Home > Uncategorized > MARKET NOTES: Early signs of trend reversal in US Markets

MARKET NOTES: Early signs of trend reversal in US Markets

MARKET NOTES:  Early signs of trend reversal in US Markets



Gold:  After a minor pull back to $1680, Gold resumed its fall and is currently placed at $1665.  There is nothing to indicate a trend shift in Gold.  It could test $1620 level during the ensuing week before a reactive pullback of some significance.  Continue to be bearish on gold.



$-Index:  $ looks all set to test 78 level in the coming weeks.  It is currently positioned at 79.1380.  $ may have resumed its intermediate down trend from the top of 82 in January 2012.  A break below 78 would confirm this prognosis.



Euro-$:  The Euro-$ is currently placed at 1.33430.  Euro-$ could come back to test the 1.30 level in the next few weeks.  On the other hand, it could reach for 1.35 before doing so; or after doing so!  The exact trajectory of the Euro-$ is rather indeterminate as it compresses between 1.30 and 1.35 before an eventual break out to the upside.  This compression could take several weeks to come.



$-INR:  The $ closed a shade below 51 at 50.87 last week after having pierced through 51 during the week.  The next target for the $ is 51.8 followed by 52.4.  $ may spend the next week consolidating above 51 before moving higher.  A retest of the recent highs at 54 before the end of May this year is likely.  News flow for the INR is likely to turn adverse as we go forward.



NYMEX Crude:  Crude fell sharply last week to test its major support at $103, which it successfully held.  Still maintain my short-term bullish view on crude.  Having successfully tested $103, Crude could flare up to $110 or more before the end of April.  Crude appears oversold on the charts.



NYSE Composite:  NYA made a top of 8330.32 on 19th March.  After making low of 8115 on 22nd March, NYA rallied to 8288.82, failing to reach its previous top.  It then fell to 8083 making a lower low than on 22nd March.  It has since rallied to close at 8207 on Friday.


A lower top followed by a lower low from the top of 8330.32 on 19th March indicates a correction has set in.  The low on 29th March also violated the trend line through points 6898 and 7129 on 25th November and 19th December respectively.  Both these indicate the ensuing correction may last a while though it is still too early to confirm a full trend reversal.


The first target for the move down is 7900 on the NYA.  The market’s reaction to that area will reveal which way the market wants to go.



S&P 500:  Not so obvious on the daily charts, but fairly clear from 10 day, 15 min intraday charts, the S&P 500 index could be in the process of forming an inverted Shoulder-Head-Shoulder pattern.  The left shoulder stands at 1414; the head at 1419 and the right shoulder could be forming at 1411.


Too early to say if the pattern will complete and prove out.  Nevertheless, taken in conjunction with the pattern on NYA that more clearly reveals the onset of a correction, the possible inverted S-H-S is another cautionary signal from the markets.



Sensex:  The Sensex pulled back smartly from the 17,000 on Friday, to close at 30th March.  The pull back was reactive though sharp.


17,000 on the Sensex has emerged as a major support having been successfully tested 3 times in the recent past.  Near term, Sensex is oversold.  So the Sensex could spend some more time above 17,000 before attempting an assault at the support again.


There is nothing in the charts to indicate that the bearish trend in play in the Sensex has reversed.  Expect another assault on 17,000 after a few days of consolidation.



Shanghai Composite:  After having made a double top at 2480, the Chinese Index has been in a correction and is currently placed at 2263.  The index is in oversold territory and could consolidate before moving down again.  My wave count still indicates the pull back from 2480 is in the nature of a correction.


The floor 2200 follows the next target on the downside for the index at 2110, which could also be tested.  Those stopped out at 2350 should wait to see how the index reacts to the 2200 area.  A violation there could call my entire wave count into question.  So caution is indicated.



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. Ashish
    April 2, 2012 at 4:19 pm

    So, gold may not correct in rupee terms… As Rupee is expected to depriciate.. I hope i understood it correct..

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