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Stock market review (weekly) after 27th July, 2012.

This week it is a brief review.

In earlier days of this week there was much fear in the market and as a reason Italy and Spain banned short-selling and later Moody’s outlook on Germany spoiled the party despite good Chinese PMI report.

INDEX
27th July, 2012
7/20/2012-7/27/2012 (%)
7/13/2012-7/20/2012 (%)




Dow
13075
1.97
0.35
Ftse
5627.21
-0.43
-0.25
Cac
3280.19
2.7
0.41
Dax
6689.4
0.89
1.11
Australia S&P
4209.8
0.25
2.86
Shanghai Com.
2128.76
-1.84
-0.79
Hang Seng
19274.96
-1.86
2.87
Sensex
16839.19
-1.86
-0.32
Russia :Titans
5947.4
-0.64
0.18
Bovespa
56553.12
4.35
-0.25
Argentina: Merval
2435.96
-0.95
3.28
South Africa
34671
1.3
1.28


But in later period of the week remarks from ECB chief again created good expectation and stock indexes looked better as well as the Spanish and Italian bond yields. In the last day speculation about ECB’s bond buying overshadowed US growth and Spanish unemployment reports.




Stock market forecast for coming week.

Let talk about different stock indexes.

I was expecting that Dow Jones I.A. will bounce from 12600 level but still I am little disappoint with its performance in later period of this week. DOW is getting hard resistance in crossing the 13000 range, last day’s close was better from earlier and now there is a good chance that in coming week it may cross 13000 level convincingly to prove its short-term bullish pattern.
I told about a medium to long-term bullish pattern of DOW, for which important level is around13300 and if DOW crosses 13000 level and triggers its short-term bullish pattern then the chance of making that medium term bullish pattern will be stronger.
During last few weeks I was talking about an alternative bearish pattern of DOW which can take it towards 12000. But now DOW has crossed an important level in the upside so if it stays there for sometime then technically the chance of triggering that bearish pattern is less.
DOW is moving side based with higher lows (or higher closings), if it continues that then earlier days of the coming week are expected to be good. But if it again gets resistance in this level then important support levels are at around 12750 and 12600 levels but considering its trend this time any drop will be limited.


Last few days of this week was better for German DAX  but testing 6400 level has created a type of reservation for up moves. Last week I was talking that if DAX tests 6400 level then it may create a short-term bearish pattern and if that pattern triggers then DAX can test lower levels of 6100. I will later discuss about the situation if DAX tests 6100 level.
Last two days were better so there is a good chance that DAX may break 6800 level in earlier days of the coming week. During last few months I was talking about a bullish pattern of DAX though it has acted to some extent on it but the expectation was little more. So if DAX breaks 6800 level then there is a good chance that we may see better days.
In brief if DAX fails to cross 6800 level then there is a good chance that it may drop to trigger its bearish pattern and for that important support levels are at 6600 and around 6562 (50% retracement).


Though FTSE 100 has not tested 5450 level but still it has created a short-term bearish pattern (approximate). I think if FTSE does not able to continue it’s up moves which we saw in later days of this week then there is a chance that it may trigger that bearish pattern. So early to middle days of the coming week are very important or I would rather say breaking roughly 5750 level in the upside.
On the other hand chance of reacting on its bullish is still there but since it is not a straighter one so it may take some time. 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. After this week’s moves I cannot say that FTSE will follow the higher highs and higher lows trend so moves towards 5900 level may not be easy. So FTESE must stay above 5600 level in earlier days so that it can take more upward steps but for avoiding short-term bearish pattern it needs to break levels above 5700.


If Shanghai Composite stays below 2130 level for some more time then I will think differently about its long-term bullish pattern. As I was saying in last week it is very difficult to predict about shanghai composite unless it shows a recovery. Though medium term bearish pattern says that Shanghai Composite can go below 2100 but last few days moves indicate that we may see a reversal in coming week, therefore initial resistance level will be around 2200.


As per expectation South Korean KOSPI dropped this week, little more corrections would be perfect. Later days were better but unless it beats 1850 level, I am not seeing much hope. In fact let it first cross the 1830 range convincingly. In the upside, for bullish pattern the important level is at around 1900.
During last few weeks KOSPI is making lower highs and lower lows so if it continues that then there is a chance that KOSPI may not go up much and it may start dropping to prove its bearish pattern completely. The pattern demands KOSPI to go around 1700 level but considering the average outcomes it may be less. Therefore it is important for KOSPI to stay above 1800 level in earlier to middle days of the coming week so that it can avoid more corrections.


S&P/ASX 200 turned back from around its 61.8% retracement level, which I have mentioned in last week. Looks like S&P/ASX is moving in an upward channel so it may take time to test 4300 level. Its last day’s closing was good and if it continues that then we may see more upward moves but for that it needs to break its initial resistance level at just above 4200 level.
S&P/ASX needs to maintain 4150 level in earlier days but as it is making higher highs and higher lows so I will be worried about the downside when it breaks 4050 level. If it goes higher earlier days of the coming week then we may see little correction days in later periods of the coming week.



Reports due in coming days (from US)

Monday, 30th July, 2012 – Dallas Fed Index

Tuesday, 31st July, 2012 – FOMC meeting begins, Personal Income & Spending, Housing Price Index, Chicago PMI, Consumer Confidence.

Wednesday, 1st August, 2012 – Auto Sales, ADP Jobs Report, ISM Mfg Index, Construction Spend, FOMC Announcement.

Thursday, 2nd August, 2012 – Unemployment Claims, Factory Orders.

Friday, 3rd August, 2012 – Labor Dept. Jobs Report, ISM non-mfg Index.




NOTEPlease see the disclaimer of this blog.

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