Home > Uncategorized > The bull run in equities continues & commodities may have turned down again

The bull run in equities continues & commodities may have turned down again

MARKET NOTES: 08-12-2012:  The bull run in equities continues & commodities may have turned down again.

 

 

Gold:

 

081212 Gold

 

 

 

Gold closed the week at $1705.50.

 

The above is a weekly chart of gold from its all time peak of $1920.  Gold last significant bottom was $1525 on 15th May.  The rally from that point to $1800 on 4th October looks like a pull back.  Gold then pulled in from $1800 to its 200 DMA and rallied as expected.  But the rally fizzled out much below 1800 and the metal has since fallen from $1755 to a low of $1693.

 

From the wave count beginning at $1920 top, we have a count that suggests the recent top of $1800 being the beginning of the wave C of the correction now underway.  Counting off from there, we are in wave 3 and sitting just atop the 200 DMA at $1650.

 

Over the next week or two, gold is likely to test its 200 DMA and in all probability breach it in a couple of attempts.  On a breach of the 200 DMA at $1650, the next logical target for gold becomes $1525.  In effect we are back to the old long-term bearish wave count.

 

 

Silver:

 

081212 Silver 

 

 

 

 

Silver’s case follows that of gold.  It closed the week at $33.13.  It is likely to test its 200 DMA at $31.70 over next week & a breach will open the way to the previous low $26.

WTI Crude:

 

081212 WTI Crude

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude closed the week at $85.93.  Have been compelled to revise my wave counts completely for crude.  Note crude failed to peak in April/May 2011 unlike most other metals/commodities.  After weighing all things, one has to concede that weakness in the crude vis-a-vis other commodities.  Once you do that, crude falls squarely into the wave pattern for other commodities.

 

We are into the second half of a Wave III down that can test & breach 78 again.  A breach of 78 has humongous repercussions for the rest of the markets.  Stay tuned to this commodity for further clues.

 

 

 

 

US Dollar:

 

081212 USD

 

 

 

 

The Dollar has been correcting down since the top 84.25 on 23rd July.  It made a low of 78.60 in mid-September and has since retraced almost 50% of the fall before turning down again from a lower level of 81.50.  That puts the $ wave c of a correction that cud see it retest 78.50.

 

At the fag end of last week, the $ pulled up sharply from 79.50 to close the week at 80.25, which happens to be its 200 DMA.  Most likely the Dollar will turn down from here once again and resume its decent to 78.50.

 

The correction will likely resume its trend down early next week, probably Monday.

 

EUR/USD:

 

081212 Euro$

 

 

 

 

EUR/USD has been in an uptrend since the low of 1.20 on 24th July 2012.  Since then it has made a high of 1.31 on 14th September but failed to hold that high 18th October the second time.  Since then it has corrected down to 1.265, up again to a lower high of 1.3090 and closed the week at 1.2924.

 

The action since July 2012 suggests a bullish top at 1.30 on 17th October followed by Wave A of the correction to 1.2650.  That puts EUR/USD in wave c of a B wave that could see it test 1.2650 again.

 

If 1.2650 holds, as I expect it to, we would have confirmation of the uptrend in the Euro.  A breach would negate my wave count.  Watch for a breach of the upward trend line for the first sign of distress.

 

$-INR:

 

081212 $-INR

 

 

 

 

During the week, $ fell to a low of INR 54 before closing the week at 54.33.  54 happens to be both the 200 and 50 DMA of the $ against INR.  The $ could turn up against the Rupee from here and resume its uptrend.

 

However, as shown by the yellow arrow on the weekly charts above, there is room for the $ to weaken against the INR further to 53.  However, even in such a case, I expect the $ to turn up again and retest the overhead resistance of 55.50.

 

 

 

 

 

NASDAQ Comp:

 

081212 NASDAQ

 

 

 

 

NASDAQ is probably in the wave 5 of Wave V albeit in the early stages.  It closed the week at 2978 after turning up from a retest of its 200 DMA from the topside.  The price action so far is constructive and the next target 3040 followed by 3100.

 

The index’s passage up to its previous top of 3200 should be orderly despite the Apple shenanigans, which is a major component of this index.

 

Keep stops just under the 200 DMA.

 

 

 

 

S&P 500:

 

081212 SPX

 

 

 

 

SPX, like the NASDAQ is in wave 5 of Wave V, albeit in the early stages.  It closed the week at 1418 just under a significant overhead resistance at 1420.

 

Barring a small correction down to 1380, there is nothing much that can go wrong with the uptrend in SPX at this point.  On the other hand a vault over 1435 will put the SPX with in the reach of the previous top at 1475.

 

Note SPX is the strongest of the US indices at this point because of the presence of a large number of financial firms in the index that benefit from ultra low interest rates and pick up in business activity.

 

 

CNX NIFTY:

 

081212 CNX NIFTY

 

 

 

 

NIFTY pulled in exactly from its major overhead resistance at 5950 to close the week at 5907.  NIFTY can continue to correct to test to test its new floor at 5800 before resuming its uptrend.

 

The next major hurdle once NIFTY vaults over 5950 is 6160.  So a break atop 5950 will have significant repercussions for retail participation in the rally underway.

 

Investors may keep sliding stops.  For the current correction the stop should be 5750 and slide that to 5810 once NIFTY pierces 5950 and so on & so forth.  Happy trading.  Note within NIFTY, as in SPX, the strongest group of stocks is financials at this point.

 

 

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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