Home > Uncategorized > Market Notes 6th Nov. 2011 – After the Greek referendum panic.

Market Notes 6th Nov. 2011 – After the Greek referendum panic.

Market Notes 6th Nov. 2011 – After the Greek referendum panic.


Shanghai Composite:  The Chinese markets held its predicted floor at 2325 [2300-2350 regions] after a general synchronized crash in the world equity markets.  The 2325 region therefore marks a floor that is unlikely to be breached in a hurry and sets up a good long term stop loss for buy & hold investors.  That said, it doesn’t mean it can’t be retested again before the end of this month though the probability of a retest below 2450 looks remote.  Hard to forget we are talking of the Chinese market where tests of extreme points tend to be exaggerated. Wave counts and time charts don’t show any clouds on the horizon beyond a retest of the recent floor at a higher level.  The first confirmation of a new intermediate bull trend in the index will come after it crosses over the overhead resistance at 2700.  Continue to remain bullish on Chinese equity markets no matter how adverse the news flow.


S&P 500:  As pointed out in the last blog post, the crucial point for reference on the S&P 500 index continues to be 1220.  This level was sorely retested on the day Greece announced a referendum resulting in a mini-crash in the world equity markets on 11/01 and still held up fine.  The index continues to be in a failed 5th wave that indicates an oversold market.  In absence of excessive short sellers, the index should have been retesting the lows at 1100 region at this point in time.  The 5th wave exhausts itself around the middle of November, when the index could retest 1220 again and even go lower before moving up.  For position traders that would be an opportunity to buy. Barring the said retest, of 1220, there isn’t much to worry about the US equity markets.  A new intermediate bull trend would be confirmed above 1270.  Look out for the shale oil & gas story in the US.  Those reserves are enough for 100 years with the potential to be a game changer in geo-politics, oil markets and the US economy.  The world’s pundits continue to ignore its impact treating it as mere hype or seeing it mired in pollution related controversy. The gas is real, already supplying about 30% of US gas demand at this point.  No matter what the technical difficulties the US will not pass up their extraction.  At some point, the markets will sit up and take notice.  Shale related resource stocks represent a great opportunity to buy.


BSE Sensex: The Sensex marked the week by filling up the gap between 17,200 to 17,700 regions that was noted in the last blog post.  The top of the previous trading range at 17,200 held up as the new support despite a general crash in world equity markets after Greece announced a referendum.  The first confirmation of a new intermediate uptrend in the Sensex will come when it breaks above overhead resistance at 17,700.  As far as time charts are concerned, the correction that started at 20,600 on 1st March of this year is now complete.  Continue to be bullish on the Indian market.


$ Index:  The $ Index broke through at the obvious support at 76.7 indicating that the recent floor at 73.5 may come up for a retest at some point in future.  Meanwhile it continues to consolidate above 76.7.  The index is in an intermediate down trend, the first wave of which may complete around the 22nd of November.  A further break below 76.7 to retest the 75 region cannot be ruled out.  A neutral to bearish stance on the $ Index is indicated till the end of this month.


$-INR:  INR continues to consolidate in the 49 region against $ despite the huge volatility in the $ Index which is instructive.  Benign neglect on part of the RBI or does it know something we don’t?  On the time charts, INR could continue to consolidate in the 49 region for some more time, probably end of December with a slightly bullish bias. In the long term however the Rupee looks set to retest it’s all time low of  52 against the $ in the new year.  As Gold imports moderate, and oil prices are adjusted more frequently to international markets, the Rupee might find a floor.  Gold and oil consume India’s foreign exchange in about equal measure that is indicative of our mismanagement of the economy.  That is why the recent petrol hike by Oil Companies on their own was such a significant step towards reforms.  Keep fingers crossed.


NYMEX Crude:  Crude is testing the top of its trading range at 95.  Near term wave counts indicate crude is in a complex correction with an upward bias.  Unless crude breaks above 95 decisively, the further round of correction below 95 may continue for some more time.  I will start blogging Brent.  The US shale oil & gas impact on NYMEX crude prices is reflected in the increasing & persistent gap between US prices and Brent.  It may be time to track the two separately to get more precise clues on what the markets have to say.


Cash Gold:  Gold has completed the first half of its upward correction after the fall from 1920 region.  The corrective pattern may continue over the next 4 weeks.  Gold failed to breach the overhead resistance of $1770 in this upward correction which is significant bench mark now.  Expect Gold to mark time between 1680 and 1770 for the next few weeks with a bearish bias.  A break below 1680 isn’t ruled out though.


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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