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Stock market review (weekly) after 28th September, 2012.

Euro zone leaders are not showing what market is expected from them though Spanish budget and stress tests of their banks were better. This week most of the stock indexes were in red which is indicating indecision about further up moves or any directional moves.

INDEX
28th September, 2012
9/21/2012-9/28/2012 (%)
9/14/2012-9/21/2012 (%)




Dow
13437
-1.04
-0.1
Ftse
5742.07
-1.89
-1.06
Cac
3354.82
-4.98
-1.42
Dax
7216.15
-3.16
0.53
Australia S&P
4387
-0.48
0.42
Shanghai Com.
2086.17
2.93
-4.57
Hang Seng
20840.38
0.51
0.51
Sensex
18762.74
0.05
1.56
Russia :Titans
6118.85
-2.75
-3.71
Bovespa
59175.86
-3.49
-1.26
Argentina: Merval
2451.73
-3.16
-0.48
South Africa
35757.98
-1.24
-0.94

Stock indexes of problematic nations of Euro zone have shown lot of corrections this week. In US, many investors may be giving priority to US treasuries because of the recent announcements but other places are not showing many improvements. Chinese stock indexes fell to 2009 lows which are making them cheaper than its peers.



Stock market forecast for coming week.

Now words of concern are coming from different authorities on the significance of latest QE-3 in US. One thing is sure that market has not welcomed it with bumper outcomes or as I said in past that it has already discounted it. Some housing reports from US were better but may be market is waiting for monthly jobs report which is due in coming week. Markets need an assurance from both sides of the Atlantic. Market will be seriously expecting stimulus from China in coming days, especially after the reports of manufacturing contraction. In the last day results of stress tests of Spanish banks were better but unless their main problems are not getting any solution, market will not show different atmosphere.

Most of the stock indexes have created a position from where they may break-out in either side. Since nothing happened this week so coming week we may have stronger chance of those break-outs. Here I must say that if they failed to break-out in the upside then most of them are threatening to make a bearish pattern by testing pre–QE-3 levels. On the other hand things will be complicated if stock indexes still continue their flat movements. When I am seeing US treasury prices, it does not giving me a good signal. On the other hand currency market indicates that stock indexes may show better signals in middle to later part of the coming week.

Last week I was expecting that Dow Jones I.A. may show slight correction and it is good to see that it maintained 13400 level. Now I will be worried if Dow does not cross 13500 level because in that case bears will be in power.
Dow has already triggered its bullish pattern and as I said in past that it may take time to react on this pattern because it is not a straight one. This type of small correction is quite possible so in coming days situation may change and it may cross 13600 levels. 13800 is its next resistance, Dow can go up to 14200 if it fully reacts on this medium term bullish pattern.
On the other side if it again fails to cross 13600 level then it may make a very short-term bearish pattern which may take it towards around 13200 level. It has initial support level at 13300 and I will think about another bearish pattern if it drops around 13000 level.

I still think that these small moves are not creating good atmosphere for German DAX in this higher levels, as past instances were not good. In spite of that Dax may test higher levels and technically I am saying this because of the higher lows it made in past weeks. If Dax is able to cross 7400 in coming week then 7500 will be its initial target in the upside and the better one is at 7600 for any bigger move.
In later days of this week it dropped and that will be a matter of concern if Dax drops below 7000 range. 7200 is its initial support. Like many other leading stock indexes, Dax has a chance of making very short-term bearish pattern if it does not able to cross 7400 in coming days and if that pattern fully reacts then Dax may test around 7000 levels. On the other hand if we go with recent reversals then it can drop up to around 6600 level (around 61.8% reversal) though this may not be necessary a prediction for coming week.

I was expecting that FTSE 100 may show directional move in middle days but still it has a chance of upside movements. Ftse may move in the both sides but frankly speaking it looks to me slightly bearish than other leading indexes and this is in spite of the fact that it is in more over-sold condition than others.

So in coming week, first it has to cross 5850 level and thereafter 5900. I will think about a new uptrend or break-out in the upside when it will give stronger moves above 6000 level.

On the other side if it drops from here  or failed to test above 5900 level then there is a chance of correction in later period of the coming week. I will think about a bearish pattern if it drops below 5700 level. Here I must say that when other leading stock indexes are showing an opportunity of making future bearish pattern, in case of Ftse that chance is more prominent.

South Korean KOSPI is not leaving 2000 zone easily, as such it was flat this week. I am still hoping that Kospi has a chance to cross 2000 level but even if go past this 2000 level in coming week, it will get better resistance at 2050 level in the upside. I will think about a new bull movement for Kospi when it will give stronger moves above 2050 range.
On the other side if it drops from this level then there is a chance that Kospi may make a bearish pattern if it goes below 1900 but still it needs more time to specify details about that. Kospi has initial support level at around 1950 level.

S&P/ASX 200 is still moving around 4400 range but the higher low it made this week around 4350 was encouraging. So in coming week it has stronger chance to cross 4400 level and that is expected to be in middle days. For any new investments, it is better to wait for confirmation about the up moves.

During past 12-14 months S&P/ASX is making lower lows which also support the up moves. 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.

Now if S&P/ASX cannot break 4400 level then there is a good chance that it may create a very short-term bearish pattern which may take S&P/ASX below 4300 level, here it has initial support at around 4350 ranges. S&P/ASX has a chance of making another bearish pattern if it tests below 4300 level in the downside but it may not be a straight one.


Reports due in coming days (from US)

Monday, 1st October, 2012 – ISM Mfg Index, Construction Spending.

Tuesday, 2nd October, 2012 – Auto Sales

Wednesday, 3rd October, 2012 – ADP Jobs Report, ISM Non-Mfg Index.

Thursday, 4th October, 2012 – Unemployment Claims, Factory Orders, Minutes FOMC mtg.

Friday, 5th October, 2012 – Labor Dept Monthly Jobs Report



NOTE Please see the disclaimer of this blog.

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