Home > Uncategorized > Market Notes, October 22nd, 2011

Market Notes, October 22nd, 2011

Market Notes, October 22nd, 2011


S&P 500:  The critical overhead resistance for S&P 500 lies at 1250.  The Index has made 4 unsuccessful attempts at breaking past that level without success.  Standing at 1219, the Index is poised to test that critical level once again. Going by the time charts and the fact that the Index made lower low in this correction at 1156, the probability of 1250 being taken out in this rally are rather low.  However, this is probably the last dip before an intermediate rally assuming the market does turn down from 1250.

Sensex:  The Sensex has more or less completed its correction that began in January this year in terms of wave counts.  On the time charts, it should complete its corrective course first week of November.  So on price action, wave counts and time charts we have congruence indicating that an intermediate tradable rally should start sometime first week of next month.  In any case, the market is unlikely to breach the 15,500 level in this correction indicating accumulation is in order.  Having said that, the market could dip before November one more time in sympathy with world markets, which in my view, would be a gratuitous buying opportunity.  Overall, a bullish stance on the Index is advisable.

Shanghai Composite:  The Shanghai Composite Index continues to aim for 2300-2350 area in its characteristic manner disregarding news flow.  On the time charts, the Index completes its correction middle of November before a substantial rally ensues.  Note, the Index started its correction much before the Sensex in August 2009, and completes it in November.  That is a 2 year correction as opposed to a little less than a year on the Sensex.  That could indicate the likely strength of the two Indices in the next rally that comes along.

$ Index:  As expected, the $ currently stands 76.5 which is roughly a 50% correction to the sharp run up from 73.5 to 80.1 in the last rally.  It is unlikely that this support will be breached as the overall trend in the $ continues to be bullish.  75% to 100% corrections in Forex markets are common.  However from the nature of the support at 76.5 a deeper correction than already achieved is unlikely.  The $ may linger around these levels for 6 to 8 weeks before rallying further.  Don’t expect tradable rallies or falls.

Gold:  As expected, Gold turned lower from the $1700 level and is tamely headed for a retest of its recent low of $1535.  The market’s reaction to the 1535 price area will give us further clues as to which way Gold is headed.  Safe to say, the price action so far is bearish, and on the time charts, the metal has a long way to traverse.  Long term “buy & hold” bulls in the metal should keep a stop loss of $1500-1525 and prepare themselves mentally for preserving their capital.  On a breach of 1535, the price action in the metal could get ugly.

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


Categories: Uncategorized
  1. J K Sharan
    October 27, 2011 at 5:42 pm

    Hello Sonali,
    This is by @jksharan @Twitter, I had very much liked your tweets which showed your multi sectoral in-depth knowledge and interest. I am not finding your Tweets, may be you Blocked, never shall or ever meant to cause you annoyance but sorry and apology if my tweets annoyed you, pl restore the benefit of your wisdom! Regards, JK Sharan. @jksharan

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