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Stock market review (weekly) after 5th October, 2012.

Market welcomed Ecb’s bond pledge and US employment report; but was not markets reacted less! Spanish bail-out is still creating confusion in the market and bad news are not leaving China so easily, this week’s manufacturing report was one of that instances but it is good to see that their stock indexes are not reacting like past days.


INDEX
5th October, 2012
9/28/2012-10/5/2012 (%)
9/21/2012-9/28/2012 (%)




Dow
13610
1.29
-1.04
Ftse
5871.02
2.25
-1.89
Cac
3457.04
3.05
-4.98
Dax
7397.87
2.52
-3.16
Australia S&P
4494.4
2.45
-0.48
Shanghai Com.
2086.17
0
2.93
Hang Seng
21012.38
0.83
0.51
Sensex
18938.46
0.94
0.05
Russia :Titans
6219.6
1.65
-2.75
Bovespa
58571.59
-1.02
-3.49
Argentina: Merval
2485.76
1.39
-3.16
South Africa
36588.67
2.32
-1.24

Most of the markets were positive this week, stock indexes from Greece, Italy jumped more from others. Indian and New Zealand markets are giving 5-6 straight positive weeks.



Stock market forecast for coming week.

Most of the world stock indexes are facing their resistance levels. If we consider about US stock indexes and particularly Dow, it is facing strong resistance at 13600 levels. Now technically I am not fully confident about crossing that level but if I think about the election in US then I have a feeling that new moneys will be pump in the stock market and that is just a matter of time. So therefore it will be interesting to see whether stock indexes face any correction before that.

Some time it looks to me that many of the stock indexes are making higher highs and higher lows and if we consider this as a reversal in a bear market then I am not too much comfortable with that situation. Let talk about different stock indexes.


Dow Jones I.A.  is still struggling to cross 13600 levels. Last week I was talking about a very short-term bearish pattern if Dow does not able to cross 13600. I am still maintaining that approach if Dow fails to do that in coming week. Here I must say that if Dow is able to maintain around 13600 levels in early days then there is a chance that it may cross it in later days of the coming week. Though last day’s close was not good comparing to its high point so now all the upside movement depends on breaking 13600 levels.
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. If Dow breaks 13600 then 13800 is its next strong 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 that short-term bearish pattern may trigger which can 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.

Last week I was expressing concern about German DAX. Since it does not able to cross 7400 level so chance of making the short-term bearish pattern is more now. If that pattern reacts completely then Dax has a chance to test around 7000 level. 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.
Last day of this week was better so if it able to maintain 7340 level or I would say levels around 7400 in early days then there is a chance that Dax may again try the upside in later days. I think it is better to wait for concrete moves. 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.

Last week I was saying about bearish view on FTSE 100 but it has tried hard to move away from that in this week. Now it is again trying to test upside and there is a chance of breaking 5900 level if Ftse maintains its moves above around 5830 in early days of the coming week. Here I must say that Ftse has created a complex medium term bullish pattern which indicates that it may try above 6200 level in coming future but I am not too much sure about that.
On the other hand the medium-term bearish pattern which I talked in past weeks is still on for Ftse and it will be stronger if in coming week Ftse fails to break 5900 level, I would like to talk more on this issue if Ftse breaks 5700 level. Last week I was talking about the difference of Ftse with its peers but after this week’s move now it looks quite similar with other stock indexes as Ftse is also showing chances of both short-term and medium-term options in the downside.

South Korean KOSPI  is showing different moves than its peers, in fact it is not showing any moves. So, most of my last week’s predictions are still applicable for it. So long it stays around 2000 level; chance of more up moves is quite expected. I will think about a new bull movement for Kospi when it will give stronger moves above 2050 range but for that first it has to break 2050 level in the upside.
On the other hand last day was not good so 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.

Last week I was saying that this time S&P/ASX 200 has the stronger chance of crossing 4400 marks. It has achieved its shorter goal of 4500 and now it is due to act on its medium term pattern, if S&P/ASX acts completely on that then we may see it around 4800 in coming future. If we consider normal success rate of that pattern then S&P/ASX will achieve level above 4600.
Last day’s close was good so I am not sure whether it is going to get any major resistance around 4500 but even if it does not, I think it is going to face better resistance at 4600 level. On the other hand if it drops down then 4450 will be its initial support and the better one is at 4400 level.
Last week I was talking about a very short-term bearish pattern, since S&P/ASX has tested the upside so that chance is less now. But the chance of making medium term bearish pattern is still there if S&P/ASX tests below 4300 level in the downside but it may not be a straight one.


Reports due in coming days (from US)


Tuesday, 9th October, 2012 – Small Bus Optimism Index

Wednesday, 10th October, 2012 – Fed's Beige Book

Thursday, 11th October, 2012 – Unemployment Claims, U.S. Trade Deficit.

Friday, 12th October, 2012 – Producer Price Index, Consumer Sentiment.


NOTE Please see the disclaimer of this blog.

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