Home > Uncategorized > Have the Markets bottomed out? – 16th October, 2011

Have the Markets bottomed out? – 16th October, 2011

Have the Markets bottomed out?  – 16th October, 2011

$ Index:  As on 14th October, 2011 the $-Index was poised at 76.90 just a touch above 76.5 mark that represents 50% of the move up from 73.7 to its recent top at 80.1.  The pill back from 80 levels has been orderly.  Below 76.5 there is further support at 75.50.  The Intermediate uptrend in the $ Index remains up and we can expect multiple tests of the 80 level before the $ breaks out upwards.  Not bearish on the $ despite the recent sharp sell off from 80 level.  Revise your outlook only if the $ breaks below 75.50.

Gold: Gold has seen a recent low of 1535 after selling off from a double top at 1916.5 level.  The upward bounce from 1535 is of a corrective nature and has barely reached the half way mark between 1535 and 1916.  Gold is unlikely to rally much beyond the 1700 mark in the near term.  One would assume that the bearish trend in Gold continues and further tests of the recent floor at 1535 will happen before Gold makes a move towards it recent double top.  Buying dips in Gold may be hazardous to your wealth especially as Gold is now a risk on asset rather than a hedge against risk.

Shanghai Composite: As anticipated, the Chinese market tested and held the 2300-2350 area making a low of 2315. On the time-price charts, the Index has achieved its target price but the correction has time to run until mid-November.  Since 2300-2350 is a major support level, the market is unlikely to turn higher without testing this area a few more times.  It is highly unlikely that the market will break below this area.  Accumulation may be in order from here till Mid-November.

S&P 500:  The US market was poised for a technical breakout upwards of 1226 at close on Friday.  Despite the bullish technicals that indicate so, the signal is likely a false one  that can be expected at this stage in the correction.  As per my reading the correction in the US markets has some more time to traverse and the recent low at 1075 could come up for testing again.  1226 is the upper edge of the trading channel and only a closing high 2 to 3% above this channel would warrant a revision of the outlook.   Caution is warranted on the buy side for position traders.

Sensex: The Sensex is interestingly poised at 17112, not too far from a major overhead resistance of 17,500.  A decisive break above 17,500 would put the Index in unambiguous bull territory. Until then caution is advisable for position traders. The Sensex is unlikely to make a dash for highs while the world markets are correcting.  As per my time charts the correction in Sensex is over.  Given the conflict between the two, the market could go flat and dead for a while or continue to mark time within existing trading range. Investors can continue to accumulate with stop losses set at 15,500.  Don’t think that level will be taken out barring a catastrophe.

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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Categories: Uncategorized
  1. October 17, 2011 at 2:30 am

    100% agree on Gold, 50% on sensex as I think the later may yet move down…Of course I am not any great analyst.

  2. Siddharth
    October 17, 2011 at 9:21 am

    was hoping to read your “personal musings” on the European markets as well

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