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Market Notes: After the Greek & Italian bond market chaos

Market Notes:  After the Greek & Italian bond market chaos


Gold makes a lower top:  After making a lower intermediate top of $1802 on November 8th, Gold fell to 1763 before attempting a rally back to $1800.  If Gold fails to rally past the 1800 level over the next three or four trading sessions, it will have confirmed a lower intermediate top at that level after the high made at 1920 on 6th September.  If that happens, a fairly long intermediate down trend in Gold prices could ensue stretching into November next year.  Long term bulls in Gold who got stuck at the highs should reconsider their stop losses.  A move below 1750 over the next few trading session will confirm this prognosis.


HG Copper:  Copper is in the process of completing a highly orderly correction in price that started in February 2011 from a price level of 4.67.  The correction should end mid-December this year.  Copper tested its bottom at 3.0 twice in the recent past, turned down again from a significant overhead resistance at 3.75 and is headed to the bottom again.  It is very unlikely that the double bottom at 3.0 will be breached but until then Copper price trend is bearish.


NYMEX Crude:  Crude has recently tested its bottom at $75 twice before staging a significant rally to its first major resistance at $100.  It is significant that crude did not go bearish in the recent turmoil in the equity markets following the near collapse in Greek & Italian bond markets.  A breach of the $100 mark, apart from a nick, looks unlikely as crude is in something of complex bearish correction.  Traders who bought the panic should consider taking profits or setting up protective stops.  A nick or two above the $100 mark would not change this prognosis.


$Index:  The $-Index has made a significant base at 76.73 in the last few trading sessions.  A break below that level would take it a retest of it recent multi-year lows of 73.5.  The intermediate trend for the Index from its recent top in the 80 region remains down.  On the time charts, the correction in process could continue for a while.  A break below 76.75 levels would see the Index test 75 region.  The probability of such a test appears high.


INR:  The Indian Rupee continues to aim for it all time lows of 52 against the $.  It is presently consolidating between 49 and 50 and this could continue to mid-December before a more decisive move on the INR unfolds.  One should note that the 49 level was the lowest point touched by the Rupee in May, 2002.  And that all time low against the $ is the new base that is shaping up in the market.  Barring a pause here for time, or a breach of 48.5, the Rupee looks pretty bearish for now.


S&P 500:  From its recent lows in the 1100 region, S&P 500 has rallied to its first major overhead resistance at 1270.  Despite the Greek and Italian chaos, the market observed the top of its previous trading range as a support that was remarkable showing resilience where none was expected.  1270 remains a formidable hurdle to cross in the next few sessions.  On the time charts, the US has some more time to run in the bullish territory.  Upon further consolidation between 1220 and 1270, a break past 1270 looks probable.  In that case a retest of 1360 region is not unlikely.  Remain modestly bullish on US equity markets, especially the Energy, Banking and Tech sectors.


Sensex:  The Sensex appears to be mirroring the moves in the US equity markets.  After its recent lows in the 15,500 region, the Sensex rallied to its first major overhead resistance at 18,000.  Not unexpectedly, it turned down from that region in order to consolidate gains.  The top of the previous trading range at 17,000 is likely to be the new support.  The Index may consolidate here briefly.  On the time charts, the correction from its recent highs at 20,660 is complete.  A break past 18,000 looks highly probable in the near future and the would bring the recent highs once again in play.  Remain bullish on the Indian markets especially Tech & Telecoms.


Shanghai Composite:  The correction in the Chinese index from its top at 6060 in Mid October of 2007 is complete.  As expected, the index held its new bottom 2330 despite all the turmoil and negative news flow on China.  The Chinese market continues to be significantly out of sync with news flow and has followed its own path despite significant correlation with world markets.  Upon holding 2460 in the current correction a significant change in trend would be confirmed in the near term.  Accumulation in Chinese stocks for the long term to buy & hold investors is probably the best strategy for China.


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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