Home > Uncategorized > Market Notes: 7th September, 2011

Market Notes: 7th September, 2011

Dollar Index:  The Dollar Index has moved in an orderly fashion despite the tumultuous news flow that had markets in turmoil.  That in itself is remarkable. Starting at 2nd May, 2011, the $ Index commenced an impulse wave up and is currently traversing the first half of Wave III. The $ made a fairly large move up on 6th September and the first major overhead resistance lies at 76.75.  A break atop 78 will confirm the medium term prognosis of test of 81.5 sometime before the end of this year.  Despite all the bearish news on the $, the charts don’t show up any $ weakness apart from a need to consolidate yesterday’s large move up.  $ Strength near-term is negatively correlated with US equity markets. But we will have more on that correlation later.

 

Gold spot:  Gold did some expected things yesterday that are worth noting.  Firstly, the closing high in spot gold markets was $1897.1 achieved on 22nd August this year.  Gold has dropped sharply from that level to 1750.55 in two trading sessions before coming up again to test the previous top of 1897.1 yesterday.  Gold opened higher on 6th at 1902.59, higher than the closing high of the previous session, went on to make a high of 1920.3 before dropping to a close of 1872.9, below the previous close.  That makes for a key reversal in price action worth noting.  The failed test of the previous top marks a potential double top in gold at 1900 level.  The next few days’ market action in gold will be critical.  Unless the market takes gold well atop 1902.59 on good volume, the gold rally ends with the double top at 1900 in the medium term.

 

Sensex: After making a low of 15,765 on 26th August the Sensex has rallied to a high of 16,989 on 2nd September.  An early sign that the markets have completed their correction would be a rally above 17,500.  Considering that we are the tail end of a correction markets can be expected to be choppy as different groups of stocks bottom out at different times during this period.  Prognosis remains the same. Pick your preferred blue chips on dips when the news is all doom and gloom between now and mid-October.  It is accumulation time for blue chips.

NB: These notes are just personal musings on the world market trends as a sort of reminder to me on what I thought of them at a particular point in time. They are not predictions and none should rely on them for any investment decisions.

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