Friday, December 7, 2012

Stock market review (weekly) after 7th December, 2012.

US job report in the last day was good but technology stocks have struggled this week. Though Greece offered 10bn euro to buy back bonds but that couldn’t save them from S&P downgraded. It is good to see that nowadays, stock markets do not react much on such things.

INDEX
7th December, 2012
11/30/2012-12/7/2012 (%)
11/23/2012-11/30/2012 (%)




Dow
13113.89
0.68
0.12
Ftse
5914.4
0.81
0.82
Cac
3605.61
1.36
0.81
Dax
7517.8
1.52
1.32
Australia S&P
4551.8
1.02
2.11
Shanghai Com.
2061.79
4.12
-2.33
Hang Seng
22191.17
0.73
0.53
Sensex
19424.1
0.44
4.5
Russia :Titans
6103.49
2.74
-0.14
Bovespa
38195.89
0.24
0.63
Argentina: Merval
2480.03
2.51
3.39
South Africa
58487.32
1.76
-0.17

Most of the stock indexes tried to test higher levels this week, where as Dax is quite different from others. Shanghai Composite is trying to make up the losses of past weeks. Italian Ftse Mib was nervous this week due to the political problem which the nation is facing.
Chinese manufacturing report was good but later to some extent it was offset by US factory index and US manufacturing report. German industrial production report was also not good.


Stock Market forecast for the coming week.

Bundesbank cut its growth forecast for Germany; I think this is an important event which is going to reflect in future rate policy of ECB. RBA’s rate cut was good gesture and now many are expecting same thing from other nations. Earlier Crude Oil (Nymex) is looking to make a base at around 85-86 ranges but it is again threatening to break that range so for those nations which import oil and are suffering from oil led inflation they may get space to consider about rate cut in coming future.


10-year US treasury yield is again trying to break around 1.60 levels and may test around 1.40 levels in coming future. Story is also same for 30-year US treasury yield which is also threatening to react on a bearish pattern, if these US treasury yields test such lower levels then that will not be a good story for stock market. Though in the last day they have tried to recover some grounds and they have the option in the upside so it is hard to say for sure that these things are going to follow any particular trend.

Different other financial markets are showing confusing or I will better say no directional moves. Let say Euro and Usd, they are showing opportunities in both sides. Everyone is taking about Gold but I do feel unless Gold (comex) is crossing the $1760 mark or I would better say $1800 range, I am not comfortable with gold. In fact I will be looking to short gold if it fails to cover that level in coming future and drops below $1660-1680 ranges. In that case Gold (comex) has a good chance to test around $1600 level.

US fiscal cliff and never ending problems from Euro zone nations such as Italy and Greece, either in form of political or economical are still there. But are not we will surprise if 1st week of January, 2013 suddenly we see that problems regarding Euro zone nations have solved due to massive initiatives of Ecb or US fiscal cliff ended positively and on the other hand middle east problem have solved and central banks are cutting their rates!  No, I will not surprise if things ended that way. These things are very easy to write than done. Therefore those investors (or better to say those institutes) who are keeping this view (or well informed), they will become the ultimate gainer and most of us will bound to enter in the market later, at higher levels. But if any of these things go contrary then that may act as a catalyst for bad thing.

Stock indexes are not showing any particular trend, though indexes like German Dax has shown better picture than others but most of them are in over-bought zone. Let talk about different stock indexes,

Last few days Dow Jones I.A. got the support at around 12900 level and it was looking like to test higher levels but I am disappointed with last day performance, it could be more. So in early days of the coming week Dow may be due for little upside movements.
Dow is not yet out from lower high and lower trend, I was emphasizing on around 13320 level to make the probable bullish pattern but it is still due to test that. Now if that bullish pattern is true then Dow may try little lower levels and that may be in middle of the coming week but that should not be more than 12500 range. In fact if Dow drops from here it will get good support first at 12800 and then at 12600, so things may turn around from these levels.
At past I said that Dow has multiple options in the downside but that depends on the specific levels. In this moment 12500 looks most probable range to create a bearish pattern but I will talk about them when Dow will cross 12600 range.

This week’s move in German DAX has changed lot of predictions, I was expecting small correction this week but Dax’s move was very interesting. Dax is in a level which we did not see much in recent past so staying in this level is a challenge for Dax. The way Dax is going it may make more upside movements basing on around 7400 levels but if it breaks that then Dax will get support at 7200.


Since FTSE 100 remains flat this week so I maintain my earlier view on it. In my last week review I was expecting that Ftse may see little drop to complete the bullish pattern though it did not do that in this week but that option is still there. The way it is moving now, I will not surprise if it again try to tests 5800-5850 levels in early days of the coming week. Things may become bad if it breaks 5800 range because in that case we may see Ftse in lower levels.
Ftse is getting strong resistance in 5900 level which it failed to break in last few months. But looks like this time Ftse is giving strong movements than recent months, so things may turn. As I said that there is a chance of drop but so long it maintains 5600 level in the downside another reversal in the upside may not be ruled out.


Last week I was expecting small corrections in earlier days for South Korean KOSPI to make a good bullish pattern but it maintained 1920 levels. Last few days were good, now Kospi is getting resistance at around 1960 range. The medium-term positive pattern is not so sound but if it reacts fully then we may see Kopsi to test around 1980-2000 levels. Here I must say that if Kospi tests around 2000 level in coming future then it will be good for Kospi in long-term perspective because in that case Kospi will create long-term bullish pattern.
It looks like that Kospi broke the lower high and lower low trend but the bearish pattern is still on for Kospi and so long it does not cross around 2000 levels in near term, that option will be there. I want to give more emphasize on this bearish pattern when Kospi will break around 1860 ranges but for that it has to first break its good support of 1900 levels. Where as its initial support will be around 1920-1930 levels.


At my past writings, I was thinking about a probable short-term bullish pattern but S&P/ASX 200 is not showing anything clearly on that matter. I am not negating that option, now I am not so much confident on that but if that pattern works out then S&P/ASX may test around 4630 ranges in coming days.
After getting support in around 4500 ranges I was expecting better moves in later days, since it did not happen in this week so in coming week I will keep that option. But as I said earlier that most of the things depend upon testing around 4580 levels which is its previous high so unless it breaks that range convincingly, I am not so bullish about it.
Last week I was mentioning about middle-term bearish option, if in coming week it fails to cross upside resistance then there is a chance that it may complete that bearish pattern. But here S&P/ASX may face one limitation which is breaking around 4350 levels which it fails to break in last few months. So if S&P/ASX falls in coming week then it has two options, either S&P/ASX may reverse its position in the upside from around 4450 support base or from around 4350 support base. In either case S&P/ASX may crate a better future bullish pattern but if it breaks around 4350 then S&P/ASX will give more strength to the bearish pattern.




Reports due in coming days (from US) 

Tuesday, 11th December, 2012 – NFIB Small Bus Opt Index, U.S. Trade Deficit.

Wednesday, 12th December, 2012 – FOMC Announcement, Bernanke’s Press Conference.

Thursday, 13th December, 2012 – Unemployment Claims, Producer Price Index, Retail Sales.

Friday, 14th December, 2012 – Consumer Price Index, Industrial Production


Others

Monday, 10th December, 2012 – German Trade Balance, French Industrial Production.

Tuesday, 11th December, 2012 – German WPI,

Friday, 14th December, 2012 – German Manufacturing PMI.



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