MARKET NOTES:  Expect the equity markets to retest recent supports.

 

 

Markets do not take out important supports or overhead resistances at the first or the second attempt.  And when they fail to do so, the recoil to the starting point before making another attempt.  We saw this scenario play out across most equity markets be it DAX, SPX, Russell or Nasdaq 100.  The rally from supports averted an immediate meltdown but the correction is far from over.  In terms of wave counts we can see another retest of the same supports before markets resume their uptrend.

 

 

Commodities like Gold, Crude staged sharp countertrend rallies to retest the breakdown points.  Such bounces don’t last long and before the end of the last week these commodities were also turning down.  The descent will gather momentum and the lows will be retested.  There were reports that demand for physical gold was much in evidence.  I believe all of those known facts are in the price & investor behavior of buying dips is not a new phenomenon.  If the reports are relevant we will see them in the price.

 

 

Abenomics however may be running out of steam.  There is a looming triple top in the USDJPY pair at 100.  Expect sideways movement thereafter.  Meanwhile Nikkei is at a price point from where we can expect a sharp correction that cud look like a “crash”.  In terms of wave counts, such correction could come last week of May, 1st week of June.  Highly unlikely that Nikkei will make it past 14550.

 

Shanghai Composite meanwhile has been retracing its rally from 1950 to 2450 and is at about the halfway mark at 2175 below both 50 & 200 DMAS. A 100% retracement is likely. Worth noting that Shanghai has started its correction in February this year much before the other markets.

 

 

Treacherous markets ahead.  Expect elevated volatility.

 

 

Gold:

270413 Gold

 

 

Gold closed the week at $1453.60 after having made a high of 1482.30 during the week.  Interesting to note that gold turned down exactly as predicted by the charts from the 1480 level.

 

Gold can rise all the way to 1550 without signaling the end of the bear market though the probability of 1480 being taken out is slim.  On the other hand, both in terms of wave counts & time available, gold should at the very least retest $1300 before beginning a counter trend rally.  I don not think we have seen a bottom in gold as yet.

 

 

Silver:

 

270413 Silver

 

 

Silver closed the week at $23.76 after having made a high of $24.34.  Both in terms of time and wave counts, Silver has plenty of space to find a bottom.  One is not in yet.  I would be surprised if Silver doesn’t take out the $20 level shortly.

 

 

 

HG Copper:

 

270413 HG Copper

 

 

Copper closed the week at 3.1845.  I don’t think Copper has ceased to be Dr. Copper.  There is fairly sustained downtrend in the Shanghai Composite that confirms we haven’t seen the lows in Copper yet.  Expect another attempt to take out the floor at 3.10 fairly shortly.

 

 

 

WTI Crude:

 

270413 WTI Crude

 

 

 

 

Crude continues to behave rather crudely, following the wave counts but taking out important levels in counter-trend rallies.  In this respect it is acting much like gold where buyers are lapping up dips. But then markets have a way of crushing such buy-the-dip investors who only provide fuel for long-term trends.

 

WTI Crude closed the week at $93, after making a high of 93.87.  Crude could find support at its 200 DMA at 91.50 for a few days of more bounce.  But eventually, I expect crude to return towards the $84 region.

 

 

US Dollar:

 

270413 dxy

 

 

DXY closed the week at 82.57.  DXY is consolidating just above 81.80 for a renewed assault on the overhead resistance at 83.50 followed by 84.25.  It could retest 81.80 before making new highs.

 

 

EURUSD:

 

270413 EURUSD

 

 

 

Euro closed the week at 1.3026.  The counter-trend rally in the Euro appears over.  Barring a bounce off its 200 DMA at 1.2950, expect the Euro to resume its drift towards the 1.27 region.

 

 

 

USDJPY:

 

270413 USDJPY

 

 

 

Has Abenomics run its course?  As shown on the chart above, a double top is in place and a triple top looms for the USDJPY at 100 Yen.  From the charts we must expect a reversal from 100, which will confirm on a violation of 96.  There is scope for some sideways movement in the currency until September this year.  I am neutral on the $Yen at these levels.

 

 

 

USDINR:

 

270413 USDINR

 

 

 

Despite the deteriorating fundamentals, there appears to be no dearth of Dollars in the INR markets.  Dollar closed the week at 54.37.  Expect the Dollar to seek higher levels in the coming weeks where Dollar could drift towards the INR55 mark.

 

Shanghai Comp:

 

270413 Shanghai Comp

 

 

 

Shanghai could launch into a counter trend rally from its current level at 2178 to 2250.  However, the more likely course is a plunge towards 1950 if 2150 is taken out in the near future.  From the wave counts, oscillator charts etc., indications are that we are heading for a “mini-crash” towards 1950 in the next few weeks.  Will 1950 hold?  Don’t bet on it.  This is China.

 

 

Russell 2000:

 

270413 Russell 2000

 

 

 

 

Russell 2000 closed the week at 935.25 having rallied up from its support at 895.  In my view the correction that began at 954 on 15th March is not yet over and we will see another pull back to 895 levels before the rally resumes and attempts at another new high.  A violation of 895 would see Russell plunge to 855 where its 200 DMA rests.  The probability of that happening has receded somewhat.

 

 

Nasdaq 100:

 

270413 Nasdaq 100

 

I have been greatly puzzled by the massive inverted S-H-S on the Nasdaq 100 chart & have wondered how it will resolve.  I think it is best to treat the whole pattern as a potential “loose” triple top.  More details when I have confirmation.  Meanwhile Nasdaq 100 continues in a corrective mode and we can expect it to retest support on its 200 DMA at 2725 in the next week or so.  This is not the end of the long-term rally.  But we are getting to the beginning of the end.

 

 

S&P 500 [SPX]:

 

270413 SPX

 

 

 

SPX, like the other indices, continues in a corrective mode although it started its correction much later than others.  SPX could make a new high but the more likely course is a retest of support around 1530.  The correction won’t terminate the rally even if we see a plunge down to 1490 that is possible but not probable.

 

 

NSE NIFTY:

 

270413 NSE NIFTY

 

 

 

NIFTY closed the week 5871.45 after making a high of 5924.60 during the week.  I do not the think the correction from the recent top of 6110 in the NIFTY is complete.  What we saw was a counter-trend rally from 5487 to 5924.  With the rally done, barring a small pullback, expect the downtrend to resume towards a retest of 5400.  We could see some sideways movement at the higher end of the range as the market readies to take the plunge.  The coming dip would be a buying opportunity in a different set of stocks from the last one except banks, which could repeat the last plunge.  Wait to buy at your levels.

 

 

 

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.

 

 

 

 

 

 

 

 

 

Advertisements
Categories: Uncategorized
  1. April 29, 2013 at 4:32 pm

    You have done some serious amount of research there.

    Pages off Life

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: