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Stock Market forecast for coming week.

Still now market is rallying on stimulus expectation, in fact they are not even responding that much even on bad news which they used to do in past. So in turn that is a bullishness which is prevailing in the market around the world and bond yields of problematic nations are also supportive. Here the important matter is how long market can hold on these levels in anticipation of future stimulus! There will be some point when markets will be tired to go on this assumptions and hints.

Greece issue is again coming into the headlines. On the other hand currency market is not giving any definite signal this week and if it continues this nature then that may become problematic matter. Most of the stock indexes are expected to perform couple of good early days but it is hard to predict about the later days of the coming week.

Let talks about the stock indexes.

Last week I was not sure that Dow Jones I.A. is going to break 13300 level in fact the medium to long-term positive pattern which I was mentioning during last few months demands Dow to drop from this 13300 level. I was talking that Dow’s drops may remain limited and I am still holding that view. I do feel that levels around 12900 may act as a good support for DOW in the downside. If we follow the recent trend then Dow may drop around 12800 (more than 50% reversal). The chance of further drop will be still there but I will be talking about the bearish pattern when DOW tests level around 12500.
According to its bullish pattern Dow is expected to go upside and its last day was better but that not means that Dow is going to break 13300 in coming week in a straight way. I think that Dow may show couple of good days but before proving that bullish pattern we may see little more correction.

I was expecting that German DAX may not test 7200 level. Now Dax may try to show couple of good days but it is hard to say whether it is going to break 7200 level in coming week.
On the other hand if it drops in middle to later days then it has an initial support at around 6900 level but it can drop up to around 6600 level (around 61.8% reversal). It has more chance of reverse from around 6800 level but specifying any level is not possible for now.
Dax has formed a medium term bullish pattern and it is also vulnerable to bear trap if it drops below around 6000 level but guessing about 6000 is too much for now.
Last week I was talking about the movements around 6400-6900; unless DAX is coming out from this zone risk of dropping around 6000 level will be there. DAX is making higher highs and higher lows, considering that if DAX breaks 6600 then I don’t think that it is going to drop below 6400 level.

I was expecting that FTSE 100 may test higher levels considering the flat movements and technical indicators but it followed the overall trend. In coming days if it drops from this level then 5700 will be its initial support and next one is at around 5600 level. If it drops more then I will think about a bearish pattern if FTSE breaks 5500 level but that may not be necessary in coming week.
Last two days were not showing any specific trend for FTSE and technical indicators are showing more oversold position so I am still expecting reversal in the upside and we may get a signal of that in early days. But I am not sure that whether it is going to break 5900 level in coming week.
FTSE is making a long-term bearish pattern which it can trigger below 5000 level but this type of pattern is difficult to trigger. On the other hand higher lows which it made in last 1 year, says that FTSE will be testing upside in coming future.

Shanghai Composite is still not showing any definite sign of reversal but since it did not break 2100, that may give a positive indication. It is better to see whether it gives better signals in early days of the coming week but if it fails to do that then more correction may come.

South Korean KOSPI has failed to cross 1950 and now for coming week 1900 is its initial support level and the better one is at 1850. Since it did not fall much so kospi may again try to reverse from around 1900 level to re-test 1950 level, as technically now it is in better position.
If it cannot cross 1950 level then there is a chance of correction. Things can be frustrating if it moves around 1850 to 1950 level, I am saying this because if it is building a reverse symmetrical triangle (which I mentioned in past) then there is a chance of more corrections so in the downside around 1850 level is very important for kospi.

Last week I was mentioning that S&P/ASX 200 may find hard resistance at 4400-4450 level.
Still I am keeping hope about the medium term bullish pattern which S&P/ASX has created though it is not very clear but if it triggers that then it will cross 4400-4450 level. Even if it drops in early days I am expecting a trend change in later days.
Now it may correct in coming week and if it drops more from 4350 level then 4300 will be its initial support and then around 4250 level.

Reports due in coming days (from US)

Monday, 27th August, 2012 – Dallas Fed Index

Tuesday, 28th August, 2012 – Home Price Index, Consumer Confidence, Richmond Fed Index.

Wednesday, 29th August, 2012 –2nd qtr GDP Rev., Pending Home Sales, Fed's Beige Book.

Thursday, 30th August, 2012 – Unemployment Claims, Personal Spending/Income.

Friday, 31st August, 2012 – Chicago PMI, Consumer Sentiment, Factory Orders.

NOTEPlease see the disclaimer of this blog.


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