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Stock market review (weekly) after 10th August, 2012.

Remark of Italian Prime minister was unable to create fear in the initial day. Most of the macro reports like German export figure were bad but they were unable to affect the market. During last few weeks a good sentiment is working on the market, especially after the developments in Euro zone. Debt market is also reacting on that, rising 10-year US treasury yield is a good example of that.

10th August, 2012
8/03/2012-8/10/2012 (%)
7/27/2012-8/03/2012 (%)

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

Most stock indexes ended in green and that is for two straight weeks, even stock indexes from problematic Euro zone nations are also showing better positive weeks. Many leading stock indexes rose for 5-6 straight days which is a better sign compare to past.

Stock market forecast for coming week.

Many stock indexes are in a stage and from here they have the options of going either side. I feel that if they are able to cross their previous tops then they may show us good days in future, otherwise considering their over-bought position we have to see the bad. In fact macros around the world also suggest about the negative moves. In coming week important Housing reports and other reports are due from US which may decide many things.

Let talks about the stock indexes.

During last few months, many times I talked about the chance of a medium to long-term bullish pattern for Dow Jones I.A. and now when DOW proves its short-term bullish pattern, that option is looking strong.
DOW is trying to make a base above 13100 level and its close in the last day was better. Now though DOW is in little over-bought condition but still there is room for more upside movements. So if it able to break 13200 then 13300 may become the next target for DOW.
If DOW fails to break 13200 then there is a risk that it may drop from this level, especially considering the movements above 13100. Since DOW is making higher lows (or closing) so even if DOW drops from this level, that drop may remain limited. Levels around 12900 may act as a good support for DOW in the upside. The chance of further drop will be still there but I will be talking about the bearish pattern when DOW tests level around 12500.

German DAX is trying to stay above 6900, as it is making base at this level. So for coming week it is important that DAX should maintain this level in early days. Last few month’s moves reflect good days for DAX and if it able to stay above 6900 then things will be better for it.
On the other hand DAX is in over-bought zone so I will not be surprise if it drops from this level. In that case its initial support level will be 6800 and later 6600. I am still concern about the movement around 6400-6900; unless DAX is coming out from this zone risk of dropping around 6100 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, in fact we may consider around 6562 (50% retracement) as important support level for it.

FTSE 100 is trying to stay above 5800 level but considering its over-bought condition, a reversal may come. Here I will consider level above 5700 as an initial support for it and then at 5600. 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.
On the other hand if FTSE maintains 5750 level then more up moves are expected. During last few weeks I was talking about the bullish pattern for FTSE, I was talking about 5900 level but after last few week’s moves I may love to increase that range to above 6100. So if FTSE maintains its last day level or reverses from 5750 level in early days of the coming week then I will be looking for levels above 6000 in the upside but this is not totally a prediction for coming week.

Shanghai Composite is still trying to recover from its lower levels, I am still waiting for its initial support of 2200. Looking at its last day close I will not surprise if it again re-tests 2150 levels. Even if that happens later days may become good and we may expect 2200 levels, provided it does not break 2150.

Finally South Korean KOSPI’s proved its bullish pattern to some extent. In past 1950 has acted as good resistance for KOSPI and during last few days its moves were almost straight so a pull back may come. Here I must say that if KOSPI acts fully on its bullish pattern then 1950 may not be much obstacle for it, in fact we can consider levels around 2050 for this matter.
In the other side if KOSPI shows volatile movements in coming week then 1850 may act as a good support for it, provided it breaks its initial support of 1900. 

S&P/ASX 200 maintained moves above 4200 and as I was expecting it gives flat movements around 4300 level. Right now it is maintaining 4270 support level and there is a chance that it may drop from this level, in that case 4200 may be the good support level. If S&P/ASX does not turn around from that level and if it drops more then as I said in last week 4150 (or near about 4120-4130) will be its next support levels. Here I must say that I will be worried about the downside or any bearish pattern when it breaks 4050 level.
Last two days were not good, in spite of that if S&P/ASX maintained around 4270 level in early days then it will try to test 4350 level but that may not easy. On the other hand if it rebounds from 4200 level then it will again try to test 4300 level in later days.

Reports due in coming days (from US)

Tuesday, 14th August, 2012 – Small Business Sentiment, Producer Price Index, Retail Sales.

Wednesday, 15th August, 2012 – Consumer Price Index, NY State Mfg Index, Industrial Production, Housing Market Index.

Thursday, 16th August, 2012 – Unemployment Claims, Housing Starts, Phila. Fed Index.

Friday, 17th August, 2012 – Consumer Sentiment, Leading Economic Indicator.

NOTEPlease see the disclaimer of this blog.


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