Home > Uncategorized > MARKET NOTES: Toppish US markets yet to confirm a downtrend

MARKET NOTES: Toppish US markets yet to confirm a downtrend

MARKET NOTES:  Toppish US markets yet to confirm a downtrend

 

 

 

Spot Gold:  Having failed to pierce through the $1800 overhead resistance on 28th February, gold has been in a steady down trend after the initial collapse in price on 29th February.  It is currently positioned at $1662.  Gold is approaching “crunch time” as far as alternative wave counts go.  Going by the one that I have been using to track the price action, gold should continue in a downtrend until the middle of April at least with $1550 being the target price.  Should it get there, gold will have signaled a fairly long bearish trend.

 

 

NYMEX Crude:  After having touched at intra-day high of $110.55 on 3rd March, Crude has been flattish but in a mild down trend and currently stands at $105.16.

 

Since the last significant bottom at $32.4 in December 2008, Crude has closely tracked equity markets.  The wave count from the low of December 2008 suggests that crude is not yet done with its way up and could make a new high by the middle of April, and the target for the high would be $115 or higher.

 

It would highly surprising to see a wave 5 failure in crude.  It would be even more surprising if crude did not overshoot its target much like the US equities have done.  Not bearish on crude in the near term.

 

 

10 Year US Treasuries:  10 year Treasury notes hit a high of 132.367 on 31st January this year and have been on the downtrend in terms of prices as yields demanded in the market to hold them have gone up.  They currently stand at 129 implying a yield of 2.24%.

 

The downtrend should test the price level of 127.5 in the coming weeks.  The price action around that level will reveal to if the interest rate cycle has finally turned up.  Should the support level be taken out decisively, the entire dynamics of the financial markets will under go a systemic change.  It is a crucial gauge to watch in the coming weeks.

 

 

Spot Silver:  Silver triggered a death cross on 21st March 2012 at price level of $33.26.  It currently stands at $32.18.  Barring the regular reactive pullbacks, there is nothing bullish on the charts for Silver.  The metal is headed for a first target of $30 followed by an even lower target of $26.  It has time until the middle of June to get there.  Silver could collapse faster than gold.

 

 

NYSE Composite:  Taking up this composite index because it is one of those that are largely ignored by traders.  Also it happens to be one of the more difficult to “manage”.   At market turning points it can reveal more information that market makers tend to do their best to obscure in the more widely followed indices.

 

Note the index made little effort to make a new high in relation to the peak at 8678 it made on 29th April 2011.  All other narrower indices such as DJIA and S&P 500 have done so.  Going by the wave counts, NYA is done its rallying and is now headed south.  It is too early to predict what shape the correction will take.  That will be known only in the coming few weeks.

 

 

S&P 500:  Is the S&P 500 done it’s rallying from 669 to 1412.66?  As noted in this blog over the last few weeks, this rally proved itself after having achieved a target of 1350.  Anything after that is really a function of shorts trapped in the market and that’s impossible to predict.  All one can say is that the process of top formation is currently underway.  It could take time.  But the upside to the market from these levels is definitely very limited and not worth the risk chasing it.  Too early to say how the correction will play out.  Investors should take profits and traders should stay out till the market confirms a downturn.  Early bears are easy meat.

 

 

Shanghai Composite:  The Chinese index nicked 2350 levels on Friday closing at 2349.5.  The nick is not significant yet but raises a cautionary flag for my bullish wave count.  A violation of 2320 would actually invalidate my wave count making it necessary to go back to the drawing boards.  So stop loss set for 2315, which still yields a decent profit from the lows of 2110.  Having said that, the fall to 2350 was expected as a reactive move and the nick itself is insignificant.  So the next week or two will indicate the way forward from here.

 

 

$-Index:  $-Index made a high of 80.78 on 15th March and is now on the way down.  It currently stands at 79.8960.  I think the move down is reactive.  Should the $-Index make a higher low than 78.15 in this reaction before moving up, it will confirm an intermediate uptrend whose target is 82.  Such a rally in the $-Index is consistent with a fall in US equities where a sell off usually triggers a rush into Dollars by overseas investors.

 

 

Euro-$:  The Euro-$ is currently positioned at 1.32710.  It is in a near uptrend with a target of 1.35.  Can’t say when it will get there.  Interesting that Euro and $-Index are both moving up.  If so what’s going to depreciate in the currency world?  An interesting conundrum is coming up for currency traders.

 

 

S-INR:  As anticipated in the last blog post, the $ pierced through the 51 mark on Thursday.  A small reaction from there came nowhere near the top of 51.  That could be tested again.  The direction of the $ against INR is a no brainer.  The next target for the $ is 52.  I expect May/June will test the previous top.  Watch out for RBI intervention, which could moderate the rise, though will not change the direction.

 

 

Sensex:  Sensex nicked its 200 DMA at 17,200 on 22nd March, closing below it at 17,196.47.  However it pulled back the very next day to close at 17,361.  Mind, Friday was an inside day so the pullback was likely reactive in nature.  The more critical level for the Sensex’s future behavior lies lower at 17,000.  It could bounce from there if it intends a rather tame correction.  A dip below that level will indicate a much higher degree of volatility in the ensuing correction.  Either way, barring regular pullbacks, the correction itself will continue.  Watch the price action at 17,000 closely for clues.

 

 

 

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. Mayank
    March 26, 2012 at 10:14 am

    Very good please write about nifty also

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