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Stock market review (weekly) after 14th September, 2012.

What was that QE-3 or a combination of QE-3, QE-4…….. !

It is not clear to me whether there is any direct relationship between QEs and employment generation if there will be any then they must be at research papers of economists!

One of the important aims of QE-3 is to make a better housing market or I may say better home price which ultimately goes into other areas like stock market. I am not an economist but something is not clear to me, like no fixed time limit for bond-buying though we get something about probable timeframe (that is unemployment will not reach 7% until 2014). At past I told it many times that it will be hard for emerging nations because of artificial increase in assets price (especially commodities), it will also not comfortable weather for exporting nations. Be sure about that those nations which are struggling with high inflation, they will not see a good days in their stock indexes like Dows.

I will not be surprise if in coming future these nations take extra precautions to save their economy, like limit their currencies against leading foreign currencies e.t.c.

INDEX
14th September, 2012
9/7/2012-9/14/2012 (%)
8/31/2012-9/7/2012 (%)




Dow
13593
2.16
1.65
Ftse
5915.55
2.08
1.46
Cac
3581.58
1.78
3.11
Dax
7412.13
2.74
3.49
Australia S&P
4390
1.48
0.22
Shanghai Com.
2123.85
-0.18
3.92
Hang Seng
20629.78
4.18
1.64
Sensex
18464.27
4.41
0.81
Russia :Titans
6534.56
4.44
3.4
Bovespa
62105.47
6.49
2.21
Argentina: Merval
2543.86
6.79
-1.09
South Africa
36550.08
2.25
1

Market around the world welcomed QE-3, except some like Shanghai composite. Though in the last day US markets were not responded well. Debt market also reacted positively as we saw that 10-year Italian bond was below 5%. German court’s ruling was also good market.




Stock market forecast for coming week.

If I have to compare between Bernanke & Draghi’s approaches then it looks to me that Mr. Draghi was more positive, when comparing their manifestations. On a whole I think that both of them are not sure about those steroids, they have just thrown their best weapons and now what will be the outcome that is completely uncertain! 


Let talks about the stock indexes.

During last few months I was talking about the medium-term bullish pattern for Dow Jones I.A. and now it looks like that Dow is triggering that. If this bullish pattern works-out completely then roughly it may go up to around 14200. If it able to cross 13600 then next resistance is at around 13800.
In coming week early days will be a testing time for Dow because if it does not able to cross 13600 then a minor correction cannot be ruled out. If Dow drops from here then 13300 is its initial support level and 13200 is its next support level. I will think about a future short-term bearish pattern if it drops around 13000.

I was expecting little correction in the early days but except the flat initial day all the moves were in the upside for German DAX. In the last day it did not respond like others that is not a good indication, in fact during last few days Dax has not given a solid move. Technical indicators are not showing any big over-bought position for Dax so I will not be surprise if it gives a big move in certain point of time in coming week.
Now 7500 is its initial target in the upside and the better one is at 7600 for any bigger move. In the downside 7200 is the initial support level and the stronger one is at 7000 level. If Dax drops from 7000 level then 6800 will be a good support for it. On the other hand if we go with recent reversals then it can drop up to around 6600 level (around 61.8% reversal).

I was expecting good days for FTSE 100 in later periods of this week. FTSE is making a long-term bearish pattern which it can trigger below 5000 level and technically it can avoid that by crossing around 6100 level. Lower lows it is making during last 1year is also indicating the trend towards upside but for that it has to first break its initial resistance which is 6000 level.
On the other hand I will be thinking about a bearish pattern for FTSE when it will be dropping around 5650 level, around 5800 is its initial support level. So in early days of the coming week emphasize should be given on 6000 level in the upside.

Last week I was expecting that South Korean KOSPI may show good moves in later days and now after breaking 1950 it is ready for a new up move or I can say that chart says it may go up to around 2150. Though it may sound quite big for shorter-term but considering the lower lows it made in past months I cannot ruled out that prediction. But for any kind of that move first it needs to cross 2050 level convincingly.
On the other hand if it doesn’t able to break around 2050 levels and come down then I will be thinking about future bearish pattern if it tests around 1870-1880 levels. After a big move in the last day of this week I will be looking that 2050 level which now looks far easier and for any correction initial support levels is at around 1950 range.

Last week I was talking that if S&P/ASX 200 does not able to cross 4400 level then there is a chance that it may create a bearish pattern if it goes down from there. I am still holding that view especially after its move in the last day, market must be looking for more from it.
It will again try to break 4400 level in coming week but if it fails then I will go with the bearish pattern which can take S&P/ASX around 4150 level but this type of pattern is very difficult to work out in shorter time period.
On the other hand if it able to break 4400 level then I have different view on it and the lower lows it is making during past 12-14 months also supports that. In the upside 4500 is the initial resistance and the bigger one is at 4600 level. In the medium term basis it has created a bullish pattern though it is not 100% accurate but if that pattern is true then S&P/ASX may go up to 4800 in coming future. So in coming week emphasis must be given on 4400 level.


Reports due in coming days (from US)

Tuesday, 18th September, 2012 – Housing Market Index

Wednesday, 19th September, 2012 – Housing Starts, Existing Home Sales.

Thursday, 20th September, 2012 – Unemployment Claims, Phila Fed Index, Leading Economic Indicator.


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