moving on a downward channel and if it wants to come-out from this channel then it has to break around 2200 level. Otherwise we may see more drops in coming days, as now technical indicators are not showing too much over-sold condition.
If this bearish pattern works out completely then it will not act on medium to long term bullish pattern which I mentioned in past weeks. Because in the downside if it breaks 2130 level then it will be technically out of that bullish pattern. Last few days moves were better so we have to look closely on moves around 2200 level in early days.


Last week I was talking that if South Korean KOSPI drops below 1850 level then the chance of triggering the bullish pattern are less but that not means it will be strictly following the reverse symmetrical triangle. Because that demands little more downside where as its yesterday’s close was better from its earlier days. Yet I want to wait couple of days more to make a decisive call. If we consider that this is the base in the downside for now then we may expect more moves in the upside in coming days, provided it breaks 1850 level convincingly. In the upside if KOSPI breaks 1900 level then it can trigger the bullish pattern which I was talking during last few weeks.
Last week I was talking about different options in the downside, now beside reverse symmetrical pattern it makes another short-term bearish pattern which can take it towards 1700 level but it needs some more time because there is a chance of making lower highs and lower lows.
KOSPI is in a vital position but as technical indicators are suggesting over-sold position and if it follows that then we should be closely watching 1850 level if KOSPI breaks that in early days then there is a good chance of up moves, otherwise bearish options will make their way.


S&P/ASX 200 is still in uncertain zone in respect of its trend. If it would break 4100 level convincingly then I will be emphasizing more on reverse symmetrical triangle than bullish pattern but right now I am not completely sure what it is going to do.
One thing is good that it has not tested its previous low of around 4000 level, in fact move in the last day was better. As it looks like that it is trying to make some kind of base here. S&P/ASX 200 is in over-sold zone so from here if it again breaks 4100 level then new optimism will arise about that bullish pattern which can take it around 4300 level.
But if it gets resistance around this 4100 level in early to middle days of the coming week then there is more chance that it may drop. The reverse symmetrical triangle which I am talking during past few weeks also demands that S&P/ASX to fall from here. In the downside if it comes close to 4000 level then there is a strong chance of making a bearish pattern which can take it towards 3850 level but it needs more time to prove.



Reports due in coming days (from US)

Monday, 16th July, 2012 – Retail Sales, NY State Mfg. Index.

Tuesday, 17th July, 2012 – Consumer Price Index, Industrial Production, Housing market Index.

Wednesday, 18th July, 2012 – Housing Starts, Fed’s Beige Book.

Thursday, 19th July, 2012 – Unemployment Claims, Existing Home Sales, Phila Fed Index, Leading Economic Indicators.



NOTEPlease see the disclaimer of this blog.

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