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Stock market review (weekly) after 23rd November, 2012.

France lost its top credit rating from Moody’s but it is good to see that market did not reacted much on it. In early days of this week stock indexes rebounded from losing streak on optimism that US may get a solution on tax and spending problem that they may face in the year end. In fact most of the stock indexes were in short-term over-sold zone so this type of reversal is quite expected.

INDEX
23rd November, 2012
11/16/2012-11/23/2012 (%)
11/09/2012-11/16/2012 (%)




Dow
13009.68
3.35
-1.78
Ftse
5819.14
3.81
-2.84
Cac
3528.8
5.6
-2.39
Dax
7309.13
5.16
-2.97
Australia S&P
4413
1.76
-2.81
Shanghai Com.
2027.38
0.63
-2.63
Hang Seng
21913.98
3.57
-1.05
Sensex
18506.57
0.19
-1.14
Russia :Titans
5948.97
3.08
-1.89
Bovespa
37865.59
2.84
-1.41
Argentina: Merval
2339.92
2.49
-4.48
South Africa
57574.03
3.92
-3.41

In the last day German business confidence report helped to make black Friday into a Good Friday. Though Euro zone PMI was not good but Chinese PMI report helped stock indexes this week. Most of the stock indexes were in positive zone, even problematic nations of Euro zone performed quite well this week.
Bond selling of problematic Euro zone nations was good this week but in the last days S&P’s rating cut of some banks in Spain was restricting the advance of their 10-year govt. bonds.


Stock Market forecast for the coming week.

If markets have to face big sell-offs from big institutes then will not they come before? A good example of that is the end of the 2007 and beginning 2008 though then there were no big election like recent days. So if I consider that due to that vital US election market did not crash then this may not be a good time for that. If it has to come then that will come in market tops or at least in intermediate top levels. So, that means are we going to see more up moves in coming days!

I do feel that all the matters have started with US housing and related mortgage problem and since recently good news are coming from those fronts then that may clear some cloud. But I will be waiting for more of such reports; definitely short-term fluctuation does not reveal much of a thing. Up to now Oil (Nymex) was threatening to break 80 but in recent weeks it was again trying to break $90 levels so that may not be good for those nations which depend on import of oil. On the other hand Gold (Comex) is also testing $1750 if again investment starts to shift toward gold then riskier markets will not be in a stable ground, especially in this circumstances.

Euro’s moves in last few days were good and it looks like that it may test 1.31 levels again so that in turn may become good for stock market. On the other hand 10-year US treasury yield which was threatening to break around 1.60 levels is now showing better moves but still around 1.85 levels is far from it. So if stock indexes get clearance from those sides then another short-term run like QE-3 may come but breaking those ranges which stock indexes are following in recent months will be hard a hard job. I think we may compare those recent levels with 1.31 range of Euro and 1.85 level for 10-year US treasury yields.

As I was saying in my earlier postings that many experts are predicting about an imminent market crash and frankly speaking some of the stock indexes are showing that situation but those are on the basis of very long-tern perspective. Where as for coming week many stock indexes may test higher levels. Few times ago macros were looking worse and most of us was thinking about crash but that did not happen where as now for coming days or for short-term there is expectation of positive things, especially when good news is coming from US fiscal cliff  but now I will be taking precaution in my approach. Let talk about different stock indexes.


Dow Jones I.A. has finally reacted on its bearish pattern but still has multiple options in the downside so it will be not clear to say that Dow will starts a new bullish phase from here.
Dow was in short-term over-sold zone so a reversal was due, here I will be emphasizing on around 12750 levels. if Dow able to maintain that in early days of the coming week then it may test higher levels but breaking its previous high of around 13320 will be a hard job for it. In fact around 13000 levels which it was trying to cross in the last day of this week will be its initial resistance. Last time I was talking about a probable short-term bullish pattern, which is still there.
Since Dow is making lower highs and lower lows trend so if it unable to stay above 12750 levels then there is a chance that it may again test its recent low of around 12400. As I have already said that still Dow has options in the downside so 12400 will be an important support level for it if Dow maintains that then it may try to bounce in the upside in later days of the coming week.

 In my last review I was expecting that German DAX may test 7000 levels and I was also expecting this probable bounce. 

Last couples of days were good for Dax but so long it maintains around 7150 levels it has the option of testing higher levels. There is chance of making a positive pattern if Dax able to test around 7400 ranges.
But here things will be different if Dax also follows the trend like other stock indexes which is making lower highs and lower lows. In that case we may not see more up movements but all this probabilities will become negative if Dax break 7400 level.
If Dax fails to stay above 7150 levels then it may drop to test 7000 levels again. Here I must say that like other leading stock indexes Dax has not much option in the downside so it makes Dax better that others. In the downside I will be concentrating on 7000 levels.

Though FTSE 100 dropped below 5700 range but it failed to complete its bearish pattern. Ftse broke crucial 5800 level and now it will not be an easy job to expect Ftse to complete its probable bullish pattern which I was talking in my last review, though that option is still open for it but for that Ftse has to test around 5900 ranges.
Now an important job for it is to stay above around 5740 levels and I will start thinking positively about it if Ftse able to break 5900 levels. When in past weeks many other stock indexes were showing lower highs and lower lows Ftse were different but now it is also trying to follow them. So if that is true then it will not break around 5900 levels in coming week. Ftse has options in the downside but those are not very clear, in fact those are complex one. So if it drops from here and break 5600 then around 5500 may act as good support for it.

 South Korean KOSPI is still due for its bearish pattern though it goes upside from around 1860 level but still it may drop. 
I think below 1840 is the level where it may get support. Since Kospi is following lower highs and lower lows trend so unless it is crossing its near high of 1940, I think it has the option in the downside.
Kopsi’s move in last few days were good and if it maintains around 1900 range in early days of the coming week then it may try to test higher levels but still I have doubts about substantial moves. In my last review I was talking about multiple bullish options and that is still open but for that it has to break at least around 1940 level in the upside.
On the other hand if it fails to stay above 1900 levels in early days then it has the chance of testing below around 1850 levels. In case if it does not drop below 1850 levels then in later days of the coming week it may bounce in the upside.
  
In my last review I was suspecting that S&P/ASX 200 has a chance to break 4450 levels, it is good to see that it finds the support at around 4350 range. 

At past I was talking that S&P/ASX has a chance of making bearish pattern if it tests below 4300 levels but as it looks like that it has many other options in the downside. S&P/ASX is making lower tops and lower highs and unless it is breaking 4525 in the upside it has less chance to come out from this trend.
In spite of being in over-sold position S&P/ASX was unable to reverse substantially so the first task for it is to maintain around 4400 levels in early days of the coming week, especially crossing 4450 level is vital for it.
On the other hand it may get the resistance here at around 4400 levels and again tests lower levels but there is a good chance that it may not drop below around 4340 levels. Therefore in later days of the coming week it may bounce in the upside. In case if it drops below 4300 then I will think about the medium term bearish pattern, its recent trend also supports that move.



Reports due in coming days (from US)  

Monday, 26th November, 2012 – Chic Fed Nat. Bus, Dallas Fed Index.

Tuesday, 27th November, 2012 – Durable Goods Orders, Consumer Confidence, Richmond Fed Index.

Wednesday, 28th November, 2012 – New Home Sales, Fed's Beige Book.

Thursday, 29th November, 2012 – Unemployment claims, Pending Home sales, 3rd Q GDP rev.

Friday, 30th November, 2012 – Consumer Income & Spend, Chicago PMI.


Others

Tuesday, 27th November, 2012 – South African GDP, South Korean current account, German CPI.

Wednesday, 28th November, 2012 – German unemployment rate



NOTE Please see the disclaimer of this blog.

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